How NIIRA 2025 Will Impact Insurance Sector

The insurance sector in August this year, came under a new legislative regime, tagged NIIRA 2025, which has evoked much excitement among insurance practitioners. Ebere Nwoji highlights the features of the new Acts and the impact it will have on the sector and the general Nigerian public

The Nigeria Insurance Industry Reform Act (NIIRA) 2025, signed into law by

President Bola Ahmed Tinubu on August 5, 2025 is seen as  the last hope of insurance industry operators.

Both the sector operators and their regulator, the National Insurance Commission

(NAICOM), believe the new Act holds everything needed to redefine the future  of the  insurance sector.

Indeed, NAICOM and all the arms of the industry before the signing of the NIIRA

2025 believed that without a new legislation to drive the insurance sector after 22 years of operating under the insurance Act 2003, which was obviously moribund, any effort towards reforming the insurance sector was a wasted effort.

According to the insurers, this dearth of suitable legislation was the  reason reforms  such as  capital upgrading and enforcement of the compulsory insurances failed to yield the desired result.

2003 Act

The 2003 insurance Act was characterised by weaknesses and outdatedness with a lot of loopholes that aided people to violet the laws arbitrarily without reasonable penalty. As such, over these years insurance business was like all comers business with fake insurance certificate hawkers  having a field day in hawking of fake insurance certificates, while members of the insuring public were violating compulsory insurance laws like the Motor Third Party Insurance, builders insurance and group life insurance among others.

Insurers’ Hope

With the signing of NIIRA 2025, the insurers are happier, more proud of their industry and eager to discuss their affairs before other operators in the finance services sector of the economy. They now have new hope for a better future with belief that unto them a new child is born and milestone achieved in their efforts to retrieve their business from the hands of hawks and scavengers  who scramble over their business.

A careful observation of the media contents these days shows that since the signing of the Act, hardly do the media  air or publish any news bulletin without mentioning of insurance and the NIIRA 2025.

Indeed, the NIIRA 2025 has more than any past insurance legislation positioned the insurance sector in the news and other programme of the media as such marketing the insurance sector both within and outside Nigeria.

The Features

With this much ovation and echoes of joy among the operators, Nigerians have asked what exactly is the special features and contents of this NIIRA 2025, what differentiates it from the former 2003 legislation and what does the new law hold for the policy holders.

A critical look at the NIIRA 2025 shows that while the 2003 insurance Act was fragmented in nature, NIIRA 2025 came as unified, modern framework designed to foster innovation, strengthen regulatory oversight, and protect policyholders nationwide. One remarkable feat achieved for the insurance sector by the NIIRA 2025   is strengthening the capital base of the operating firms through a capital upgrading legislation that cannot be altered by anybody within and outside the industry.

Recapitalisation in insurance industry has always ended inconclusively due to resistance by operators with weak capital base firms who often collaborate with shareholders to thwart recapitalisation plans through court injunctions. But NIIRA

2025 ushered in a new capital regime that nobody can contest in the court without amending the law itself.

Again, it gave NAICOM the regulator more powers with broader supervisory and enforcement authority, including power to enforce compliance, drive innovation, and maintain market discipline in the industry. Before now one of the complaints of NAICOM was that the 2003 Act did not vest on it the necessary powers to enforce compulsory insurance or withdraw license of weak and ailing firms.

This, according to the commission, has been addressed by NIIRA2025.

At the 2025 media retreat organised by NAICOM for journalists in Abeokuta, Ogun State, penultimate week, the commissioner for Insurance, Mr Olusegun Ayo

Omosehin, had described the NIIRA as a modern rulebook for a modern market,

pointing out that  above other things it strengthened financial stability of the industry enthroning the regime of stricter capital requirement and Risk Based Capital by indicating new minimum capital of N10 billion for Life underwriting firms, N15 billion for general business and N35 billion for reinsurance firms. 

This represents a very significant upgrade from the former N2 billion capital for life insurance operators, N3 billion for general business and N10 billion for reinsurance firms. The new legislation according to him set up a new fund called Insurance policy protection fund for protection of policyholders in case of insurer insolvency.

He said NIIRA also identified criteria for licensing and classifying insurers, ensuring that only robust and well-governed entities operate in the market.

He said it enhanced supervision framework that focuses on the actual risks faced by insurers, enabling more effective oversight and intervention.

On Risk-Based Capital Requirements, Omosehin said the new insurance Act strengthened capital adequacy standards that required insurers to hold capital commensurate with their risk profiles, protecting policyholders and promoting fair competition. In other words, with NIIRA regime, the insurance market is no longer a market of all policies for all underwriters rather it is now a market that selects underwriters for specific business tickets and risk profile depending on financial capability.

“These reforms aim to create a more resilient and competitive insurance market, ultimately benefiting policyholders and the broader economy.”

The NIIRA 2025 introduced key statutory provisions, including innovation hub/sandbox framework: Providing a formal structure for testing and refining innovative insurance products and services in a controlled environment, fostering creativity while ensuring policyholder protection,” the insurance commissioner stated.

Throwing more light on the peculiarity and superiority of the NIIRA 2025 over the hitherto regulation, NAICOM Deputy Director, Market Conduct and complaints

Bureau, Mr. Olugbenga Jaiyesimi, said NIIRA aligned Nigeria’s insurance regulations with global standards and supported the government’s ambition of building a $1 trillion economy.

He said it expanded compulsory insurances making GroupLife insurance mandatory for all employers and extended compulsory insurances to petroleum installations, healthcare facilities.

He highlighted other major reforms brought by the Act as digital transformation in the area of legal recognition of electronic policy, issuance and digital proof of insurance aimed at streamlining operations and improving insolvency.

He also said NIIRA legally required insurers to pay claims promptly thereby reducing delays in claims settlement.

He also said the new legislation has enthroned a regime of tighter controls on licensing, management stability and operational transparency.

The Act also put in place mechanism for consumer protection through stricter licensing and regulation.

For instance, the regulation allows only licensed agents, brokers and insurers to operate and placed heavy penalty for unlicensed activities.

In doing this, the target is to reduce frauds and protect consumers from fraudulent operations.

Core Benefits

The act has core benefits for insurance consumers in the area of faster claims settlement, protection of the customer against insolvency of the company they purchased insurance policy from through the establishment of  insurance policy protection fund, it also reduced fraud by safeguarding the customers from paying his premium to the third party in form of agents.

Analysts’ Views

Industry analysts said in terms of content, NIIRA 2025 has carefully addressed the problems insurance industry operators have been lamenting over and has prepared enough grounds for rapid growth of the insurance sector if carefully implemented.

But good as NIIRA is, the onerous is in the hands of the operators, government through the use of its law enforcement agents to implement the laws.

A good law devoid of implementation and enforcement is equal to non-existence.

The insurers should therefore be at the vanguard of implementing the laws through compliance with the aspects that have to do with professional conduct in their business operations such as  premium rate charging, 60 days of remittance of collected premium by insurance brokers, engagement of only licensed agents, exposition of any agent or broker who conducts business in a way  that is against the new legislation, payment of  genuine claims without delays as stated by the law among others.

It is strongly believed that if the insurers should religiously play their part as stipulated by the regulation, definitely others will fall in line.

From the facial outlook of present administration in NAICOM led by Ayo Omesehin, the industry will know sanity and discipline by force as he has maintained that his regime has zero tolerance to any operational misbehaviour.