By Kayode Lawrence-Omole

Some laws arrive with fanfare. Others slip quietly into the statute books, waiting for you to realise they touch your home, your office, your ship at sea, your aircraft in the sky, even the roof over your head.

A New Chapter in Nigeria’s Reform Story

On 5 August 2025, President Bola Ahmed Tinubu signed into law the Nigeria Insurance Industry Reform Act (NIIRA) 2025. The Act will change the way Nigerians insure property, businesses, and lives.

NIIRA 2025 is not a stand-alone reform. It is part of a bigger, strategic rewrite of Nigeria’s economic rulebook that has unfolded over the past two years. This includes the Central Bank of Nigeria (CBN) recapitalisation of the banking sector, FX liberalisation and digital payments,  the enactment of a new Investment and Securities Act which expanded the capital market, and the recent overhauling of the tax and revenue system through four enactments—the Nigeria Tax Act, the Nigerian Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act—collectively referred to as the tax reform acts.

NIIRA 2025 is the missing pillar. A law to protect capital once deployed, ensure losses are covered, and force Nigeria’s insurance market to meet global standards.

What the Law Changes — Key Provisions

Below are the headline reforms that will matter day-to-day for market participants:

  1. Higher minimum capital & risk-based capital regime — Large increases in statutory minimum capital for non-life, life and reinsurance businesses combined with a mandatory risk-based capital framework.[1] Existing insurers are required to meet the new minimum capital requirement within the transitional period set out in the Act. This is intended to strengthen solvency and loss-absorption capacity.
  2. Stricter licensing and ongoing suitability tests — Licences conditional on corporate form, capital, business plan, and “fit and proper” tests for principals.[2] There is also tighter control on opening/closing branches and cross-group activities. The Commission can refuse or cancel licences on enumerated grounds (insolvency, repeated regulatory failures, failure to file returns).[3]
  3. Separation/specialisation requirement — Composite insurers (life + non-life) are required over a transition period to separate operations or comply with special provisions.[4] This is a structural change that will drive M&A and business model re-assessment.
  4. Enhanced corporate governance and senior-management standards — The Act provides for mandatory board and senior management suitability checks, restrictions on certain appointments (e.g., past misconduct or fraud), and expanded reporting obligations to the Commission.
  5. Stronger policyholder protections and market conduct rules — The Act mandates faster policy delivery timelines, explicit duties on timely claims handling, delivery of policy documents, and clearer product approval and disclosure rules. There are also stricter penalties for delay or bad faith conduct.
  6. Digitalisation and InsurTech recognition — Formal recognition of digital platforms, authorisation processes for new products, and a regulatory sandbox / accelerated approvals with time-bound decision windows (deemed approval if regulator does not respond within statutory period).
  7. Greater regulator enforcement powers — NAICOM gets broader investigative and sanction powers, including publication of non-compliant insurers and the ability to act as receiver in certain circumstances, for example, where it has cancelled the licence of a loss adjuster or insurance broker.[5]
  8. Intermediary licensing & conduct — Agents, brokers and loss adjusters must be licensed with minimum qualifications, registration, record-keeping and client-account rules (including professional indemnity requirements). The Act prescribes heavy penalties for transacting without licence. Penalties range from fines to imprisonment for a term not exceeding 12 months for individuals.

Why These Changes Matter — Who Wins, Who Loses

  1. For insurers

Winners: Well-capitalised, well-run companies, with strong governance structures, will gain market share and investor interest. Improved solvency boosts credibility with corporates and retail customers.

Pressure points: Smaller insurers will face capital shortfalls, forcing recapitalisation, consolidation, or exit. Expect increased M&A activity and strategic partnerships with reinsurers and investors.

  1. For policyholders & corporate buyers

Benefit: Better protection, clearer product information, and swifter claims handling. Stronger regulatory oversight should reduce fraudulent behaviour and payment delays.

Watch-outs: Some niche products might become temporarily unavailable as underwriters re-price or redesign offerings to meet new capital or product approval constraints.

  1. For brokers & intermediaries

Professionalisation: Higher qualification and indemnity requirements will raise trust and professional standards, but also increase compliance costs for small brokers.

  1. For NAICOM

Toolbox expanded: NAICOM can act decisively to protect policyholders and enforce solvency. But it must balance enforcement with market stability. The priority should be to prevent insurer collapses through carefully calibrated interventions.

Why This Law is a Big Deal for Key Industries

  1. Shipping

For years, high-value marine insurance was placed offshore, draining premiums out of Nigeria. NIIRA 2025 builds local underwriting capacity and mandates that certain covers be placed domestically first, keeping more value in the Nigerian economy.

  1. Oil & Gas

Energy sector insurance often bypassed Nigerian underwriters due to capacity constraints. Now, local content rules have more bite, compelling multinationals to first seek coverage locally, retaining hundreds of millions in premiums.

  1. Aviation

Aircraft operators must show valid cover for passenger liability, cargo, and third-party risks before operating. The Act encourages Nigerian insurers to join aviation risk pools, reducing dependence on foreign-only coverage.

Predicted Impact — Short, Medium, and Long Term

Short Term (2026–2027)

In the immediate aftermath of implementation, the industry is likely to experience market contraction as smaller and weaker insurers, brokers, and intermediaries struggle to meet the steep capital adequacy thresholds and digitisation requirements. Mergers, acquisitions, and voluntary exits will become common as operators either seek survival through consolidation or fail to secure recapitalisation.

Also, compliance costs, including IT upgrades, governance reforms, and new reporting obligations, will almost certainly be passed on to policyholders in the form of higher premiums, particularly in specialist sectors such as aviation, marine, and energy. This environment will generate a surge in demand for legal, actuarial, and compliance consulting services, as firms require expert guidance to navigate the new regulatory architecture, structure capital injections, and design compliant product offerings.

Medium Term (2028–2030)

By the late 2020s, the shake-out phase should yield a more consolidated and better-capitalised industry. The survivors will likely be larger players with stronger governance, deeper technical capacity, and more sophisticated risk management frameworks, supported by a maturing reinsurance market.

The strengthened local underwriting capacity will facilitate greater insurance backing for large-scale infrastructure, energy, and transport projects, reducing reliance on offshore insurers and improving foreign exchange retention. This shift will also result in higher domestic premium retention, with a growing share of high-value risks placed, and settled, within Nigeria, thereby contributing to capital market development and economic resilience.

Long Term (2031 and Beyond)

Over the long term, sustained enforcement of NIIRA’s provisions, coupled with broader economic growth, could see insurance penetration rise from the current 0.5% of GDP to between 2–3%, aligning Nigeria more closely with emerging market peers. This would represent billions of dollars in additional premium volume, supporting deeper reserves, greater claims-paying ability, and stronger investment capacity.

With these structural gains, Nigeria could position itself as a continental insurance hub, potentially rivaling South Africa in scale, capacity, and influence in regional reinsurance markets. Moreover, more predictable and timely claims settlement, a product of both the statutory timelines and stronger NAICOM enforcement powers, will enhance Nigeria’s investment climate, improving investor confidence and contributing to sustained foreign direct investment inflows.

Transitional & compliance timelines

  1. Minimum capital compliance — Existing insurers must comply within the 12-month statutory transition period which is 12-month. Begin capital planning now (equity raise, subordinated debt, strategic JV).
  2. Separation of composite entities — Composite insurers have a five-year window to restructure operations to meet the specialisation rules. Evaluate structural reorganisation options immediately.
  3. Deposits with CBN / statutory deposits — New requirements to deposit 50% of minimum capital with the CBN upon commencement of insurance business. This is also time-sensitive; ensure treasury readiness and make the necessary deposit with the CBN promptly after commencement of business.
  4. Licensing renewals & documentation — Intermediaries and loss adjusters must secure licences and meet professional requirements (certificates, indemnity cover) before transacting business. Insurance brokers to renew licence within 6 months to the expiration of the licence. Brokers should audit compliance immediately.
  5. Product approvals / deemed approval deadlines — NAICOM has statutory windows (e.g., 30 days) to approve new products; if NAICOM does not respond, products may be deemed approved. Use this to accelerate InsurTech product launches but ensure full documentation.[6]

The Loopholes and Grey Areas

  1. Enforcement gaps: linking compulsory cover to permits and approvals in real-time — NIIRA 2025 creates mandatory/priority domestic placement rules and requires operators to hold certain covers (e.g., aviation liability, some classes of energy/marine cover). But the Act stops short of mandating integration between insurance verification and the government permit/permit-to-operate systems (aviation clearances, port clearances, petroleum operating permits, vehicle/driver licensing, etc.). That leaves a practical enforcement vacuum. Regulated operators can continue to operate while technically non-compliant, and regulators have limited visibility until after an incident or complaint.

To address this, NAICOM should mandate a statutory interoperability obligation and a “No-Permit Without Proof” rule, which will make it mandatory for regulated operators to provide a verifiable insurance certificate to issue or renew an operating licence.

  1. Regulatory overlap: NAICOM vs CBN vs SEC — The Act expands NAICOM’s remit but does not exhaustively allocate powers where insurance activity intersects with banking (bancassurance, statutory deposits, solvency interactions) and capital markets (insurance-linked securities, securitisation of insurance risk). Overlap with the CBN and SEC creates legal ambiguity about primary supervision, information sharing, and enforcement authority. More should be done to specify the lead regulator by activity e.g., bancassurance distribution and bank solvency, CBN lead; prudential conduct of insurance business, NAICOM lead; capital markets issuance/secondary trading of ILS, SEC lead, with NAICOM approval on insurance-risk treatment.
  2. Digital exclusion: smaller, rural brokers and digitisation mandates — NIIRA 2025 encourages and empowers digital distribution and modernisation, but does not provide explicit transitional support or carve-outs for smaller brokers, micro-insurers, and rural intermediaries who lack capital, connectivity, or technical skills. Without a graded approach, digitisation requirements could lead to market consolidation and the exclusion of underserved communities.
  3. Climate blind spot: no mandatory climate-risk / ESG disclosures — NIIRA 2025 contains no explicit requirement for climate-risk disclosure, stress testing for catastrophe accumulation, or ESG integration in underwriting and investment policies. Given insurers’ dual role as underwriters and long-term institutional investors, that omission leaves regulators and markets ill-prepared for climate-linked systemic risk.
  4. Claims settlement rules are stronger on paper than in enforcement details — The Act provides that claims must be admitted or paid within specified periods (60 days for ordinary claims), and the Commission may effect payment from the statutory deposit if claims remain unpaid. Although this enforcement route (using statutory deposit) is helpful, the Act does not clearly state the maximum quantum recoverable from that deposit, nor the priority of those amounts vis-à-vis other creditors. It is also not explicit about how cross-border claims or complex multi-jurisdictional disputes will be handled.

There is a real risk of Policyholders facing delays if the deposit is insufficient.

From Insight to Impact: 90 Days to Get Ahead of the NIIRA Curve

Within 30 days:

  1. Convene Board/Executive task force (CFO, GC, CRO) to map compliance gaps against the Act.
  2. Run capital gap analysis and short-list financing options (rights issue, subordinated notes, M&A).
  • Confirm status of licences, licences of intermediaries, and required professional certifications.

Within 60 days:

  1. Engage actuary & external auditor to prepare risk-based capital modelling and valuation work required by the regulator.
  2. Prepare an internal governance remediation plan (board composition, policies, compliance manuals).
  • Start dialogue with potential strategic partners (reinsurers, investors, tech providers).

Within 90 days:

  1. File or update licence/registration materials as required and prepare product submissions.
  2. Implement priority IT and reporting upgrades (policy admin, data feeds to regulator).
  • Public communications: update customers and brokers on continuity plans and enhanced consumer protections.

Final Word

If enforced in both letter and spirit, NIIRA 2025 could do for Nigeria’s risk culture what the recapitalisation era did for banking. It will restore trust, improve resilience and unlock investment in the sector. The question is not whether NIIRA 2025 can change Nigeria’s economy. The question is whether Nigeria will enforce it with the consistency, transparency, and discipline it deserves.

Key Contacts:

Corporate Integrity and Government Relations (CIGR) Unit, Dentons ACAS-Law

  1. Kayode Lawrence-Omole, Email: olukayode.lawrence-omole@dentons.com Tel: +2348077771670
  1. Samson Julius, Associate Email: samson.julius@dentons.com, Tel: +2347038434623
  1. Joseph Matawa Associate Email: ccp.nigeria@dentons.com Tel: +2349063848118

[1] See section 15 NIIRA 2025

[2] Section 13

[3] Sections 7 and 8

[4] Section 6

[5] Sections 42 and 50

[6] Section 18

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