Introduction to NIIRA 2025

On 6 August 2025, President Bola Ahmed Tinubu, GCFR, signed into law the Nigerian Insurance Industry Reform Act 2025 ("NIIRA" or "the Act") the most significant overhaul of Nigeria's insurance laws in more than twenty (20) years. For decades, the industry was governed by a scattered collection of ageing statutes, the principal of which dated back to 2003. Those laws had become increasingly out of step with modern markets, leaving gaps in supervision, weak protection for policy holders, and a sector widely seen as under-capitalised and short on public trust.

NIIRA replaces that fragmented framework with a single, modern law. In doing so, the Act repeals and consolidates five long-standing statutes: the Insurance Act, the Marine Insurance Act, the Motor Vehicles (Third Party Insurance) Act, the National Insurance Corporation of Nigeria Act, and the Nigeria Reinsurance Corporation Act. The result is one coherent regime governing how insurance and reinsurance business is licensed, capitalised, conducted and supervised in Nigeria and a markedly stronger mandate for the regulator, the National Insurance Commission ("NAICOM" or "the Commission"). Under the Act, NAICOM's authority is expressly broadened to cover licensing, capital adequacy, product approval, market conduct, dispute resolution and consumer protection, equipping it to act early and decisively rather than after problems have already crystallised.

Stronger Balance Sheets: Recapitalisation and Risk-based Supervision

The heart of the reform is money, specifically how much capital an insurer must hold before it is permitted to carry the public's risks. Under section 15 of the Act, the minimum capital a company must have and maintain is set as the higher of a fixed figure or the risk-based capital that NAICOM determines. This risk-based capital model requires insurers to maintain capital based on their risk profile.

For a non-life (general) insurer the figure is fifteen billion naira (N15,000,000,000.00); for a life insurer, ten billion naira (N10,000,000,000.00); and for a reinsurer, thirty-five billion naira (N35,000,000,000.00). The Act itself fixes these three thresholds; NAICOM has, through its recapitalisation circular, additionally set a twenty-five-billion-naira (N25,000,000,000.00) requirement for composite operators during the transition, a point operators should confirm directly with the Commission.

This approach reflects a deeper change in philosophy. Nigeria is moving away from a "one figure fits all" model towards what is known as risk-based capital. In determining the risk-based figure, the Act requires NAICOM to weigh insurance risk, market risk, credit risk and operational risk, applying capital charges to a company's assets and liabilities. In plain terms, an insurer that underwrites larger or more complex risks must set aside more capital to back them, and the Commission may direct any individual insurer to hold capital above the statutory minimum where its size, complexity or risk profile warrants it.

For existing operators, the practical consequence is pressing. Section 15 requires any insurer registered before the Act came into force to comply within twelve (12) months, and the Commission must cancel the registration of any insurer or reinsurer that fails to meet the requirement for its category. NAICOM commenced the recapitalisation exercise and has fixed 30 July 2026 as the deadline, maintaining publicly that this date is statutory rather than administrative, so that any extension would require a fresh amendment to the Act. Within thirty (30) days of the deadline, the Commission must publish the list of insurers that have complied.

In practice, recapitalisation is therefore not a mere balance-sheet exercise but a condition of staying in business. Boards should already be executing capital strategies — whether by raising fresh equity, issuing rights to existing shareholders, attracting new investors, or pursuing mergers and acquisitions. For the wider market, this cycle is likely to drive consolidation, producing fewer but financially sturdier companies better able to pay large claims and absorb economic shocks, and opening real opportunities for investors prepared to back stronger players.

Life vs. Non-Life Insurance: The Clearer Split Under NIIRA 2025

Section 3 of the Act reorganises how insurance business is classified. The old division between "life"and "general" insurance gives way to a cleaner distinction betweentwo main categories: life insurance and non-life insurance. Life business nowcomprises four classes — individual life, group life, annuity, and healthinsurance with annuity (a product providing a guaranteed stream of income,often in retirement) recognised as a distinct class. Non-life businesscomprises eight classes, among which oil and gas cover has been broadened andrenamed "energy (oil, gas and power) insurance." The Act alsopreserves a category of miscellaneous insurance, expressly includingfinancial-inclusion products, and allows NAICOM to publish further classes in theFederal Government Gazette.

The most consequential changehere, set out in section 6, is that NAICOM may license an insurer only within asingle category meaning a single company may no longer transact both life andnon-life business. Existing composite insurers, which currently do both, aregiven five (5) years from commencement to restructure, typically by separatingtheir operations into distinct licensed entities or by divesting one side ofthe business. The Act preserves limited flexibility: a life company may holdshares in a non-life company and vice versa, and NAICOM may grant a combinedlife and non-life licence to a reinsurer. Composite operators would be welladvised to begin planning this separation early, and to clarify with NAICOM howthe prohibition sits alongside the separate composite capital figure introducedfor the recapitalisation exercise.

Section 5 also tightens theposition of foreign insurers: an insurer incorporated abroad, or itssubsidiary, may not operate in Nigeria unless it maintains a physical presencein its home country of incorporation and licensing and is affiliated with a financialservices group subject to effective consolidated supervision. No Nigerianinsurer may continue a relationship with a foreign insurer that fails thesetests.

Higher Standards for Insurance Intermediaries and Agents

The Act tightens the rules for the intermediaries who stand between insurers and the public — agents, brokers, loss adjusters and actuaries. All insurance intermediaries must now meet enhanced professional standards. Under section 37, an insurance agent must be licensed and must hold a certificate of proficiency from the Chartered Insurance Institute of Nigeria (or, for a corporate agent, have a principal officer so qualified), or demonstrate at least ten (10) years' experience in an underwriting firm. The applicant must not have been convicted of an offence involving fraud or dishonesty, nor have a recent bankruptcy. An agent's licence is renewable after three (3) years. Under section 39, a broker must be properly incorporated under the Companies and Allied Matters Act, with a partner orchief executive who is professionally qualified, experienced, and a member ofboth the Institute and the recognised brokers' body; a broker's licence isrenewable every five (5) years. These standards are backed by substantialpenalties for operating without authority. Under section 10, transactinginsurance business without a licence exposes an individual to a fine oftwenty-five million naira (N25,000,000.00),imprisonment for up to two (2) years, or both; for a company, each responsibleprincipal officer faces a fine of fifty million naira (N50,000,000.00), up to two (2) years' imprisonment, or both. Anunlicensed agent is liable to a fine of up to five hundred thousand naira (N500,000.00) or six (6) months'imprisonment, and may be ordered to refund sums collected, while an insurerthat deals with an unlicensed agent faces a penalty of five times the premiuminvolved (section 37). An unlicensed broker faces a penalty of not less thanten million naira (N10,000,000.00) inthe case of a company assessed against each principal officer — or up to fivemillion naira (N5,000,000.00) or twelve(12) months' imprisonment in the case of an individual (section 39). Themessage to the market is unambiguous: only properly qualified and licensedpersons may sell or service insurance, and the cost of ignoring that rule isnow severe.

Policyholder Protection: Faster Claims Settlement and Safety Nets

Few grievances have done moredamage to public confidence in Nigerian insurance than the slow, grudgingpayment of legitimate claims. Section 210 confronts this directly. Where aclaim is made in writing, the insurer must, unless it denies liability, settleit within the timelines set in NAICOM's Service Charter and, for ordinaryadmitted claims, within sixty (60) days of notification. Where an insurerdeclines liability or finds the documentation incomplete, it must say so inwriting within sixty (60) days.

An insurer that breaches thesection is liable to a penalty of five hundred thousand naira (N500,000.00) and must pay the claimtogether with monthly compound interest at the prevailing bank rate, runningfrom the date it ought to have settled. If a claim remains unpaid, the insuredmay ask the Commission to pay it out of the insurer's statutory deposit. And inevery case of compulsory insurance, an insurer may be ordered by a court or theAct's dispute-resolution panel to compensate the insured or a third party forlosses caused by unreasonable delay. In short, the Act turns delay into adirect financial cost a powerful incentive to treat prompt, fair settlement asa core obligation rather than an optional courtesy. Insurers should review andre-engineer their claims, governance and reserving processes now, becausepersistent delay will carry not only a monetary price but reputational andlicensing risk.

The Act also builds a genuinesafety net for consumers. Section 212 establishes the Insurance PolicyholdersProtection Fund, overseen by a dedicated committee, to compensate policyholderswhere an insurer becomes insolvent or otherwise cannot meet its obligations —so that an ordinary customer is not left empty-handed if the company behindtheir policy collapses. A related Fire Services Maintenance Fund is createdunder section 76, financed by a quarterly contribution of 0.25% of net premiumfrom insurers writing public-building cover. Alongside these, the Actstrengthens the duties of disclosure owed by insurers and brokers and providesa firmer basis on which policyholder disputes can be resolved. Taken together,these measures are designed to restore trust by giving the public credibleassurance that claims will be paid, promptly and in full.

Expanded Compulsory Insurance Requirements Under NIIRA 2025

One of the Act's most far-reaching effects reaches well beyond the insurance industry itself, because it expands the range of insurance that ordinary businesses and individuals are required by law to hold. NIIRA 2025 significantly expands the range of compulsory insurance requirements across multiple sectors. Under section 75, no one may construct a building of more than one floor without insuring against liability for injury or death caused to workers or members of the public during construction; the cover must be in place once the building plan is approved and before construction begins, and default carries a fine of five-million-naira (N5,000,000.00), up to twelve (12) months' imprisonment, or both. Under section 76, every public building, which includes tenement houses of more than one floor, hostels, and any premises the public may enter for education, medical care, recreation or business must be insured against collapse, fire, earthquake, storm, flood and similar hazards, covering the liability of owners and occupiers to users and third parties; an owner or occupier in breach faces a fine of at least one million naira (N1,000,000.00)or up to twelve (12) months' imprisonment, or both, and the Commission may have an uninsured building sealed.

Section 78 requires all petrol and gas refilling stations and installations, and the vehicles that transport fuel, to be insured against third-party loss from accidental fire or explosion, with the certificate displayed conspicuously or carried with the goods; default attracts a fine of at least one-million-naira (N1,000,000.00) or a minimum of two (2) years' imprisonment, or both. Section 80 requires every licensed healthcare provider to maintain professional indemnity cover and display its certificate. Section 82 makes insurance compulsory for goods imported into Nigeria, and the Act requires that such cover be placed with a locally licensed insurer. Lenders, under the relevant provisions of Part X, must require borrowers taking loans above ten million naira (N10,000,000.00) to obtain credit life insurance covering the outstanding balance should the borrower die or become permanently disabled, with the cost transparently disclosed and the lender named as beneficiary.

Existing compulsory covers are retained and reinforced. Section 68 requires every employer to maintain group life cover for each employee of at least three times the employee's annual total emolument. The Act also modernises motor insurance enforcement: a driver must produce a certificate of insurance, in printed or electronic form, on the demand of a law enforcement officer, and where unable to do so at the scene of an accident must report and produce it at the nearest police station within twenty-four (24) hours.

The practical lesson for businesses, property owners, developers, lenders, importers and professionals is to audit their arrangements against this expanded list without delay. Failing to hold a legally required cover now attracts direct statutory penalties and, just as importantly, leaves the business exposed to a catastrophic losswith no insurance behind it.

ECOWAS Integration and Corporate Governance Strengthening

Looking outward, section 103 formally integrates Nigeria into the ECOWAS Brown Card Scheme by establishing a National Bureau on the Scheme, which administers cross-border motor claims and ensures adherence to Economic Community of West African States (ECOWAS) procedures, so that Nigerian motor cover can extend protection to victims of accidents across West Africa. Closer to home, the Act sharpens the discipline of corporate governance and reporting within the industry. Under section 29, an insurer must submit audited accounts, revenue account and statement of investments to NAICOM by 30 June each year and may neither hold its annual general meeting nor distribute dividends until the Commission has approved them. Section 30 requires quarterly returns to be filed within ten days of eachquarter's end, and section 35 restricts the declaration of dividends until prescribed conditions are met. The Act replaces much of the old regime of fixed penaltieswith a more flexible, proportionate approach, allowing NAICOM to match the sanction to the seriousness and financial significance of a breach. The effectis a regime in which transparency and sound stewardship are not aspirations butenforceable obligations.

What This Means: A Guide for Different Stakeholders

The reforms touch different people in very different ways, and the most useful question to ask is a personal one: where do I sit in this picture, and what should I be doing now?

1. For Insurers and Reinsurers: Recapitalization Deadlines

The dominant concern here is the recapitalisation clock. The minimum capital under section 15 must be in place, and verified by NAICOM, by 30 July 2026, and an insurer that misses it faces cancellation of its registration. That timetable should already be driving decisions about raising equity, issuing rights, courting investors or pursuing a merger. If you are a composite operator, a second, longer clock is also running under section 6: the five (5) year window to separate your life and non-life businesses, a restructuring best begun early rather than near the deadline. Running in parallel, your claims, reserving andgovernance functions need to be capable of meeting the sixty-day settlement standard in section 210 and the continuous risk-based capital requirement,because falling short on either carries financial, reputational and licensing consequences.

2. For Insurance Brokers and Intermediaries: Licensing and Qualifications

If you are an insurance broker, agent or other intermediary, the immediate task is to confirm that you and your senior officers hold the qualifications and licences required under sections 37 and 39, and that nothing in your record disqualifies you. Operating without proper authorisation is no longer a technical lapse but an offence carrying heavy fines and, in some cases, imprisonment. Now is the time to check that your licensing is current and that renewals are diarised three (3) years for agents, five (5) years for brokers.

3. For Business Owners and Developers: Compulsory Insurance Audit

If you are a business owner, developer, property occupier, importer, lender or licensed professional, the expanded list of compulsory insurance is the part of the Act most likely to catch you. Constructing a multi-storey building, running premises the public can enter, operating a fuel station or fuel-transport business, importing goods, lending above ten million naira (N10,000,000.00), or practising in a licensed healthcare profession now each carry a specific legal obligation to insure under Part IX of the Act. The practical step is a simple audit: list what your business does, match it against the compulsory covers, and close any gaps promptly. The downside of inaction is twofold —direct statutory penalties, which for the most serious breaches run into millions of naira and carry the prospect of imprisonment for responsible officers, and the far larger risk of meeting a serious loss with no cover behind you.

4. For Policyholders: Enhanced Protection and Faster Claims

As an ordinary policyholder, the news is largely reassuring. Your insurer is now legally bound to settle valid claims within sixty (60) days or pay you interest for the delay, the company behind your policy must be better capitalised and more closely supervised, and if it should fail, the Policyholders Protection Fund under section 212 stands behind your legitimate claim. The reforms are, at their core, designed to make the policy in your hand worth more and the promise behind it more reliable.

5. For Investors: Consolidation and Capital Raising Opportunities

If you are an investor, the recapitalisation cycle is reshaping the market in real time. Consolidation, rights issues, private placements and acquisitions are creating openings to backbetter-capitalised, better-governed insurers but the same pressures mean weaker operators may exit or be absorbed, so the timing and quality of any investment merit close attention.

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It is also worth bearing in mind that NIIRA is a new and detailed statute, and a number of its finer points, including the precise contents of the minimum capital, qualifying assets, verification process and various procedural matters will be settled only as NAICOM issues implementing regulations, guidelines and circulars. One matter in particular bears watching: the relationship between the Act's prohibition on composite insurers in section 6 and the separate composite capital figure introduced through NAICOM's recapitalisation circular. None of this diminishes the reforms but it does mean that anyone making significant decisions in reliance on the Act should confirm the current position against the latest regulatory guidance before acting.

Conclusion: NIIRA as a Watershed Moment for Nigerian Insurance

The Nigerian Insurance Industry Reform Act 2025 is, in every sense, a watershed. By consolidating decades of fragmented law into a single modern statute, raising the financial bar for operators, tying claims settlement to firm deadlines, widening the protections available to policyholders, and bringing more of the public within the reach of compulsory cover, the Act lays the foundation for a stronger, more trustworthy and more competitive insurance sector.

The benefits, a more resilientindustry, fairer treatment for consumers, and greater confidence in the valueof an insurance policy will only be fully realised if operators and theregulator meet the demands of the new regime in practice. For insurers,intermediaries, businesses and ordinary policyholders alike, the period aheadis one in which understanding these reforms, and acting on them in good time,will make all the difference.

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Frequently Asked Questions About NIIRA 2025

Q1: What is NIIRA 2025 and why is it significant?

NIIRA (Nigerian Insurance Industry Reform Act 2025) is the most significant overhaul of Nigeria's insurance laws in over 20 years. It consolidates five previously separate statutes into one modern framework, strengthens the regulator (NAICOM), requires higher capital levels, and provides stronger protections for policyholders. It came into force on 6 August 2025.

Q2: What are the new minimum capital requirements under NIIRA?

Under Section 15 of NIIRA: Non-life (general) insurers must maintain ₦15 billion; Life insurers must maintain ₦10 billion; Reinsurers must maintain ₦35 billion. Additionally, NAICOM has set ₦25 billion for composite operators during transition. These are the minimum fixed amounts, and insurers may be required to hold more based on risk-based capital calculations.

Q3: What is the recapitalization deadline and what happens if an insurer misses it?

The deadline is 30 July 2026. NAICOM must cancel the registration of any insurer or reinsurer that fails to meet the minimum capital requirement for its category by this date. Existing operators have twelve (12) months from when NIIRA came into force (until 6 August 2026) to comply, though NAICOM has set the external deadline as 30 July 2026.

Q4: What is the difference between life and non-life insurance under NIIRA?

Life insurance now comprises four classes: individual life, group life, annuity, and health insurance with annuity. Non-life (general) insurance comprises eight classes including liability, motor, marine, energy (oil, gas and power), and others. A key change is that NAICOM may license an insurer in only one category—meaning a single company can no longer transact both life and non-life business simultaneously (except reinsurers).

Q5: What must composite insurers (those doing both life and non-life business) do?

Composite insurers have five (5) years from commencement of NIIRA to restructure. They must either separate their operations into distinct licensed entities (one for life, one for non-life) or divest one side of the business entirely. This restructuring must be completed by 6 August 2030. A life company may hold shares in a non-life company and vice versa, but they cannot transact both types of business under the same licence.

Q6: What qualifications do insurance agents and brokers need under NIIRA?

Under Section 37, an insurance agent must be licensed and either hold a certificate of proficiency from the Chartered Insurance Institute of Nigeria or demonstrate at least 10 years' experience in an underwriting firm. Agent licences are renewable every 3 years. Under Section 39, brokers must be properly incorporated under CAMA 2020 with a qualified, experienced principal or chief executive, and broker licences are renewable every 5 years.

Q7: What are the penalties for operating as an unlicensed insurance agent or broker?

Under Section 37, an unlicensed agent faces a fine of up to ₦500,000 or six (6) months' imprisonment, and may be ordered to refund collected sums. An insurer dealing with an unlicensed agent faces a penalty of five times the premium involved. Under Section 39, an unlicensed broker (company) faces a fine of at least ₦10 million per principal officer, or individuals face up to ₦5 million or 12 months' imprisonment.

Q8: How long does an insurer have to settle a claim under NIIRA?

Under Section 210, an insurer must settle an admitted claim within sixty (60) days of notification (unless a longer timeline is specified in NAICOM's Service Charter). If the insurer denies liability or finds documentation incomplete, it must notify the insured in writing within sixty (60) days. Failure to meet this deadline results in a penalty of ₦500,000 plus payment of the claim with monthly compound interest at the prevailing bank rate.

Q9: What is the Policyholders Protection Fund and who does it protect?

Established under Section 212 of NIIRA, the Insurance Policyholders Protection Fund is a safety net that compensates policyholders if an insurer becomes insolvent or cannot meet its obligations. This ensures that ordinary customers are protected even if the insurance company behind their policy fails. The Fund is overseen by a dedicated committee.

Q10: Which businesses now must have compulsory insurance under NIIRA?

Compulsory insurance now applies to: (1) Construction of buildings over one floor (Section 75); (2) Public buildings and tenement houses over one floor (Section 76); (3) Petrol and gas stations and fuel-transport vehicles (Section 78); (4) Licensed healthcare providers (Section 80); (5) Imported goods (Section 82); (6) Employers (group life for employees - Section 68); (7) Lenders requiring borrowers with loans over ₦10 million to obtain credit life insurance; (8) Motor vehicle owners and drivers (existing requirement, now modernized).

Q11: What are the penalties for not maintaining compulsory insurance?

Penalties vary by type of compulsory insurance. Construction insurance non-compliance carries ₦5 million fine or up to 12 months' imprisonment. Public building insurance non-compliance carries at least ₦1 million fine or 12 months' imprisonment. Energy sector (fuel stations) non-compliance carries at least ₦1 million fine or minimum 2 years' imprisonment. In serious cases, NAICOM may seal uninsured premises.

Q12: How does NIIRA affect foreign insurers operating in Nigeria?

Under Section 5, a foreign insurer incorporated abroad may not operate in Nigeria unless it maintains a physical presence in its home country of incorporation and is affiliated with a financial services group subject to effective consolidated supervision. No Nigerian insurer may continue a relationship with a foreign insurer that fails these tests.

Q13: What is risk-based capital under NIIRA?

Risk-based capital is a model where the minimum capital an insurer must hold is determined not only by a fixed statutory amount but also by the risks it actually underwriters. NAICOM calculates capital charges based on an insurer's insurance risk, market risk, credit risk, and operational risk. Companies with larger or more complex risk profiles must set aside more capital. NAICOM may direct any individual insurer to hold capital above the statutory minimum if warranted.

Q14: What is the ECOWAS Brown Card Scheme under NIIRA?

Under Section 103, NIIRA formally integrates Nigeria into the ECOWAS Brown Card Scheme by establishing a National Bureau to administer cross-border motor insurance claims. This allows Nigerian motor insurance cover to extend protection to victims of accidents across West African countries (ECOWAS member states) and ensures adherence to Economic Community of West African States procedures.

Q15: When do I need to audit my business against the new compulsory insurance requirements?

The recommendation is to audit immediately upon learning that a new compulsory insurance requirement applies to your business type. The sooner you identify gaps and close them, the better. This protects you from statutory penalties (which can reach millions of naira and include imprisonment for responsible officers) and, more importantly, protects your business from catastrophic losses that would otherwise have no insurance coverage.