Nigerian insurance sector eyes transformation in 2025
Joy Agwunobi
The Nigerian insurance sector is starting 2025 with optimism and renewed hope, as industry players anticipate a year of significant transformation. Insurers, regulators, and stakeholders are setting a clear agenda for growth, focusing on technological advancements to enhance efficiency and customer service.
With evolving regulatory frameworks and increasing demand for sustainable and digital solutions, the sector aims to unlock new growth opportunities while reshaping traditional business models. Central to this optimism is the recent passage of the Nigerian Insurance Industry Reform Bill by the upper legislative house in 2024. The bill, if signed into law, is expected to revolutionise the sector by introducing enhanced capital requirements, risk-based supervision, strengthened consumer protection, and a streamlined regulatory framework.
According to the National Insurance Commission (NAICOM), the bill consolidates existing insurance laws into a comprehensive framework, setting the stage for a more robust and competitive industry capable of contributing significantly to Nigeria’s GDP.
NAICOM highlighted that the bill seeks to address the sector’s long-standing challenges, including low insurance penetration and the inability of indigenous firms to underwrite large-scale accounts often outsourced abroad. Key provisions in the bill include increased minimum share capital requirements. N10 billion for life underwriters, N15 billion for general business underwriters, N25 billion for composite firms, and N35 billion for reinsurers. These measures are designed to enhance the financial stability of insurers and improve public confidence in the industry.
The bill also emphasises risk-based supervision, a milestone that aligns with global best practices. According to Olusegun Omosehin, Commissioner for Insurance and CEO of NAICOM, the new legislation signifies a new era for the sector, positioning it to compete favorably in both African and global markets.
Omosehin highlighted the bill’s role in consolidating fragmented legislative frameworks, strengthening consumer protection, and fostering innovation within the sector.
Another factor boosting confidence is the N4 trillion allocation for infrastructural development in the 2025 federal budget. Insurers expect a portion of these funds to flow into the industry through project-related insurance covers, providing an additional growth catalyst.
During its final board and management meeting for 2024, NAICOM reiterated its commitment to setting industry standards, regulating premiums, and ensuring compliance across the sector. The commission outlined its priorities for 2025, including enhancing financial stability, fostering innovation, and laying a foundation for sustainable growth.
Kunle Ahmed, chairman of the Nigeria Insurers Association (NIA), also outlined plans to leverage technology to tackle long standing issues of claims fraud and disputes over claims payments in Nigeria’s insurance sector. According to Ahmed, the association aims to introduce digital systems for the collation and tracking of claims payments, ensuring greater transparency, customer satisfaction, and a reduction in insurance fraud.
Beyond Nigeria, a look into the global insurance landscape reveals shared challenges across the sector. According to Deloitte’s outlook on the global insurance market, particularly in the United States, insurers are under pressure to adapt to increasingly complex and unpredictable risks. The proliferation of generative AI tools has empowered consumers and rendered traditional risk evaluation methods less effective.
Deloitte recommends modernising operations and infrastructure, innovating product offerings, and enhancing customer interactions as key strategies for staying competitive. The firm noted that by adopting advanced risk modeling approaches, insurers can build a more resilient safety net for their clientele.
Similarly, the Allianz Commercial Directors and Officers Insurance Insights Report sheds light on the turbulent business environment anticipated for 2025. Industries such as real estate, construction, hospitality, and tourism are particularly vulnerable to challenges posed by rising interest rates, inflation, and economic uncertainties.
The report notes that global business insolvencies rose by 11 per cent in 2024 and predicts a double-digit surge in 2025, significantly impacting economies that account for more than half of the global GDP.
This economic instability, the firm stated, is anticipated to drive a surge in Directors and Officers (D&O) claims, as creditors and investors seek accountability from business leaders.
Dan Holloway, Head of Global Management Liability at Allianz Commercial, notes that companies in these vulnerable sectors are under immense pressure to manage debt amid inflation and macroeconomic challenges.
Vanessa Maxwell, Chief Underwriting Officer at Allianz Commercial, stresses that D&O insurance is indispensable in today’s volatile business environment, as businesses face increasing regulatory penalties, shareholder lawsuits, and sanctions-related risks. Maxwell adds that non-compliance with geopolitical risks or sanctions can lead to severe consequences, including litigation and financial losses.
The Allianz report also highlights the growing legal risks tied to artificial intelligence (AI), noting that as businesses increasingly adopt AI technologies, they encounter rising litigation related to regulation, shareholder scrutiny, and “AI washing” – a practice where companies exaggerate their technological capabilities. The United States has already seen securities class actions triggered by such practices, with similar cases rising by 10 per cent in Europe and 43 per cent in Australia.
As 2025 unfolds, these insights underscore a dual reality for insurers. While opportunities for growth and transformation abound, insurers are likely to face numerous challenges.