Growing Insurance via NIIRA Implementation

NIIRA 2025, Nigeria’s new insurance legislation commences fully this year. Ebere Nwoji posits that implementation of the law will address the challenge of slow growth and development of the insurance sector

With the passage of the Nigeria Insurance Industry Reform Act (NIIRA2025), the Insurance sector operators are confronted with the challenge of taking their destiny by their hands in terms of working for growth, development and meaningful contributions of the sector to Nigeria’s gross domestic products (GDP).  

Until this is achieved, the insurance sector and its operators will continue to suffer the protracted look down and negative regard by the public as the poor cousin of bank, an image it has been struggling to free itself from for decades.

Before now, operators have always projected the problem of weak legislation and low capital as their stumbling block, calling on successive governments to avail the sector with new law insisting that most of the contents of the insurance act 2003 have been overtaken by events; so, could not drive the growth of the industry.

But with the emergence of NIIRA 2025, and its attendant Risk Base Capital increase initiative, the sector now has its growth and developmental gate thrown wide open for exploits. Much now rest on the operators’ shoulders to explore the opportunity of the new legislation and uninterruptible recapitalisation initiative of the regulator to ascend greater height.

As of December 2025, insurance contributions to the nation’s GDP hovered below 1 per cent. Whereas the National Bureau of Statistics (NBS) in its Q2 and Q3 2025 reports of financial sector performance and contributions to the economy said that Nigerian banking sector (Finance & Insurance) contributed significantly to GDP, with 4.57 per cent in nominal terms in Q2 2025, a jump from prior periods.

The report said in Q1 2025 in terms of capital inflows, the banking sector attracted over half (around 55.44 per cent) of total capital imported into Nigeria, amounting to $3.1 billion of the $5.6 billion total.

According to the NBS report, the banking sector showed strong growth, particularly in Q2 2025, driven by increased financial activities and investor confidence.

It said the banking sector’s stability was maintained by the Central Bank of Nigeria (CBN) oversight, even as policy stances eased to support domestic growth. 

According to NBS report, the Nigerian pension sector’s assets were valued at approximately N26.09 trillion, as at September 2025.  By November, it has grown to N27.052 trillion. 

This, according to NBS, accounted for 7.1 per cent of the 2024 GDP. The NBS said this typically reports on the broader finance and insurance sector’s contribution to GDP, not the pension sector in isolation. 

The total pension assets under management (AUM) reached N26.66 trillion as of October 2025, thus marking a significant 21.63 per cent increase year-on-year.

In terms of pension contributions to GDP, total pension assets accounted for approximately 7.1 per cent of Nigeria’s 2024 GDP, highlighting the industry’s growth but also its potential for further penetration.

The NBS report said combined finance and insurance sector, which includes pension activities, recorded a robust 16.13 per cent year-on-year growth in the second quarter of 2025.

Though the NBS often merges contributions of banking, insurance and pension sectors together as contributions of finance services sector of the economy, obviously insurance stands as the least contributor. Positioning the insurance sector as the poor cousin of the bank.

Insurance sector and new act

But with the new act, the insurance sector can break up every obstacle and toe the path of growth starting from this current year which is the first year of implementation of the new act.

So, suffice it to say that the insurance sector this year is faced with the challenge of bringing to practical reality the implementation of the NIIRA 2025. Industry analysts said the sector’s ability to confront and address this challenge by carefully abiding by the stipulations of the law determines its direction of movement in the new business year and beyond under the new regulation.

Topping the list of number of issues addressed by NIIRA 2025, which the industry operators must start implementing this year is the issue of claims settlement. 

The industry operators, experts said, must demonstrate their willingness and determination to lead members of the public in compliance with the new insurance law starting from attitudinal change towards claims settlement. Indeed, claims settlement is one of the key areas NIIRA 2025 focused attention.

The law was intentional about seeing the issue of non-settlement of claims addressed in the industry.

The Chairman Nigeria Insurers Association (NIA), Mr Kunle Ahmed,  speaking on tackling problem of claims settlement in the industry said the  association  would  through technology end the era of  claims fraud and controversy over claims payment between the industry and insuring public by exploring  the possibility of digital collation and tracking of claims payment to delight customers and reduce insurance fraud. Also, going by what the insurance commissioner said the industry will from 2025 account presentation cease from reflecting figures of unpaid claims in their accounts book. This was after the Commissioner for Insurance, Mr Olusegun Ayo Omosehin, had initially declared that the industry has zero tolerance to  non settlement of claims.

Analysts’ view

As business activities kick off for the year, insurance sector analysts said both the regulator and operators must address the claims issue in the industry in line with the position of the law by implementing the punishment spelt out by the law against non-claims paying firms.

They also said both the insurance underwriters and the regulator must abide by the position of the new law concerning remittance of premium by brokers. “Insurance underwriters must treat brokers who fail to remit premium paid to him by the insured within the stated time as stated by the law,” the analysts said.

Section 61 of the NIIRA 2025 mandates that brokers must remit collected premiums to insurers within 20 working days or 30 calendar days, whichever is later, from either the date of receipt of the premium or the effective date of cover.

Concerning the “No Premium, No Cover” rule, the Act reinforces the “No Premium, No Cover” principle (Section 60), meaning that insurance coverage is not valid until the advance premium has been paid and remitted to the insurer. The law says Insurers who provide cover without receiving the premium face significant penalties.

On issue of insurance funds, the law said that brokers are required to maintain a dedicated clients’ account for all premiums collected and claims payments, ensuring that client funds are not mixed with the broker’s operational funds.

NIIRA 2025 states that brokers who fail to comply with the remittance timeline face several penalties such as payment of the net premium with interest at a rate of 2 percent above the Central Bank of Nigeria’s Minimum Rediscount Rate.

It recommended a penalty of N500,000 or twice the value of the commission earned, whichever is higher.

It further said brokers must submit audited statements and revenue accounts to the National Insurance Commission (NAICOM) annually (by June 30th), and the auditor’s report must confirm that all collected premiums have been properly remitted to insurers. 

These rules were designed to ensure greater transparency and accountability, protect the insured’s funds, and foster a more reliable insurance market in Nigeria. 

During the 2026 business year which is the first year of the regime of the new insurance legislation, insurance underwriters and the regulator must demonstrate willingness to implement the new law by treating every actor in insurance business chain according to what the new law says.

A situation where insurance underwriter fails to expose brokers withholding his premium more than the 20 or 30 days permitted by the new law for the purpose of retaining the brokers patronage in subsequent times will make the law non-effective and is capable of returning the entire industry back to square one despite the new law.

At the launch of the Nigeria Insurers Association’s tech lab at the insurers’ house, one of the insurance underwriters who spoke to THISDAY on their e NIIRA 2025 said as happy as underwriters were for the new Act, the problem is implementation and willingness on the part of the insurers themselves to allow the new law take its course.

Obviously, the underwriter was speaking from personal experience and this has identified the need for NAICOM to gird its belt tighter for the purpose of ensuring that implementation of NIIRA 2025 is effected to the later at all cost  effect from this year irrespective of the consequences on  any insurance underwriter, broker or government agency. This is the only way insurance sector will regain its lost glory and pride of place among other arms of the finance services sector of the economy.