President Bola Ahmed Tinubu has signed into law the Nigerian Insurance Industry Reform Act (NIIRA) 2025—an ambitious legislation set to transform the country’s underperforming insurance sector through sweeping regulatory and operational reforms.
The new law aligns with the government’s broader agenda of financial inclusion, economic resilience, and institutional reform. It introduces key provisions aimed at deepening insurance penetration, restoring consumer trust, and repositioning the sector as a cornerstone of Nigeria’s financial system.
Key Provisions and Impact Areas
NIIRA 2025 raises minimum capital requirements for insurers, a move expected to spark a wave of mergers and acquisitions among undercapitalised firms. Only financially sound and professionally managed companies will be licensed to underwrite risk, bolstering confidence in the industry’s stability.
The Act also expands the scope of compulsory insurance beyond existing categories such as motor and group life, adding new mandatory coverages for sectors including agriculture, SMEs, public infrastructure, and cyber liability. This is intended to drive broader adoption and relevance across the economy.
In a major digital push, NIIRA mandates full digitalisation across the insurance value chain—from underwriting and customer onboarding to claims processing and policy management. The objective is to improve efficiency, reduce fraud, and expand consumer access through technology.
To address long-standing issues with claims, the law enforces strict timelines for assessment and payment, with penalties and potential license suspension for delays. A Policyholder Protection Fund is also being established to provide compensation in cases where an insurer becomes insolvent.
Implications for the Market
For the over 25 insurance firms listed on the Nigerian Exchange, the reforms present both challenges and opportunities. While the capital requirements are steep, the Act provides a framework for long-term sustainability and profitability.
Industry analysts expect consolidation activity to intensify over the next 12 to 18 months, with at least a dozen firms likely to merge or be acquired.
Observers say the most transformative aspect of NIIRA 2025 is its consumer-centric focus. The law puts policyholders first, demands operational transparency, rewards innovation, and enforces accountability.
Looking Ahead
With insurance penetration in Nigeria currently hovering below 1% of GDP, stakeholders hope the reforms will push that figure to between 3% and 5% over the next decade.
NIIRA 2025 is more than a legislative update—it is a strategic reset. As insurers adjust to the new rules, government agencies, investors, and industry players will need to work together to ensure the Act delivers on its promise of building a stronger, more inclusive insurance ecosystem for Nigeria.
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