As Nigeria clocks 66, the insurance industry is focusing on strengthening its operations to support the national economic growth writes Ebere Nwoji

The series of reforms going on in the insurance sector point to the fact that the sector is no doubt committed to ensuring that it develops the necessary institutional strength required to support the economy.

Indeed, the insurance sector at  66 years of Nigeria’s nationhood, has remained  committed to contributing significantly to the development of the national economy.

This, the sector has been doing through various reforms targeted at reforming and reshaping the industry.

In the recent times,the following reforms have been made in the insurance sector 

To reform the industry, the Nigerian Insurance Industry Reform Acct NIIRA 2025 described as Landmark Legislation was signed into law  by President  Bola Ahmed Tinubu  on July 31,  2025.

The Act repealed and consolidated several outdated insurance laws into a single, modern legal framework and replaced the Insurance Act of 2003.

NIIRA 2025 instituted fresh capital for insurance operators from N2 billion minimum capital for life insurance underwriters, to N10 billion, from N3 billion capital  for general business underwriters to N15 billion. The Act further increased minimum capital of composite firms from N5 billion to N25 billion and reinsurers from N10 billion to N35 billion.

Recently, the insurance sector regulator, the National Insurance Commission (NAICOM), announced the successful completion of the  12-month recapitalisation exercise (August 2025 – July 2026) revealing that a total of 50  insurance and reinsurance companies met the new capital requirements, while six insurance firms went under waiting for liquidation.

Policyholder Protection

Prior to the conclusion of the recapitalisation exercise, the commission established the Insurance Policyholders’ Protection Fund (IPPF) by setting up a dedicated IPPF Committee  to provide a financial safety net for policyholders in the event of an insurer’s insolvency or distress. The fund was established pursuant to Section 212 of NIIRA 2025. It advocates  zero tolerance for claim payment delays.

Innovation & Market Development was another reform introduced by the regulator .

This saw to Insurtech Licensing, as NAICOM issued its first Insurtech licence, reinforcing its commitment to innovation and market integrity.

NIIRA 2025 Digitisation: The Act includes provisions for the digitisation of the insurance market to improve access and efficiency.

Compulsory Insurance Enforcement: Insurance sector witnessed renewed drive to enforce compulsory insurance policies, such as third-party motor insurance, to enhance consumer protection.

Regulatory & Supervisory Changes

Risk-Based Capital (RBC) Framework: Following recapitalisation, NAICOM announced its next major initiative, which is the implementing a Risk-Based Capital (RBC) framework. The initiative will  be launched tomorrow (Thursday  Oct 8 ) at the insurers’ committee meeting to be chaired by the commissioner for insurance Mr Olusegun Ayo Omosehin with all insurance Chief Executive Officers expected to be in attendance.This will align insurers’ capital levels with the specific risks inherent in their business portfolios.

Regulatory Intervention: NAICOM  developed the regulatory tactics of intervening  in weak insurance firms to save policyholders. It started with intervention in African Alliance Insurance Plc in October 2024 due to liquidity challenges. After an 18-month turnaround, operational control was handed over to a new board in June 2026 and has today stood as one of the stable insurance firms.

Institutional Renaming: There have been legislative moves to rename NAICOM as the Insurance Regulatory Commission.

Regional Integration

This is one of the reforms in the insurance sector. This brought in the regime of ECOWAS Brown Card System. The reform includes expanded participation in regional insurance schemes, including the ECOWAS Brown Card System.

Commenting on the reforms at the BusinessDay  insurance conference, Omosehin stated, “The reforms we have pursued in recent years, particularly under the Nigerian Insurance Industry Reform Act (NIIRA) 2025, were inspired by vision. They were designed not merely to increase capital but to strengthen capacity, not to only create bigger balance sheets but to create stronger institutions, not merely to satisfy regulatory requirements but to enhance the industry’s ability to serve Nigerians more effectively.”

Indeed, though the industry  is older than Nigerian as an independent country having been in operation for over a century, its stage of development compared with its sister sector is still not satisfactory. However, it has in recent years begun to  record some notable achievements that is  gradually lifting its status among other sub sectors of finance services sector.

Before these most recent reforms, the sector under the  supervision of past commissioners for insurance have effected some notable changes that will enhance its operations and put more money in underwriters’ pockets to be able to pay claims.

Notable  among such positive changes recorded by the industry was the enforcement of no” premium no cover” law which non implementation  over the years plunged operators into huge debt  that nearly  kill the industry, the review of motor insurance premiums

The implementation of no premium no cover enabled the industry to operates on cash basis and to be well positioned to pay claims and handle big accounts.

Fake Insurance institutions 

Closely connected to this is the activities of fake insurance operators especially motor and marine insurance operators, which  for many years drained the industry’s vault. But this was addressed a few years back through the insurance industry database platform set up by the Nigerian Insurers Association.

Also, the development of micro insurance is another milestone recorded by the industry in the past few years, which is expected to boost insurance penetration in the country.

These changes and  more if sustained,  will in the nearest future turn around the fortunes of the industry and reposition it as a major contributor to the nation’s gross domestic products (GDP).

Insurance industry Prior to Reforms 

Prior to these changes, insurance industry in Nigeria  since  the exit of  British operators, has recorded a chequered history due to  activities of the early Nigerian practitioners,  resulting in alienation of the people to the industry. Indeed, the industry, has suffered the worst neglect and poor patronage as insurance  ranks  last in the scale of preference of an average Nigerian.

The industry was so jettisoned by every Dick and Harry in the country that very few Nigerians want to buy insurance, work in an insurance company or want to have anything to do with the industry. Although this is changing, the industry is still faced with some challenges.

The above problem combined with poor patronage of the industry resulted in low premium income,  low contribution to Nigeria’s GDP.

The industry’s contribution to the GDP has remained less than 1 per cent. 

While other sub-sectors of the economy were recording success and growth, the insurance industry, remained a toddler for several years mainly due to low capital base.

Over the years, the issue of recapitalisation was a major problem in the industry as owners of weak insurance firms would always try to scuttle the chances of enthroning the regime of new capital base  in the industry.This is currently raging even in the NIIRA initiated recapitalisation as owners of failed insurance firms especially NICON insurance and Nigeria Reinsurance  corporation refused to accept the  conclusion of the exercise and are still dragging the matter in court.

Achieving N1trillion Market

Despite the earlier setbacks, a major development in the industry was the successful achievement of its long-standing plan to transform the sector into N1 trillion market from the N260 million position in 2009 when it launched a medium-term market development initiative, tagged, “Market Development and Restructuring Initiative.”

The industry realised this dream in 2023 when its annual premium hit the N1 trillion mark. As at Q2 2026, the sector’s annual premium stood at N1.285trillion.

Despite the recent achievements, the insurance sector is still bedeviled by various challenges prominent among which are persistent low market penetration and paltry 1 per cent contribution to the GDP. There is also the problem of governance and consumer trust deficit, macro economic and operational strain due to high inflation rate, regulatory and structural fragmentation, talent and innovation gaps.These require  holistic strategy beyond capital. 

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