On the 6th of August, 2025, President Bola Ahmed Tinubu assented to the Nigeria Insurance Industry Reform Act 2025 (NIIRA 2025). The law repeals existing insurance and reinsurance statutes with a single, updated regulatory framework aimed at strengthening the insurance sector, protecting policyholders, encouraging investment, and accelerating digitalization. It also regulates and supervises insurance and reinsurance businesses in Nigeria. In this article, we will examine the key features, reforms, and innovations introduced by the new law and its impact on consumers and other key players in the industry.
Key Features and Reforms of the Act
1) Consolidation of Prior Insurance Laws
The Nigeria Insurance Industry Reform Act 2025 repeals and consolidates multiple prior insurance laws, such as the Maritime Insurance Act, the Motor Vehicles (Third Party Insurance) Act, the National Insurance Corporation of Nigeria Act, etc., into one Act. The goal is to remove legal fragmentation and give regulators a modern statutory backbone for supervising insurers, reinsurers, and intermediaries.[1] A consolidated law should make compliance and enforcement more consistent.
2) Higher Capital and Solvency Requirements
The Act introduces a vital increase in minimum capital and solvency standards for insurers and reinsurers. This is intended to reduce the number of under-capitalized firms and lower the risk of insurer failure. For new companies, the minimum capital may consist of one or more of government bonds, treasury bills, cash, or cash equivalents. While, for old companies, it may consist of an excess of assets over liabilities, any other financial instrument, or any other subordinated liabilities, subject to approval by NAICOM[2]. However, industry commentary warns that the tighter capital thresholds could force consolidation; smaller operators may merge with bigger operators or exit.[3] The revised thresholds are:[4]
- Life Insurance: ₦15 billion (up from ₦2.0 billion)
- Non-life Insurance: ₦25 billion (up from ₦3.0 billion)
- Reinsurance: ₦45 billion (up from ₦10.0 billion)
In addition, insurers are required to maintain a minimum capital adequacy ratio of 100% at all times.[5]
3) Policyholder Protection Mechanisms
The NIIRA 2025 establishes formal policyholder protection arrangements. This is a protection fund or equivalent mechanism intended to compensate policyholders if an insurer becomes insolvent. The Act also empowers regulators to intervene earlier in troubled firms.[6]
4) Faster Claims Timelines and Tougher Penalties
The Act mandates strict timelines for handling claims and introduces tighter penalties for delayed or unfair claims practices.[7] All claims are to be settled within 60 days of notification or such period of time as may be prescribed in regulations made by the Commission from time to time. Regulators will have enhanced enforcement powers, including fines and licence sanctions, for non-compliance.[8]
5) Compulsory Insurance in Key Sectors
The new law expands the scope of compulsory insurance for specific sectors such as: agriculture, small and medium enterprises (SMEs), public infrastructure, and cyber liability. The government frames this as protecting citizens and reducing fiscal risks.[9] Individuals and businesses in affected sectors will need to budget for required policies.[10] This can increase costs for some businesses but may improve risk allocation and public protection for contractors, transport operators, or public projects being insured.
6) Push for Digitalization and Market Modernization
The Nigeria Insurance Industry Reform Act 2025 explicitly promotes digital distribution, electronic policies, and data-driven supervision. The Act encourages insurers to adopt digital platforms and gives regulators the legal basis to require electronic record-keeping and reporting.[11]
7) Market Access, Foreign Investment, and Industry Consolidation
By strengthening standards and modernizing the legal framework, the Act aims to attract foreign capital and raise industry professionalism. That can bring more capacity and products, but may also accelerate mergers and acquisitions among local firms.[12]
8) Stronger Consumer Protection and Dispute Resolution
The NIIRA 2025 strengthens statutory protections for policyholders, clarifies disclosure duties for insurers and brokers, and provides a firmer basis for dispute resolution through regulators and courts. Expect updated consumer complaint procedures to be set out in implementing regulations.[13]
9) Establishment of the National Bureau on ECOWAS Brown Card Scheme
This bureau is saddled with the responsibility of issuing ECOWAS brown cards as well as settling claims arising from accidents caused by holders of the card in other West African countries.[14] This synergizes and expands the scope of the insurance business both locally and regionally.
Takeaways for professionals, investors, and consumers
- Consumers: The Act provides stronger protections and faster claims for consumers, as well as a safer insurance market in the medium term. In the short term, consumers may see some insurers leave or consolidate, possibly affecting product availability and pricing in niche segments.
- Insurance professionals & intermediaries: Higher capital and compliance standards will raise the bar for market participants; brokers and agents should prepare for digital distribution and stricter conduct rules.
- Investors: The law aims to make the sector more investor-friendly. Foreign and institutional capital may grow, but returns will depend on how regulators calibrate rules and how quickly market players adapt.
Conclusion
The Nigeria Insurance Industry Reform Act 2025 is a significant overhaul designed to stabilize and modernize Nigeria’s insurance sector. It combines higher standards, stronger consumer protections, compulsory lines for systemic sectors, and a push for digitalization. The Act aims to improve trust, attract capital, and increase the sector’s contribution to the econom,y but it will also force industry change, including consolidation and higher compliance costs ahead.
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[1]https://statehouse.gov.ng/news/president-tinubu-assents-to-nigerian-insurance-industry reform-bill 2025-to-drive-financial-sector-transformation
[2] Section 15 (4) NIIRA Bill 2024
[3] https://www.deloitte.com/ng/en/services/audit/perspectives/the-nigerian-insurance-industry-.html
[4] Section 15 NIIRA Bill 2024
[5] Section 24 NIIRA Bill 2024
[6] https://dmarketforces.com/niira-2025-tinubu-ushers-new-era-of-reform-in-nigerias-insurance-industry/#google_vignette
[7] Section 210 NIIRA Bill 2024
[8]https://www.premiumtimesng.com/news/top-news/812178-tinubu-signs-new-law-to-regulate-nigerias-insurance-sector.html
[9] https://dmarketforces.com/niira-2025-tinubu-ushers-new-era-of-reform-in-nigerias-insurance-industry/#google_vignette
[10] https://www.capitalmarketsinafrica.com/president-sings-nigerian-insurance-industry-act-2025/, Section 3 NIIRA Bill 2024
[11] Section 19 (2) NIIRA Bill 2024
[12] https://www.capitalmarketsinafrica.com/president-sings-nigerian-insurance-industry-act-2025/
[13] https://dmarketforces.com/niira-2025-tinubu-ushers-new-era-of-reform-in-nigerias-insurance-industry/
[14] Section 103 NIIRA Bill 2024
