By David Akinmola
Nigeria’s insurance sector is set for a historic transformation following the presidential assent to the long-awaited Insurance Reform Bill, a development that signals sweeping changes across the industry, including a major recapitalisation of insurance firms.
Multiple high-level sources within the insurance sector and the Presidency confirmed yesterday that President Bola Tinubu signed the bill into law on Friday. Although an official announcement from the State House is still pending, industry stakeholders have described the move as a “watershed moment” for a sector that has long operated under outdated laws and weak capital structures.
The passage of the Nigerian Insurance Industry Reform Act, 2025 (SB. 393) follows months of legislative deliberations, culminating in the House of Representatives’ approval in March, after the Senate had passed it in December 2024.
Recapitalisation at the core of the reform
A key feature of the new legislation is a significant upward revision of minimum capital requirements across all classes of insurance operations in the country an overhaul expected to strengthen underwriting capacity, enhance policyholder protection, and restore public confidence in the industry.
Under the new thresholds:
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Life insurance firms must now raise their capital from ₦2 billion to ₦10 billion
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Non-life insurance companies are required to increase theirs from ₦3 billion to ₦15 billion
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Reinsurance companies will now need to maintain a minimum capital base of ₦35 billion, up from ₦10 billion
This recapitalisation drive marks the first major shakeup since 2007 and is widely seen as a necessary step to improve the industry’s ability to absorb risk, pay claims promptly, and compete more effectively—both regionally and globally.
“This is the kind of bold reform the industry has been waiting for,” a senior executive at one of Nigeria’s top insurance firms said. “It changes the conversation around the financial strength of Nigerian insurers and opens the door for greater innovation and customer trust.”
Out with the old: Repealed insurance laws
The new Act also sweeps away a patchwork of outdated legislation, replacing them with a unified, modern framework that aligns with international standards. Among the repealed laws are:
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The Insurance Act, Cap. I17, Laws of the Federation of Nigeria, 2004
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The Marine Insurance Act, Cap. M3
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The Motor Vehicle (Third Party) Insurance Act, Cap. M22
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The National Insurance Corporation of Nigeria Act, Cap. N54
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The Nigerian Reinsurance Corporation Act, Cap. N131
In their place stands the Nigerian Insurance Industry Reform Act, 2025, a consolidated legal foundation that addresses critical issues such as solvency margins, digital operations, corporate governance, claims administration, and dispute resolution in the insurance ecosystem.
A new era for regulation and public trust
The reform is widely expected to reshape how insurance is regulated and practiced in Nigeria. With higher entry barriers and stricter oversight, regulators aim to reduce the number of weak or undercapitalised players in the market and ensure a more stable and trustworthy industry.
“The law lays the groundwork for a much more responsible and transparent insurance sector,” said a senior official at the National Insurance Commission (NAICOM). “We now have the legal tools to enforce compliance, protect consumers better, and promote long-term investment in the sector.”
For consumers, the recapitalisation requirement is particularly significant. Under-capitalised insurers have long been associated with delays or denials in claims payment, contributing to widespread public mistrust of insurance in Nigeria. The new law aims to correct this narrative by ensuring that only financially sound operators remain in business.
Industry welcomes the reform
Across the board, industry stakeholders have welcomed the reform as long overdue.
“This is a game changer,” said a spokesperson for the Nigerian Insurers Association (NIA). “The new law strengthens our hand in rebuilding public confidence, increasing insurance penetration, and attracting foreign investors who had previously been wary of the fragmented regulatory environment.”
The Chartered Insurance Institute of Nigeria (CIIN) also applauded the development, saying it will elevate professional standards and compel operators to invest more in technology, product innovation, and customer engagement.
Reactions have been similarly optimistic from the Nigerian Council of Registered Insurance Brokers (NCRIB), which noted that brokers will now be better positioned to partner with well-capitalised insurers, providing more reliable services to clients in the corporate and retail segments.
Recapitalisation timeline and transition
While the law is now in effect, NAICOM is expected to release detailed implementation guidelines in the coming weeks, including timelines for compliance with the new capital thresholds. Analysts anticipate a phased approach, allowing firms time to restructure, merge, or raise fresh capital either from private investors or through public listings.
“This is not just about increasing the numbers; it’s about building institutions that can compete globally,” said a Lagos-based insurance analyst. “We expect some M&A activity and perhaps some market exits, but the long-term result will be a leaner, stronger, and more customer-focused industry.”
Boosting confidence, penetration and GDP contribution
Despite being Africa’s largest economy, Nigeria’s insurance penetration remains among the lowest on the continent hovering around 0.5% of GDP, compared to 3% in Kenya and over 10% in South Africa. Poor claims experience, weak consumer awareness, and low trust have all contributed to this lag.
Proponents of the new reform believe the bill will change that trajectory. With a more credible industry structure and stronger regulatory backing, insurance is expected to play a more prominent role in economic planning, risk management, and social protection.
“Insurance should be a driver of economic growth, not an afterthought,” said the President of the CIIN. “This reform is the first real step in making that happen.”
Next steps: awaiting official release
As of press time, the Presidency had yet to issue an official statement or gazette the new law, though multiple confirmations point to the bill being signed last Friday. Industry players are now urging NAICOM to provide a clear roadmap for implementation to ensure a smooth transition and avoid market disruptions.
Once formally announced, the Nigerian Insurance Industry Reform Act, 2025, is expected to be published in the Federal Government Gazette, at which point NAICOM will commence enforcement.
In the meantime, insurers are already reviewing capital strategies, engaging shareholders, and preparing for the sweeping changes ahead.
For Nigeria’s insurance sector, long plagued by weak capitalisation, outdated regulations, and low public confidence, the reform represents a turning point—a chance to build a stronger, more inclusive, and future-ready industry.
