By David Akinmola
Nigeria’s insurance industry faces a sweeping capital overhaul as the federal government, through the Nigeria Insurance Industry Reform Act (NIIRA) 2025, has raised minimum capital requirements by over fivefold and given operators a 12-month deadline to comply.
The reform, which came into effect this month, mandates insurers to recapitalize by July 2026, a move regulators say is essential to strengthen risk-bearing capacity, protect policyholders, and position the sector to support Nigeria’s $1 trillion economy target.
Under the new framework, life, general, and composite insurance firms will face steep increases in paid-up capital requirements, while reinsurance companies will also undergo significant recapitalization thresholds. Industry analysts estimate that the adjustment represents the most aggressive capital reform in two decades, surpassing the 2007 recapitalization exercise.
The National Insurance Commission (NAICOM) stated that the policy aims to consolidate the sector, attract foreign investment, and boost underwriting capacity in critical sectors such as oil and gas, aviation, and infrastructure. “This reform is a deliberate step to ensure Nigerian insurers are strong enough to meet obligations, take on big-ticket risks, and deepen penetration,” a NAICOM spokesperson said.
The new law also empowers regulators to enforce compliance strictly, including sanctions such as license revocation for non-compliant firms. Experts predict a wave of mergers and acquisitions as smaller operators scramble to meet the new thresholds or risk exiting the market.
Stakeholders believe the reform could unlock growth opportunities in a market with less than one percent penetration despite Africa’s largest economy. However, some operators have expressed concerns over the short compliance window, citing current macroeconomic headwinds and foreign exchange volatility as potential hurdles.
Industry watchers say the coming months will reshape the Nigerian insurance landscape, with stronger, better-capitalized companies emerging to compete locally and regionally.
