Economist and founder of Awabah, Tunji Andrews, asserts that the Nigerian insurance sector is on the brink of significant change following the implementation of the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
Enacted earlier this month by President Bola Tinubu, this legislation brings forth extensive modifications designed to modernize the industry, enhance regulatory supervision, and set Nigeria on a path to a more vigorous financial future.
The NIIRA 2025 imposes elevated capital requirements for insurance companies, mandates compulsory insurance policies, and introduces thorough regulations for tech-based insurance providers, including fintechs.Capital Requirements to Reshape Industry Landscape
One of the most impactful provisions of the NIIRA 2025 is the increase in capital requirements for insurance companies.
This move mirrors similar reforms in the banking and pension sectors, which led to the emergence of larger, more efficient institutions. Andrews drew parallels to these industries, noting that the insurance sector is likely to follow the same trajectory.
“What you did see in the pension industry was that those who couldn’t raise the capital ended up merging or being sold to bigger ones, so you have stronger institutions,” he explained. “What this will create in the insurance space is that you have bigger, better insurance companies.”
The expectation is that smaller, undercapitalized firms will either consolidate or exit the market, resulting in a leaner, more competitive industry. This shift is anticipated to improve consumer confidence, enhance service delivery, and expand insurance penetration across Nigeria.
A New Era for FinTech and Digital Insurance
The NIIRA 2025 also addresses a long-standing gap in the regulation of digital insurance providers. With the rise of fintech platforms offering coverage across state lines, the lack of oversight had raised concerns about product quality and consumer protection. The new law introduces clear guidelines for both insurers and distributors operating in the digital space.
Andrews highlighted the importance of this development, stating, “My office is in Lagos, I can provide insurance in Abuja. What ensures that I give the kind of product that I say is on my billing? But now we have regulation.”
By formalizing the role of technology in insurance delivery, the Act is expected to unlock new growth opportunities and improve access to affordable coverage, particularly for underserved populations.
As Nigeria continues its push toward a $1 trillion economy, the NIIRA 2025 stands as a landmark reform that could redefine the insurance landscape for years to come.
What You Should Know
Some sweeping reforms under the NIIRA 2025 include:
Section 96(1)(b) says Nigerian motorists are now legally permitted to present their motor insurance certificates in digital form during routine checks or accidents. This is a major shift from the previously required hardcopy documentation.
Section 37 (1) of the Insurance legislation says Unlicensed insurance agents across Nigeria are liable, upon conviction, to a six-month jail term, with penalties including a fine of N500,000.
Section 201 mandates that people running insurance businesses online must obtain a license from the National Insurance Commission to practice in Nigeria.
