Tinubu Signs NIIRA 2025 Act, Sets Insurance Industry on Fast Track to Power $1 Trillion Economy Ambition
Sector reform raises capital requirements, spurs M&A outlook, and aims to deepen insurance penetration nationwide
Nigeria's insurance sector has entered a transformative new phase with the signing of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 by President Bola Ahmed Tinubu, setting the stage for the industry to play a pivotal role in the administration’s quest to grow the nation’s economy to $1 trillion.
The landmark legislation, which repeals and consolidates all outdated insurance laws into a unified, modern regulatory framework, is widely viewed as a long-overdue overhaul that will reshape the sector’s landscape — with higher capitalisation thresholds, compulsory insurance enforcement, and digitalisation measures at its core.
Under the Act, the minimum capital for life insurance businesses has risen from ₦2 billion to ₦10 billion, for non-life firms from ₦3 billion to ₦15 billion, and for reinsurance companies from ₦10 billion to ₦35 billion. These new thresholds, according to analysts, will likely trigger a wave of mergers and acquisitions among the 55 insurers currently operating, as firms seek to consolidate and recapitalise to meet the new requirements.
The National Insurance Commission (NAICOM) has been tasked with overseeing the implementation of the Act. The Presidency has directed the regulator to issue transitional guidelines that would allow for a smooth recapitalisation process and ensure the reform unlocks the full potential of the sector — especially in deepening insurance penetration, which currently remains below 1% in Nigeria.
In a statement issued by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, the Tinubu administration reaffirmed its commitment to financial stability, economic development, and inclusive growth.
“This development reaffirms the administration’s commitment to financial stability, economic development, and inclusive growth,” the statement read. “The NIIRA Act 2025 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.”
A Blueprint for Industry Transformation
Key features of the NIIRA Act include:
- Stringent new capital requirements to ensure financial soundness and investor confidence.
- Enforcement of compulsory insurance policies, particularly for public and commercial properties.
- Market-wide digitisation aimed at improving accessibility and operational efficiency.
- Mandatory timelines for claims settlement, enforcing a zero-tolerance stance on payment delays.
- Creation of policyholder protection funds, especially for insolvency situations.
- Integration into regional insurance initiatives, such as the ECOWAS Brown Card system.
- Stimulus for investment, positioning Nigeria as a leading insurance hub in Africa.
The Senate passed the bill on December 17, 2023, followed by the House of Representatives on March 13, 2024. A harmonised version was subsequently sent to the President for assent.
Industry Leaders Applaud the Reform
Stakeholders in the financial and insurance sectors have largely welcomed the reform, describing it as critical to unlocking the long-dormant potential of the Nigerian insurance industry.
Mr. Tope Adaramola, Chief Executive Officer of the Council of Insurance Brokers, called the Act “a long-awaited milestone” that addresses foundational issues in the industry. He highlighted the significance of the recapitalisation drive in enhancing risk retention capacity.
“This is a development that industry operators and financial analysts have been waiting for,” he said. “The issue of higher capitalisation for insurance operators is going to broaden their capability to underwrite risks, which are often ceded outside the country. With this, insurers can retain more risks locally, with multiplier benefits for the economy.”
He further noted that the enforcement of compulsory insurance laws, particularly for public buildings and buildings under construction, could unlock substantial premium income and employment opportunities, while also supporting the government’s macroeconomic goals.
Dr. Femi Ademola, Managing Director of AIICO Capital and a Chartered Financial Analyst, emphasised the expected revitalisation of the sector: “It portends the opportunity of waking up the sleeping Nigerian insurance sector through strengthening regulation, boosting capitalisation, and enforcing compulsory insurance. These will deepen insurance awareness and penetration.”
According to Dr. Ademola, the recapitalisation wave will also benefit capital markets, as insurance firms turn to equity investors to meet the new requirements. AIICO Capital is part of one of the country’s largest insurance conglomerates.
Mr. Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management, said the reform would play a complementary role in the ongoing recalibration of Nigeria’s broader financial architecture. He noted that just as banks are being recapitalised to support large-ticket financing, insurers must similarly scale up to share risk and backstop national growth.
“You cannot grow beyond your size,” Amolegbe said. “The ability to underwrite large transactions locally will improve if insurers become better capitalised. The insurance industry also provides critical investment capital to sectors of the economy. With stronger capacity and regulation, this role will only grow.”
Capital Injection and Growth Projections
According to estimates by Agusto & Co., the recapitalisation drive alone is expected to inject at least ₦600 billion in new equity into the insurance industry. This infusion of capital is anticipated to create significant headroom for growth, performance optimisation, and service delivery.
Agusto & Co. also projects the industry’s gross revenue to reach ₦1.1 trillion in 2024, with the NIIRA Act expected to further sustain the industry’s current double-digit growth rate, which stands at over 30%.
Despite these promising growth figures, Nigeria’s insurance penetration — the ratio of gross premium to GDP — remains one of the lowest in Africa. The hope, however, is that with new legislation, higher capital bases, and regulatory enforcement, the industry will be better positioned to support national development, attract foreign investment, and contribute meaningfully to Tinubu’s $1 trillion economy target.
As implementation unfolds, all eyes will be on how NAICOM manages the transition and whether industry players can rise to the challenge of consolidation, digitisation, and transformation in a market that is finally being reawakened.