Awaiting Presidential Assent to Insurance Bill

As various sectors  of the economy navigate through the first half of this year, Insurance sector operators said securing presidential assent to the Insurance Reform Bill is their highest expectation writes Ebere Nwoji 

The Insurance sector at the beginning of the business year 2025  was one of the sectors that  commenced the year with high hopes, enthusiasm and new dreams.

The sector’s hope was  anchored on the  belief that with  the passage of the Insurance Industry  Reform bill, late December 2024,  by the senate,  going by the speed at  which the present administration treats economic matters on its table, the bill would this time secure presidential assent. They  also believe that once the bill gets assent from the presidency, the insurance sector is good to go in its efforts to secure its  pivotal position  in the finance services sector of the economy.

Stakeholder, who spoke with THISDAY on the sector’s performance in the first six months of this expressed divergent views.

For instance,the Chairman Nigeria Insurers Association (NIA) Mr Kunle Ahmed said : “The insurance industry in the last five months witnessed some growth. Using the first quarter unaudited result of quoted companies as a barometer to measure the growth, some companies recorded more than 40 percent growth in revenue.

“The growth recorded will be better appreciated when viewed from the fact that the influence of currency devaluation has reduced considerably compared to last year, due to the relative stability of the naira this year. The changing market dynamics, increasing creativity of underwriters coupled with the drive for the enforcement of compulsory insurances, especially the third-party motor insurance are some of the factors responsible for the growth.”

Speaking further, he said despite the growth recorded, “we have noticed an increase in the request for short term cover by customers, driven by inability to pay one year premium from policy inception, in some instances some policies are yet to be renewed.  Insurance companies, like all other companies are still grappling with general increase in operational cost and increasing shortage of some required skills. I believe companies will overcome these challenges and the industry will potentially deliver over N2 trillion in 2025,” the NIA Chairman stated.The NIA is the umbrella body of all the insurance underwriting companies in Nigeria.

Sector’s Achievements

One  of the major achievements of the sector within this period  was the Passage of the Insurance Reform Bill by the Federal House of Representative. This means that what the industry is expecting at present is the presidential assent which will give the insurance sector a new  Act to replace the existing  and outdated 2003 Act under which the industry is operating currently.

The new Act will repeal several outdated laws, including the Insurance Act, Cap 117; the Marine Insurance Act, Cap M3; the Motor Vehicle (Third Party) Insurance Act, Cap M22; the National Insurance Corporation of Nigeria Act; and the Nigerian Insurance Reinsurance Corporation Act, Cap N131, all of which were part of the Laws of the Federation of Nigeria, 2004.

The senate passed the Reform Bill in December 2024 while the House of Representative passed it in March 2025. 

It is now three months after the bill was passed by the two chambers and the industry is earnestly waiting for presidential assent.

 Going by their comments and actions,  insurers are very much optimistic that this administration would deliver on this long overdue issue of providing the insurance sector with fresh Act that meets the test of time in place of the 2003 Act which is now outdated with most of the contents   overtaken by events.

The insurers’  optimism is anchored on the fact that the present administration has been magnanimous enough to have the bill already passed by both upper and lower chambers of the house in this first tenure meaning that the president has enough time to assent to it before he leaves office.This is contrary to what happened in the Buhari ‘s administration. 

Indeed, the passage of the bill by the law makers was described by the insurance sector regulator the National Insurance Commission (NAICOM) as a mile stone achievement.

In his comment after the passage of the bill by the House of Representatives in March, the Commissioner for Insurance Mr Ayo Omosehin, said   “NAICOM welcomes Passage of the Insurance Reform Bill by the House of Representatives

“This is a milestone achievement that marks yet another significant step towards transforming the insurance industry in Nigeria.The Commission is enthusiastic about the prospects of the bill receiving assent from Mr. President, which will pave the way for the implementation of its provisions,” Omosehin stated.

Third Party Motor Insurance

Another milestone achievement recorded by the insurance sector within these first six months of this year is  the ongoing  enforcement of the the Third Party Motor Insurance by the police nationwide.

This took effect from February 1 2025.

The development was in compliance with section 68 of the insurance Act 2003.

The Inspector General of Police IGP Kayode Adeogun Egbetokun had announced that effect from February 1,2025 all motor vehicles plying Nigerian roads must have genuine Third Party Motor Insurance to protect other road users.

The development came exactly two years after NAICOM  increased premium rate on the policy by 200 percent.

At present, both NAICOM, police and Federal Road Safety Commission (FRSC) are collaborating to ensure an effective enforcement.The development so much impressed the insurers who have over the years been agitating for it.

In his analysis  of the success so far achieved in the Third Party Motor Insurance enforcement, NIA Chairmanduring a press briefing on the activities of the insurance sector in the first quarter of the year said: “The stricter enforcement of Third-Party Motor Insurance by the Nigeria Police Force, which commenced on February 1, 2025, is generating significant effects on both the insurance industry and policyholders in Nigeria.”

The most immediate and significant impact is the substantial increase in the purchase of third-party motor insurance policies. This surge in demand directly translates to higher premium income and overall revenue growth for insurance companies. Available reports indicated a significant increase in the uptake, and this trend is expected to be amplified by continued enforcement in 2025 and beyond,” he stated.

He however said the increase in uptake implies increase in the volume of claims and overall potential liabilities of insurance companies. 

He added that this  would necessitate that insurance companies enhance their claims processing efficiency and customer service capabilities to handle the increased workload and ensure policyholder satisfaction.

He was also optimistic that timely and efficient payment of claim obligations would  gradually lead to increased public trust in the insurance sector. “Interestingly, the increased awareness and enforcement can create opportunities for insurers to develop more attractive and user-friendly third-party insurance products and leverage technology (Insurtech) to improve service delivery,” he said.

Financial Performance

In the area of financials of the sector, increase  in the operating capital of insurance firms was major target of the industry during the year. Presently, insurance firms’ minimum capital requirements stand at N2 billion for life underwriters, N3 billion for general business, N5 billion for composite firms and  N10billion for reinsurers. But in the new bill, the regulator is seeking to increase the minimum capital to N10 billion for life underwriters, N15 billion,  for general business underwriters,  N25 billion for composite firms  and N35 billion for reinsurers. Both insurance managers and their regulator believe that if the insurance bill receives presidential ascent, the sector would  be robust enough to underwrite some of the big ticket accounts that are often flown abroad due to low capacity of indigenous firms.

Ahmed said: “The proposed significant increase in the minimum capital requirements for insurance companies will enhance the financial capacity of insurers to underwrite larger risks, improve their solvency, and increase public confidence in their ability to meet obligations. It also aims to improve the industry’s retention capacity and reduce reliance on foreign reinsurance.   

“The bill emphasises a shift towards risk-based supervision, which is a more sophisticated and effective approach to regulation. This will allow  NAICOM to better monitor and manage risks within the industry, ensuring stability and protecting policyholders.Indeed, both the operators and regulator  have come to agree that if there is anything the insurance sector needs most in the current  business year, it is the recapitalisation exercise if the sector must continue to exist.”

A breakdown of their financial performance showed that NEM Insurance  

assets increased to N152.09 billion compared to N121.93 billion as at 31 December 2024. Total liabilities stood at N73.83 billion, up from N56.49 billion in the previous period. Equity increased to N78.26 billion from N65.44 billion.

Insurance revenue for the quarter reached N46.06 billion, significantly higher than the N29.03 billion reported in the same quarter of the prior year. Profit after tax for the period was N12.82 billion, a substantial increase from N10.54 billion in the prior year quarter. The company said the strong performance was driven by increased revenue and effective cost management.AIICO Insurance Plc reported total assets of N439.7 billion, a six percent increase compared to N416.4 billion of 31 December 2024. Total liabilities stood at N367.1 billion, a five  percent increase from N348.7 billion. Shareholders’ equity increased to N72.6 billion, a  seven percent rise from N67.7

Regulatory Achievements

On the regulatory side  first half of the year period has witnessed a lot of regulatory changes, innovations, collaborations and initiatives.

For instance, within the period, NAICOM  new regulation for leased aircrafts  to boost aviation and insurance sectors, the commission within the period signed MOU with National Electricity Management services Agency (NEMSA), the commission also signed collaboration agreement to ensure compliance with the Third Party Motor insurance, it also collaborated with the police to launch a joint committee on compulsory insurance enforcement among others.

Overall, the insurance sector in this on going first half of this year has recorded notable achievements as elucidated by the operators however the sector is not immune from the  vagary effects of factors that have kept business environment in Nigeria very unfriendly year in year out.