Hot SourceThe signing of the Nigeria Insurance Industry Reform Act into law last week by President Bola Tinubu was the climax of all the reforms that have been going on in the insurance sector, Ebere Nwoji writes
The insurance industry has, in the past few years, been going through major reforms and transformations targeted at reshaping the future of the sector and repositioning it to be one of the major contributors to the National Gross Domestic Product (GDP) of the economy.
Currently, insurance contributes 0.6 per cent to the GDP.
These reforms became more pronounced in 2023 when the immediate past Commissioner for Insurance, Mr. Sunday Thomas, launched what he called “A ten-year strategic roadmap for the insurance sector, as well as a guidance note for the insurance of government assets and liabilities.
The Roadmap
With the roadmap, Thomas said over the next decade (2024-2033), the insurance industry would seek to continue its transformation journey along seven major strategic thrusts with the objective of achieving the corresponding goals.
He, however, stated that the transformation and reformation would thrive best in the face of a befitting legislative framework that would strengthen the capital base of the industry and give the regulator, the National Insurance Commission (NAICOM), more powers that would lead to adequate regulation of the operators on the track of trajectory growth.
With this in mind, Thomas, in collaboration with the insurance sector operators, pursued with vigour the institutionalisation of a new regulation that will guide the operation of the sector. The insurance sector operated under the 2003 Act for 22 years until the present development of signing a new Act on Tuesday last week.
Consolidated Insurance Bill and NIIRA
Before now, insurers have been fighting for the signing into law of the 2020 Consolidated Insurance Bill, which, though successfully passed by both upper and lower chambers of the 9th National Assembly, it however failed to secure presidential assent before the expiration of the late former President Muhammadu Buhari’s tenure.
As painful as this was to the insurance sector, operators and stakeholders, however, summoned courage to propose a new bill to the 10th National Assembly, tagged Nigeria Insurance Industry Reform Bill (NIIRA).
The bill was passed between December 2024 and May 2025, passed by the two chambers of the lawmakers, and to the jubilation of the entire insurance industry, on August 5th, it was signed into law by President Bola Tinubu.
The new Act repealed the Insurance Act, Cap. I17, Laws of the Federation of Nigeria, 2004; the Marine Insurance Act, Cap. M3 Laws of the Federation of Nigeria, 2004; the Motor Vehicles (Third Party Insurance) Act, Cap. M22, Laws of the Federation of Nigeria, 2004; the National Insurance Corporation of Nigeria Act, Cap. N54, Laws of the Federation of Nigeria, 2004; the Nigeria Reinsurance Corporation Act, Cap. N131, Laws of the Federation of Nigeria, 2004; to provide for a comprehensive legal and regulatory framework for insurance business in Nigeria; and for related matters.
It introduces critical measures such as: Stringent capital requirements to ensure the financial soundness of operators; enforcement of compulsory insurance policies to enhance consumer protection; digitisation of the insurance market to improve access and efficiency; zero tolerance for delays in claims settlement; creation of dedicated policyholder protection funds, especially in cases of insolvency; and expanded participation in regional insurance schemes, including the ECOWAS Brown Card System.
NAICOM is mandated to administer and implement the provisions of the NIIRA 2025 in a manner that unlocks the industry’s full potential and significantly improves insurance penetration across the country.
The new Act provides for comprehensive regulation and supervision of all insurance and reinsurance businesses operating within Nigeria. It also ushers in a new era of transparency, innovation, and global competitiveness for the insurance industry. It aligns with the federal government’s vision of achieving a $1 trillion economy.
Operators’ Views
According to the insurers, the new law stands as the climax of all the reforms clamoured by successive regimes in the regulatory body, NAICOM.
According to them, it is indeed the climax because successive administrations in NAICOM have come up with various phases of reforms to move the industry from a very static position of minimal contribution to the GDP of the country and shallow penetration of insurance services to the masses.
For instance, several attempts by the commission to upgrade the minimum capital base of the industry from its low level hit the rock as in each case, owners of insurance firms with low financial bases had always secured court injunctions against the move, making the industry to retain its low capital base of N2 billion for life underwriters, N3 billion for general business underwriters, and N10 billion for reinsurers despite the prevailing inflation rate.
Again, there were firms with weak financial bases, but the existing laws did not empower the regulator to revoke their licenses. Operating firms were arbitrarily shirking payment of claims without a serious penalty being meted out.
Among the public, people were violating laws on compulsory insurance because of a lack of empowerment for enforcement and a low penalty rate attached.
Thomas said NAICOM, under his leadership, had remained resilient and focused on implementing initiatives that would foster the development of the Nigerian insurance industry and align its fortune with that of the nation as Africa’s largest economy.
Omosehi’s Efforts and the Signing of NIIRA
Then came the new Insurance Commissioner, Mr. Ayo Omosehin, whose regime saw the passage of the bill by the two chambers of the National Assembly up to last week’s final presidential assent to the bill.
Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Tokunbo Abiru, said NIIRA was one of the most far-reaching reforms in the history of the country’s financial services sector.
In a statement, the lawmaker, who led the legislative push for the bill, described the Act as a milestone in Nigeria’s journey towards economic transformation.
He said, “This Act replaces a fragmented and outdated legal regime with a unified, modern framework designed to foster innovation, strengthen regulatory oversight, and protect policyholders nationwide.”
Insurance Operators’ Reaction
Also speaking on the development, the Chairman Nigeria Insurers Association (NIA), Mr. Kunle Ahmed, described the development as a new era for Nigeria’s financial services sector.
According to him, it reflects the federal government’s commitment to deepening financial inclusion and ensuring that insurance becomes a robust pillar in Nigeria’s economic architecture, and in line with the president’s vision for achieving a $1 trillion economy by 2030.
He said as a leading voice of the industry, the NIA pledges its full support towards the successful implementation of the NIIRA Act.
In her reaction, the immediate past Director General of the African Insurance Organisation (AIO) and former Managing Director of NICON Insurance Corporation, Ms Priscilla Soares, observed that the industry was in a very challenging situation right now and a lot needed to be done to ensure the survival of the insurance industry.
She said with the new Act, companies needed to determine the line of business they could do. She added that the days of running all over businesses were over as the law now requires each firm to concentrate on one area where its capital could be used.
Reaction by Insurance Brokers
On his part, the Executive Secretary Nigerian Council of Registered Insurance Brokers, Mr. Tope Adaramola, said the presidential assent was one of the finest things that could happen to the insurance industry.
He noted that the industry had huge potential for growth but that this has been constrained by several challenges, some of which concern the government not creating enough legal environment for the insurance to grow.
On the implications of the new law, he explained that “The increase in capital base will assist members, and it will also boost the capability of insurance companies to be able to undertake risks that are hitherto taken abroad. The enhanced capacity will help to broaden the solvency and the industry and ensure the financial soundness of operating firms,” he said.
The new Act, according to the insurers, has indeed ushered the insurance sector into a new era in its quest to occupy a strategic position in the global committee of developed insurance sectors.
However, stakeholders and industry analysts said it is now left for the industry operators, the law enforcement agencies, who interpret and enforce the law to work with the new legislation to ensure strict enforcement and compliance by making sure that offenders face the wrath of the law as stipulated in the new Act to serve as a deterrent to the public.
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