NIIRA: Legislation that defined insurance in 2025

While President Bola Tinubu has signed several significant laws in 2025, none has resonated with such broad-based acceptance as the Nigerian Insurance Industry Reform Act. OLUWAKEMI ABIMBOLA examines how this landmark legislation has shaped the insurance sector in the outgoing year

When President Bola Tinubu signed the Nigerian Insurance Industry Reform Bill into law in August, it was clear that the legislation’s core purpose was to propel his $1tn economic vision for Nigeria. Although some analysts question this target for the next five years, NIIRA 2025 stands as a foundational law aimed at transforming the insurance sector’s role in national development.

Nonetheless, the first paragraph of the statement from the presidency, signed by the Special Adviser to the President (Information & Strategy), Bayo Onanuga, explicitly notes: “NIIRA was landmark legislation to strengthen Nigeria’s financial sector and accelerate the nation’s march toward a $1tn economy.”

The new law, which was widely accepted in the insurance industry, repealed and consolidated several outdated insurance laws into a single, modern legal framework. NIIRA 2025 introduced stringent capital requirements to ensure the financial soundness of operators and enforced compulsory insurance policies to enhance consumer protection. It introduced the digitisation of the insurance market to improve access and efficiency; had zero tolerance for delays in claims settlement; created a dedicated policyholder protection fund, especially in cases of insolvency; and expanded participation in regional insurance schemes, including the ECOWAS Brown Card System.

The regulator, the National Insurance Commission, also had its powers strengthened to enable it to administer and implement the provisions of the NIIRA 2025 in a manner that unlocks the industry’s full potential and significantly improves insurance penetration across the country.

Onanuga, in the statement, added, “The reform introduced by the new law is expected to catalyse new investments, boost consumer confidence, and position Nigeria as a leading insurance hub in Africa.”

Echoing similar sentiments, the regulator, the National Insurance Commission, described NIIRA 2025 as landmark legislation marking “a significant milestone in the country’s efforts to revamp the insurance industry, nearly two decades after the enactment of the Insurance Act 2003. The Act marks a new era in the ongoing efforts to strengthen the Nigerian insurance industry, enabling it to compete favourably in the African insurance market and globally.

“NAICOM is confident that the new law will catalyse growth, prosperity, and potential in the insurance sector, driving economic development and progress in the country. The NIIRA 2025 is a game-changer for Nigeria’s insurance industry.”

NAICOM also said that the piece of legislation would address the chronic challenge of insurance penetration in the country, which is at 0.5 per cent, ranking 70th globally and fifth in Africa, compared to South Africa’s 11 per cent.

“With a growing GDP and young population, the industry’s potential for growth is significant. The new legislation aims to drive reform, unlocking this potential and propelling the industry’s success over the next decade,” the regulator affirmed.

Indeed, since the signing of the bill, the contributions of the insurance sector to the GDP have improved. According to the 2025 second-quarter GDP report from the National Bureau of Statistics, financial institutions reported the highest growth in real terms at 16.13 per cent. A breakdown of the data indicated that financial institutions accounted for 87.97 per cent and insurance, 12.03 per cent of the sector, respectively, in real terms in Q2 2025.

In nominal terms, the sector grew 63.66 per cent (year-on-year), with the growth rate of the financial institutions at 65.24 per cent and a 53.00 per cent growth rate recorded for insurance.

The Q3 data showed that the insurance subsector of the financial services industry recorded real GDP growth of 20.78 per cent, significantly higher than the 15.70 per cent in the previous quarter or even the last six quarters, where growth had stayed under 10 per cent. Also, the subsector has surpassed its 2024 full-year performance with N1.22tn (FY2024: N1.18tn) in terms of contributions to the GDP.

Another positive fallout of the signing of the NIIRA is the boost provided to the stocks of insurance companies listed on the Nigerian Exchange Limited. The market capitalisation of the stocks has nearly doubled to N904bn as of Wednesday from N468bn as of 24 December 2024, with the likes of AIICO Insurance, NEM Insurance, and AXA Mansard leading and Lasaco, Mutual Benefits, Sovereign Trust, and Coronation Insurance recording triple- and quadruple-digit gains in their stocks.