Heralding More Reinvigorated Nigerian Insurance Sector

The Nigerian Insurance Industry Reform Act (NIIRA) 2025, signed into law by President Muhammadu Buhari on July 31, 2025, is ushering in a reinvigorated insurance sector in Nigeria. The Act mandates the recapitalisation of insurance and reinsurance companies, setting minimum capital requirements based on risk, life, or general business operations. Non-compliant companies face license cancellation if they fail to meet the requirements within a year of the Act's implementation.

NAICOM, the National Insurance Commission, has successfully cancelled the licences of companies not meeting the recapitalisation standards. This has led to a list of 50 sound insurance and reinsurance companies, 48 insurance and 2 reinsurance, available for consumers. The Nigerian Council of Registered Insurance Brokers (NCRIB) lauds NAICOM for its responsible approach to the reform, highlighting the Act's consumer-centric provisions.

The Act mandates insurance brokers to carry a Professional Indemnity Insurance of at least N100 million or 50% of their previous year's income. NAICOM has ensured adherence to this provision. Additionally, the Insurance Policyholders' Protection Fund, financed by 0.25% of gross premium income and 0.25% of the Security and Insurance Development Fund, is established to handle unpaid claims in case of insolvency or license cancellation.

A Road Accident Victims Compensation Fund was also created, with 0.5% of motor insurance underwriting profits allocated to it. The Road Accident Victims Compensation Committee, including representatives of insurance intermediaries, will oversee the fund's use for compensating victims of uninsured vehicle accidents.