Analysts: New Insurance Act Will Trigger Industry Recapitalisation, Catalyse Economy

•Senate Committee hails regulation as “most far-reaching reforms” in financial sector   •NAICOM: Act will enhance insurance penetration, promote economic growth, protect policyholders’ interests and attract investments into the sector

James Emejo, Sunday Aborisadein Abuja andEbereNwojiin Lagos

Analysts and industry operators, yesterday, hailed the signing of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 into law by President Bola Tinubu, describing it as a catalyst for economic transformation.

They said the new regulations had the potential to rebuild trust, restore confidence, and attract massive investments into the insurance industry.

The landmark legislation repealed the 22-year-old Insurance Act of 2003, and consolidated several insurance laws, which were no longer current, into a single, modern legal framework.

Chairman, Senate Committee on Banking, Insurance and other financial institutions, Senator TokunboAbiru, said NIIRA was one of the most far-reaching reforms in the history of the country’s financial services sector.

In a statement, the lawmaker, who led the legislative push for the bill, described the Act as a milestone in Nigeria’s journey towards economic transformation.

He said, “This Act replaces a fragmented and outdated legal regime with a unified, modern framework designed to foster innovation, strengthen regulatory oversight, and protect policyholders nationwide.”

Abiru stressed that the new framework was crucial to restoring public trust and improving accountability in the industry, and also strengthened Nigeria’s participation in regional insurance systems, such as the ECOWAS Brown Card Scheme, which facilitates cross-border coverage and cooperation.

To ensure effective implementation, NIIRA significantly empowers the National Insurance Commission (NAICOM) with broader supervisory and enforcement authority, including power to enforce compliance, drive innovation, and maintain market discipline in the industry.

Abiru stated that the changes were not merely technical adjustments but strategic reforms aimed at unlocking the vast potential of Nigeria’s insurance market.

He said, “For decades, the insurance sector has suffered from low penetration, estimated at just 0.5 per cent of GDP, far below the African average.

“This has been due to regulatory inefficiencies, weak enforcement, limited consumer confidence, and a lack of innovation. 

“The NIIRA, is designed to address these challenges head-on and chart a new course for the sector.”

He expressed deep appreciation for the support of the senate leadership, members of the Senate Committee on Banking, Insurance and Other Financial Institutions, lawmakers in both chambers of the National Assembly, National Insurance Commission (NAICOM), and stakeholders across the insurance value chain.

Abiru expressed confidence in NAICOM’s ability to realise the ambitious objectives of the NIIRA, stating that Nigeria stands at the threshold of a new era in insurance regulation and development.

“With NIIRA, we are laying the foundations for a safer, more resilient, and prosperous Nigeria,” he said.

Analysts believe the passage of the Act marks a defining moment in modernising Nigeria’s financial infrastructure as well as stimulating investment, creating jobs, boosting investor confidence, and ultimately enhancing the lives of everyday Nigerians through more robust, accountable, and accessible insurance services.

NAICOM said Tinubu’s assent to the bill represented the dawn of a new era and a game-changer.

In a statement, the commission said, “This marks a significant milestone in the history of our industry and underscores this administration’s commitment to the financial sector’s reform and economic growth.

“NIIRA 2025 is a game-changer for our industry, providing a modernized framework that will enhance insurance penetration, promote economic growth, protect policyholders’ interests and attract investments into the sector.

“We are confident that this new law will unlock the potential of the insurance sector, enabling it to contribute more meaningfully to Nigeria’s economic development and in achieving the $1 trillion-dollar economy.”

Similarly, Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. IdakoloGbolade, said the new insurance act was long overdue, as the industry needed strong capital injection, which the act adequately provided for in its implementation.

Gbolade said, “In other climes, insurance industry is far bigger than their banking sector and some insurance companies own banks but the reverse is the case in Nigeria.

“The Nigeria insurance sector has also being plagued with trust issues by their clients due to delays in claims payment and sometimes outright refusal to pay legitimate claims with dubious clauses.”

Gbolade added, “The lack of adequate capital also made most of the serious insurance businesses in the country to be factored out to very capitalized foreign insurance firms and reinsurance companies.

“A robust insurance sector will further strengthen the economy and compliments the efforts of the banking sector to enable Nigeria achieve its aspiration of a trillion-dollar economy by 2030.

“The insurance sector in South Africa was the backbone of their economy and the same can happen in Nigeria if the insurance sector is adequately capitalised and properly regulated.”

In separate interviews with THISDAY, industry operators welcomed the presidential assent to the bill, expressing strong belief that the new Act would elevate the industry to a world class height  and give it a competitive edge over its counterparts in other climes, especially within the African region.

Despite its position as the giant of Africa, Nigeria is one of the countries whose insurance sector contributes minimally to the GDP.

Currently, insurance contributions to GDP is still below one per cent.

But insurers believe that having a new Act that replaced the much outdated 2003 Insurance Act would definitely do the magic of redefining the future of the industry

Speaking on the development, Chairman Nigeria Insurers Association (NIA), Mr. Kunle Ahmed, described the development as a new era for the Nigeria’s financial services sector.

Expressing the insurers’ feelings on the development, the NIA Chairman said, “Nigerian Insurers Association (NIA) welcomes with great appreciation the presidential assent to the Nigerian Insurance Industry Reform Act (NIIRA) 2025, a pivotal legislation that sets the stage for transformative progress across the insurance ecosystem and the broader financial services landscape.

“This Act, signed into law by President Bola Ahmed Tinubu, GCFR, represents a bold step towards strengthening the regulatory framework, enhancing public trust, improving market penetration, and modernising operations within the industry.”