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Transforming Nigeria’s insurance landscape: Highlights of novel provisions in the Nigerian Insurance Industry Reform Act 2025

Transforming Nigeria’s insurance landscape: Highlights of novel provisions in the Nigerian Insurance Industry Reform Act 2025

This reform is more than a legislative update. It represents a strategic shift towards global best practices and signals the government’s determination to address challenges such as under-capitalisation, low consumer confidence, and fragmented regulation.

Introduction

On 31 July 2025, President Bola Ahmed Tinubu, GCFR, assented to the Nigerian Insurance Industry Reform Act (NIIRA) 2025, following its passage by the National Assembly. The Act repeals several long-standing laws and introduces a single, modern framework for regulating insurance and reinsurance in Nigeria. It is the most comprehensive review of insurance legislation in decades, aimed at promoting financial stability, protecting policyholders, and making the industry more competitive internationally. 

This reform is more than a legislative update. It represents a strategic shift towards global best practices and signals the government’s determination to address challenges such as under-capitalisation, low consumer confidence, and fragmented regulation.  

On 12 August 2025, NAICOM issued a circular setting out the roadmap for implementation, including capital thresholds, compliance timelines, asset admissibility rules, and sanctions, thereby providing practical guidance to operators. 

Repealed Legislation 

NIIRA 2025 consolidates and replaces the following statutes: 

  • Insurance Act, Cap. I17, Laws of the Federation of Nigeria, 2004;  

  • Marine Insurance Act, Cap. M3 Laws of the Federation of Nigeria, 2004; 

  • Motor Vehicles (Third Party Insurance) Act, Cap. M22, Laws of the Federation of Nigeria, 2004;  

  • National Insurance Corporation of Nigeria Act, Cap. N54, Laws of the Federation of Nigeria, 2004;  

  • Nigeria Reinsurance Corporation Act, Cap. N131, Laws of the Federation of Nigeria, 2004. 

 
Consequently, NIIRA 2025 removes overlaps in the multiferous insurance legislations, addresses gaps in regulation and provides a coherent basis for the growth of the sector. It also ensures that the legal framework reflects modern realities in the insurance market, rather than relying on outdated provisions. 

 

Key Highlights 

Revised Capital Requirements & Compliance Timeline 

Capital thresholds for insurance operators have been raised substantially: 

Type of Insurance Operator 

Previous Minimum Capital 

New Minimum Capital 

% Increase 

Life Insurance Companies 

₦2 billion 

₦10 billion 

400% 

Non-Life Insurance Companies 

₦3 billion 

₦15 billion 

400% 

Composite Companies 

₦5 billion 

₦25 billion 

400% 

Reinsurance Companies 

₦10 billion 

₦35 billion 

250% 

All insurers must now maintain a Capital Adequacy Ratio (CAR) of 100% at all times. These changes are intended to strengthen the financial resilience of operators and improve their ability to absorb market shocks. Furthermore, insurance operators are expected to take practical steps to ensure compliance with the new Minimum Capital Requirements (MCR) within the prescribed 12-month timeframe, ending 30th July 2026.  

NAICOM has confirmed that operators who successfully meet the new capital requirements and undergo verification will be issued fresh licences upon payment of requisite fees. This makes recapitalisation not only a balance sheet exercise but also a re-licensing process that re-validates an operator’s right to do business in Nigeria. 

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Important Notice: The information contained in this Article is intended for general information purposes only and does not create a lawyer-client relationship. It is not intended as legal advice from Jackson, Etti, & Edu (JEE) or the individual author(s), nor intended as a substitute for legal advice on any specific subject matter. Detailed legal counsel should be sought prior to undertaking any legal matter. The information contained in this Article is current to the last update and may change. Last Update: October 1, 2024.