Innovations In Nigeria's Insurance Landscape: Key Provisions Under The Nigerian Insurance Industry Reform Act, 2025

Introduction

President Bola Ahmed Tinubu has assented to the Nigerian Insurance Industry Reform Act, 2025 (NIIRA 2025), marking the most comprehensive overhaul of Nigeria's insurance regulatory framework in over two decades. The Act repeals and consolidates several laws including the Insurance Act, Cap. I17 LFN 2004, the Marine Insurance Act, the Motor Vehicles (Third Party) Insurance Act, the Nigeria Reinsurance Corporation Act, and the National Insurance Corporation of Nigeria Act.

The NIIRA 2025 introduces sweeping reforms across capitalization, governance, consumer protection, and regulatory accountability. Below are the key highlights.

1. Conditions for licensing

The Act provides in Part III that a person shall not commence or carry out insurance, reinsurance or related business in Nigeria unless licensed by the commission as an insurer or a reinsurer under the Act. It further provides that a person shall not be licensed as an insurer or a reinsurer except a limited liability company incorporated under the Companies and Allied Matters Act No. 3 of 2020 or established pursuant to any other law or enactment in Nigeria and the company has and maintains, while carrying on the business, the required minimum capital as may be prescribed by the Commission.¹

2. Minimum capital requirements.

The law, which recognize two classes of insurance in the country (life and non-life insurance), increase minimum capital requirement across the various classes of insurance. It provides that a person shall not carry on insurance business in Nigeria unless the insurer has and maintains, while carrying on that business, a minimum capital, in the case of non-life insurance business, the higher of N15bn or risk-based capital determined by the commission. For life assurance business, the higher of N10bn risk-based capital determined by the commission. For the reinsurance business, the bill provides for the minimum capital requirement in the higher of N35bn and risk-based capital determined by the commission.²

3. Minimum capital to be deposited with the Central Bank of Nigeria

The legislation provides that an insurer intending to commence insurance business in Nigeria after the commencement of the Act shall deposit the equivalent of 50 per cent of the minimum capital requirement referred to in section 15 of the bill with the Central Bank of Nigeria. Upon registration as an insurer, 80 per cent of the statutory deposit shall be returned with interest not later than 60 days after registration. In the case of existing companies, an equivalent of 10 per cent of the minimum capital stipulated shall be deposited with the Central Bank of Nigeria. Any statutory deposit made shall attract interest at the minimum lending rate by the Central Bank on every 1st of January of each year. However, the commission may approve the investment of the statutory deposit in treasury bills or other secured investment guaranteed by the Federal Government.³

4. Licensing of insurance agents and brokers

No person can transact business in Nigeria as an insurance agent unless he is licensed and such a person cannot be licensed as an insurance agent unless he possesses a minimum of certificate of proficiency issued by the Chartered Insurance Institute of Nigeria, in the case of a corporate entity, at least one of the principal officers possesses a certificate of proficiency issued by the Institute or he possesses experience/length of service of not less than 10 years in an underwriting firm. Likewise no person can transact business in Nigeria as an insurance broker unless he is licensed under the provisions of the law and a license issued shall be renewed every 6 (six) years or for such longer duration as the Commission may determine from time to time.

The Act also imposes a fine of N500, 000 on anybody acting as an insurance agent without being licensed or an imprisonment of six months, and a fine of N10 million and N5 million on companies and individual respectively acting as insurance brokers without being registered to do so.⁴

5. Cancellation of license

The law provides for the cancellation of an operating license, in situations where the commission is satisfied that a licensed insurer or reinsurer is not conducting insurance business in accordance with sound insurance principles; has failed to satisfy the capital or solvency requirement as prescribed by the Commission, has ceased to carry on the business of insurance and the primary purpose for which it was registered for at least one year in Nigeria, has a judgment debt in relation to a judgment obtained against it from a Court of competent jurisdiction in Nigeria which remains unsatisfied for 90 days and there is no appeal pending against the judgment or has not less than 5 complaints of failure to pay claims promptly made against it which the Commission has received and verified.⁵

6. Opening and closing of a branch

According to the law, no insurance company is allowed to open or close any branch office or representative office anywhere within or outside the country without prior approval of the commission, adding that any insurer intending to close any of its branches or subsidiaries shall give notice in writing to the commission of its intention at least six months before the date of intended closure.

The law also says that no insurer shall appoint or change its principal officers except with the prior written approval of the National Insurance Commission, adding that insurer is expected to notify the commission of any change due to death, dismissal, redundancy or resignation of any of its principal officers.

7. Insurance against third party risks

Using or permitting any other person to use a motor vehicle or be in effective control of such a vehicle unless there is in force in relation to the use of that motor vehicle by such person or such other person as the case may be, a policy of insurance in respect of third party risks is prohibited. A person who contravenes the provision of the law is liable on conviction to a fine of not less than ₦250,000.00 or imprisonment to a maximum term of 12 months or to both term of imprisonment and fine.⁶

8. Road accident victims' compensation fund

There is established a Fund to be known as the Road Safety and Accident Victims Compensation Fund into which shall be paid 1 per cent of the net premium received by every insurer in respect of insurance of motor vehicles.⁷

9. Insurance of public buildings.

The law provides for compulsory insurance of every public building against the hazards of collapse, fire, earthquake, storm, flood and such other hazards as the Commission may determine from time to time. The insurance policy to be provided for shall cover the legal liabilities of the owner and occupier of premises for loss or damage to property or bodily injury or death suffered by any user of the premises and third parties.

Where an owner or occupier of premises contravenes this provision, he commits an offence and is liable on conviction to a fine of not less than ₦1,000,000.00 or imprisonment for a term not exceeding 12 months or to both fine and imprisonment.⁸

10. Motor Vehicle Insurance

The Act makes significant reforms to motor insurance. A driver must now produce a certificate of insurance in print or electronic form when required by law enforcement officers.⁹A driver unable to produce the certificate at the scene of an accident must produce it at a police station within 24 hours.¹⁰ Failure to comply attracts fines, e.g., not exceeding ₦25,000 for some contraventions.

The Act also integrates the ECOWAS Brown Card Bureau framework, meaning all motor insurance policies issued in Nigeria automatically carry Brown Card protection for cross-border cover.¹¹

Conclusion

The Act is expected to regulate the Insurance industry and protect the interest of policy holders, prospective policy holders and other stakeholders under insurance policies in a way that are consistent with the continued development of a viable competitive and innovative insurance industry. In addition, this Act is expected to position Nigeria's insurance sector for global competitiveness and contribute to the nation's goal of becoming a $1 trillion economy by 2030. For insurers, brokers, investors, and policyholders, the NIIRA 2025 ushers in a new era of transparency, solvency, and consumer trust in Nigeria's insurance industry.

Footnotes

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