Table of Contents
Joy Agwunobi
As Nigeria’s insurance industry stands on the verge of a sweeping transformation, stakeholders across the sector are mobilising to align with the forthcoming recapitalisation exercise and other key provisions embedded in the Nigerian Insurance Industry Reform Act (NIIRA) 2025, a landmark legislation set to take full effect in 2026.
The NIIRA, which replaces the two-decade-old Insurance Act of 2003, is widely regarded as the most ambitious reform in Nigeria’s insurance history. It seeks to overhaul the industry’s regulatory framework, strengthen risk-based supervision, reinforce consumer protection, and deepen confidence among policyholders, investors, and the public. Analysts believe that, beyond its immediate regulatory focus, the Act will reshape how insurers operate, price risks, manage assets and liabilities, and interact with customers in an increasingly digital economy.
To dissect the provisions and implications of the new law, Coronation Insurance Plc recently convened a webinar titled “The Nigerian Insurance Industry Reform Act: Insight, Benefits & Opportunities.” The virtual session brought together regulators, underwriters, brokers, and policy experts to discuss how NIIRA will redefine market conduct, encourage investment, and drive innovation across the value chain.
Speaking at the session, Soji Oni, controller, technical, at the Nigerian Insurers Association (NIA), described NIIRA as a defining opportunity to rebuild trust in Nigeria’s insurance sector and reposition it as a cornerstone of the country’s financial system. According to him, the new legislation marks “a rebirth” for the industry, one that places the consumer at the heart of every transaction, ensures stronger supervision, and enforces discipline among operators.
“The policyholder is our number one stakeholder,” Oni emphasised, “With NIIRA, there will be enhanced consumer protection and greater confidence. Customers will trust insurers more because supervision, competence, and accountability have all been elevated. This Act ensures insurers retain top talent, manage risk responsibly, and deliver on their promises.”
A shift toward customer-centric insurance
Oni noted that NIIRA represents a clear departure from the traditional “one-size-fits-all” product model that has dominated Nigeria’s insurance landscape for years. He explained that the focus will now shift from pushing products to customers toward understanding specific needs and creating tailored solutions.
“It’s no longer about what we want to sell; it’s about what customers need,” he said, while also noting that “Insurers must design bespoke policies, not jacket-made policies that fit everyone. The reform also mandates faster claims processing, companies are now required to settle approved claims within 60 days. This will restore trust and reduce the long-standing perception of delay in claims settlement.”
He added that digital transformation under NIIRA will run through the entire insurance value chain from underwriting to claims processing while the newly established Policyholders Protection Fund will serve as a safety net to compensate consumers in cases where insurers become insolvent.
Building stronger insurers and a resilient market
For insurers, Oni said, the NIIRA opens a new window for growth through increased capitalisation and improved operational standards. He described the Act as a consolidation of all major insurance legislation into a single, coherent framework that provides clarity and discipline across the industry.
“Insurers now have the capacity to retain more business locally. With higher capital and stronger balance sheets, the days of sending too much business abroad are over. This will lead to market consolidation, stronger brands, and a more trusted industry overall. Even companies that are already strong will become mightier under the new order,” Oni explained.
He added that NIIRA introduces a risk-based capital requirement, compelling insurers to assess and manage various forms of risks — insurance, credit, operational, and market risks in alignment with their capital structure and risk appetite. This, he said, will ensure capital adequacy, fair competition, and better governance across board.
Boosting investor confidence and public trust
According to Oni, NIIRA’s introduction has already begun to generate excitement among investors and the Nigerian Stock Exchange. The reform, he said, signals transparency, governance strength, and long-term sustainability — three factors that investors consider vital when deciding to enter or expand in any market.
“One of the biggest benefits for investors is trust,” Oni said, “For too long, insurance in Nigeria has been seen as weak or fragmented. But with NIIRA, no insurer will be considered small. Every operator will be subject to the same prudential and governance standards, creating a level playing field. Investors can now see the industry as a viable platform for long-term returns.”
He pointed out that the Act also gives the National Insurance Commission (NAICOM) more power to enforce compliance and penalise defaulting firms, ensuring prompt claim settlements and adherence to mandatory insurance policies.
NIIRA also expands the range of compulsory insurance categories in Nigeria, a move Oni described as “a long-overdue step to ensure better coverage and accountability.” The reform now mandates insurance for public buildings and government assets (Sections 76 and 77), buildings under construction (Section 75), petroleum and energy facilities (Section 78), healthcare indemnity insurance (Section 80), aviation and maritime activities (Section 82), cargo imports and goods-in-transit insurance, third-party motor risks and credit life policies, as well as container movement insurance for goods transported within Nigeria.
Oni praised the collaboration between NAICOM, the Ministry of Commerce, Nigerian Shippers Council, and other agencies for ensuring these provisions address long-standing challenges like tanker explosions, cargo losses, and non-compensation of victims.
Strengthening risk management and data integrity
A central theme in the NIIRA framework is risk-based supervision (RBS), which demands that insurers continuously assess and report their exposure to various risks. Oni highlighted that the Act requires a strong data-driven approach to regulation, ensuring accurate reporting, pricing, and assessment of solvency margins.
“Data integrity has been a major issue for the sector,” he said. “Now we have a structured database and reporting framework. This will drive transparency, enable proper evaluation, and enhance supervisory interventions by NAICOM.”
He added that the NIIRA also introduces regulatory sandboxes, allowing insurers to test new products and technologies under controlled environments, a move that is expected to stimulate innovation and attract tech-driven players to the industry.
Challenges and market implications
While the Act has been largely applauded, Oni acknowledged that it comes with certain structural and operational challenges. He noted that the recapitalisation drive could lead to market consolidation, mergers, and acquisitions, potentially reducing the number of active players in the short term.
“Raising capital will create pressure for some insurers,” he said, “There’s a likelihood of mergers and acquisitions, just like we saw in other countries where over 60 firms merged into about 10 strong ones. Smaller firms will have to innovate or partner to survive.”
He further pointed out that implementing the risk-based capital regime will require significant investment in technology and skilled personnel. Insurers that lack digital infrastructure or technical expertise, he warned, may struggle to comply fully.
Additionally, Oni stressed the need for regulatory coordination between NAICOM, the Corporate Affairs Commission (CAC), Central Bank of Nigeria (CBN), and other oversight bodies to avoid procedural delays and overlapping authority.
Unlocking future opportunities
Looking ahead, Oni said the NIIRA presents vast opportunities for innovation, digital inclusion, and the creation of specialised products. He urged insurers to invest in human capital development, technology, and AI-driven solutions to deliver microinsurance, climate-risk coverage, and pay-as-you-use models that better suit Nigeria’s diverse demographics.
“We must invest in talent and technology,” he emphasised. “Our underwriters must be world-class — as good as any in South Africa or the UK. The future is in customised and digital-first products, not in outdated, generic offerings.”
He cited emerging innovations in Nigeria’s market, such as the use of artificial intelligence for vehicle inspection and claims verification, as examples of how technology is already improving efficiency and transparency.
Oni also called for intensified public awareness campaigns to change consumer perceptions of insurance. He said Nigerians must begin to see insurance not as a product for the rich, but as a safety net for everyone.
“The poor need insurance more than the rich,” he noted. “We need to tell success stories, showcase testimonials, and promote the value of protection. The days of insurers hiding in the background are over — we must make Nigerians believe in the power of insurance.”
He concluded by urging continuous collaboration between insurers, regulators, and state governments to deepen penetration and deliver on the promise of NIIRA.
“Collaboration is key,” Oni said. “Without strong partnerships between the public and private sectors, we cannot achieve the goals of this reform. NIIRA has given us a platform; now it’s up to us to build the future we want for Nigeria’s insurance industry.”
With the countdown to 2026 already underway, Nigeria’s insurance operators are clearly in motion, recalibrating their systems, retraining their workforce, and readying themselves for what many see as the dawn of a more disciplined, transparent, and innovative era in Nigerian insurance.
