Introduction

On the 31st of July 2025, President Bola Ahmed Tinubu signed the Nigerian Insurance Industry Reform Act, 2025 (“NIIRA” or the “Act”) into law. The Act replaces existing insurance laws¹ and aims to provide a comprehensive legal framework for the insurance industry. The legislation’s primary objective is to protect the interest of existing and prospective insurance policy holders and other stakeholders in the insurance industry.²

The Act is a significant milestone for the insurance industry, set to transform the operation of insurance business in Nigeria. It consolidates all insurance laws into a single regulatory framework, and introduces key changes aimed at accelerating the industry’s growth, addressing the pitfalls of the repealed insurance laws and protecting the interests of stakeholders.

Some of the key highlights are as stated below:

(i) Use of restricted names: The word “Insurer” is restricted to legal entities which are licensed as insurers, insurance brokers and loss adjusters by the National Insurance Commission (the “Commission”), or to a duly appointed insurance agent. These are the only persons permitted to use the word “Insurer” or any derivative of it as part of their business name or for describing the nature or object of such business.³

Similarly, the use of the word "underwriter" is restricted to persons who are licensed insurers or their appointed agents. Only such persons are permitted to use the word “underwriter” in their business name or to describe the objects of their business.⁴ Any person who violates this provision is subject to a daily penalty of ₦250,000.⁵

(ii) Regulation of Holding Companies: A key highlight of the Act, is the expansion of the Commission’s authority to include the regulation of subsidiary insurance companies that are part of a holding company.⁶ This is a welcome development as the repealed Insurance Act, 2003 was silent on this provision.

(iii) Minimum Capital requirement: The Act introduces a noticeable increase in the minimum capital threshold required for insurance and reinsurance companies in Nigeria. Following the enactment of the Act, the minimum capital requirement is as follows:

a) ₦10 billion instead of ₦8 billion for life insurance companies;

b) ₦15 billion instead of ₦10 billion for non-life insurance companies; and

c) ₦35 billion instead of ₦20 billion for reinsurance companies.

All existing insurance and reinsurance companies are mandated to comply with the minimum capital requirement on or before the 30th of June 2026.⁷

(iv) Restriction on dividend payment: The Act mandates that Insurers are to ensure that all expenses are completely written off, adequate provision is made for actual and contingent losses on risk assets and liabilities, and all capital and solvency requirements are complied with, prior to the declaration or payment of dividend.

Any director, manager or officer who violates this provision is liable on conviction to a fine of not more than 5% of the dividend paid, imprisonment for a term not exceeding 3 years, or both.⁸

(v) Strict sanctions for unlicensed insurance operators: The Act reinforces the Commission’s commitment to safeguarding the interest of policy holders by imposing strict penalties of ₦25 million for individuals and ₦50 million for companies that operate unlicensed insurance businesses in Nigeria.⁹

(vi) Establishment of policyholder protection fund: A laudable scheme introduced by the Act is the establishment of the insurance policy holder protection fund (the “fund”). This fund would be used to pay outstanding claims of policyholders of licensed insurance or reinsurance companies in the event of bankruptcy.¹⁰

Conclusion

The enactment of the NIIRA is undoubtedly a landmark reform poised to transform Nigeria’s insurance industry. By consolidating fragmented laws into a unified framework, strengthening corporate governance, and elevating capital thresholds, the Act reinforces regulatory discipline while enhancing consumer protection.
The reforms are expected to accelerate market consolidation, as insurers who are unable to attain the capitalisation threshold may be forced into mergers, acquisitions, or exits. In addition, the enhanced regulatory clarity and policyholder protection framework could unlock fresh opportunities for foreign investment and deepen public confidence in insurance as a reliable tool for risk management.
Compliance requirements may pose short-term adjustment pressures, especially on smaller firms, however, NIIRA lays the foundation for a stronger, more resilient, and globally competitive Nigerian insurance market. Its true impact will ultimately depend on the consistency of regulatory enforcement and the agility of industry players in adapting to this new era of reform.

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1. The Nigerian Insurance Industry Reform Act, 2025 repealed the Insurance Act, Cap. I17, Laws of the Federation of Nigeria, 2004; the Marine Insurance Act, Cap. M3 Laws of the Federation of Nigeria, 2004; the Motor Vehicles (Third Party Insurance) Act, Cap. M22, Laws of the Federation of Nigeria, 2004; the National Insurance Corporation of Nigeria Act, Cap. N54, Laws of the Federation of Nigeria, 2004; the Nigeria Reinsurance Corporation Act, Cap. N131, Laws of the Federation of Nigeria, 2004
2. Section 1 of the Nigerian Insurance Industry Reform Act, 2025.
3. Section 4(1) of the Nigerian Insurance Industry Reform Act, 2025.
4. Section 4(2) of the Nigerian Insurance Industry Reform Act, 2025.
5. Section 4(3) of the Nigerian Insurance Industry Reform Act, 2025.
6. Section 11(1) of the Nigerian Insurance Industry Reform Act, 2025.
7. Recapitalization Circular: NIIRA 2025, NAICOM, 24 August 2025.
8. Section 35(1) and (2) of the Nigerian Insurance Industry Reform Act, 2025.
9. Section 10(a) and (b) of the Nigerian Insurance Industry Reform Act, 2025.
10. Section 212(1) and (2) of the Nigerian Insurance Industry Reform Act, 2025.