President Sings Nigerian Insurance Industry Act 2025

LAGOS (Capital Markets in Africa) – Following the passage of the Insurance Bill by the Senate (in December 2024) and subsequent approval by the House of Representatives (in March 2025), President Bola Ahmed Tinubu has officially signed the long-anticipated Insurance Bill into law. The presidential assent on Tuesday, 5 August 2025, now transforms the bill into the Nigerian Insurance Industry Reform Act, 2025 (NIIRA 2025)—a landmark legislation providing a comprehensive legal framework for the Nigerian insurance industry. This development marks a significant milestone in the sector’s evolution, as it consolidates several insurance laws and repeals outdated regulations. Below are some key provisions of NIIRA, 2025; 

• Recapitalization of the Insurance Industry: The Act mandates a substantial increase in minimum capital requirements—the first major recapitalisation in nearly two decades to enhance the financial soundness of operators. The new thresholds are: (i) Life Insurance: N10.0 billion (previously N2.0 billion), (ii) Non-life Insurance: N15.0 billion (previously N3.0 billion), (iii) Reinsurance: N35.0 billion (previously N10.0 billion), and (iv) Composite: N25.0 billion (previously N5.0 billion). Additionally, all insurers must always maintain a minimum capital adequacy ratio of 100.0%.
• Consumer protection provisions: The Act enforces compulsory insurance policies to enhance consumer protection. For instance, the Act has made provisions for a policyholder protection fund, which is to be funded by 0.25% of each operator’s gross life premium income to provide relief in cases of insurer insolvency.
• Market digitisation: The law promotes the digitisation of the insurance ecosystem, including licensing, product approvals, claims processing, and regulatory filings—all to be conducted via NAICOM-managed digital platforms to improve market access and operational efficiency.
• Regional integration: The Act expands Nigeria’s participation in regional insurance schemes, notably the ECOWAS Brown Card System, which should help facilitate cross-border coverage and settlement claims within the region.

Beyond the aforementioned highlights, NIIRA 2025 also encompasses the enforcement of product approvals, claims settlements, regulatory filings through NAICOM-managed platforms, stiffer penalties for policy non-compliance, amongst other compulsory insurance policies.

In our view, these reforms are expected to reshape the competitive landscape of the industry, with the recapitalisation directive likely to pose challenges for the relatively smaller operators, given the existing market fragmentation amidst other structural bottlenecks. Hence, we could see a wave of industry consolidation through mergers and acquisitions, as less-capitalised firms seek to meet the new thresholds within the stipulated timeframe. Insurers would be required to comply with the new capital requirements within 12 months of the law’s commencement, as stipulated by the National Assembly. However, we expect further regulatory guidance on implementation timelines, qualifying capital, and transitional provisions.

Ultimately, these reforms tie finely with the government’s broader economic vision of achieving a $1 trillion economy by 2030, complementing recent initiatives such as the banking sector recapitalisation, the revised Investment and Securities Act, and the 2025 Tax Act. In the coming months, we will closely monitor regulatory announcements and responses from industry players, particularly listed insurers, regarding their recapitalisation strategies and broader compliance plans under the new Act.

Source: CardinalStone Research.