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Introduction On 29 July 2025, President Bola Ahmed Tinubu signed into law the Nigeria Insurance Industry Reform Act 2025 ('NIIRA' or 'New Act'), a legislation aimed at transforming the Nigerian insurance sector. The New Act repealed the Insurance Act, Cap. 117, Laws of the Federation of Nigeria, 2004 ('Old Act') and other obsolete insurance legislations to provide a comprehensive and consolidated regulatory framework for insurance business in Nigeria.
The legislation aligns with the Federal Government's goal of fostering financial stability and economic development. We have highlighted notable provisions under the New Act.
Key Highlights of NIIRA
1.1. Licensing and Operations of Insurer
NIIRA expands the conditions for licensing as an insurer or reinsurer.1 Under the New Act, a person shall not be licensed as an insurer or reinsurer unless:
a. The company is incorporated under the Companies and Allied Matters Act 2020 (CAMA).
b. The company has and maintains the required minimum capital as prescribed by the National Insurance Commission ("NAICOM" or the "Commission").
c. The company has paid the statutory deposit with the Central Bank of Nigeria ("CBN") as may be prescribed by the Commission.
d. The company has met all other requirements, including the submission of a business plan that identifies the niche market of the company.
Insurers are licensed to operate two main categories of insurance business:2
a. Life Insurance business (there are four classes of Life Insurance business); and
b. Non-Life Insurance business (there are eight classes of Non-Life Insurance business.
Further, NIIRA created a miscellaneous insurance business classification, which includes financial inclusion insurance business. Life insurers may own or acquire shares in non-life insurers, and non-life insurers may own or acquire shares in life insurers.
Notably, the Commission may issue a combined or composite life and non-life license to a reinsurer. It is germane to note that under NIIRA, existing composite insurance companies must, within five years from the commencement of NIIRA, comply with the provisions of NIIRA on the categorisation of insurance businesses.
Under the NIIRA, an individual who engages in insurance business without being licensed commits an offence and is liable to a fine of N25 million or imprisonment for a term of 2 years or both, while for a company, a fine of N50 million per principal officer or imprisonment for a term of two years or both.3 These sanctions serve as deterrents for contravention of the law and safeguard the interests of the insured public.
1.2. Insurance Intermediaries
1.2.1. Insurance Agents
In addition to the requirement for a person to possess a certificate of proficiency issued by the Chartered Insurance Institute of Nigeria (the "Institute") under the Old Act, a person shall only transact business as an insurance agent upon fulfilment of the following conditions:
a. Where the applicant is a company, at least one of its principal officers must hold a certificate issued by the Institute.
b. The applicant must possess at least 10 years of experience in an underwriting firm.
c. The applicant must not have been convicted by a court or tribunal for an offence involving dishonesty or fraud
d. The applicant must not have been bankrupt for 5 years before the date of the application.4
The penalty for any person who transacts as an insurance agent without a licence has been increased from N100,000 under the Old Act to N500,000 under the NIIRA.5 1.2.2. Insurance Brokers By the provisions of NIIRA, a person is prohibited from transacting as an insurance broker without a license.6 The Commission may grant a licence where7 :
a. The applicant is a registered firm, partnership, or limited liability company under CAMA.
b. The chief executive officer or a partner is a qualified and experienced member of the Institute and the registered professional body of insurance brokers.
c. The chief executive officer or partner holds a valid membership clearance certificate from the professional body of registered insurance brokers.
Licensing
Furthermore, an insurance broker license shall be renewed every five (5) years, and insurance brokers are required to renew their licenses within six (6) months before expiry or such longer date as may be prescribed by NAICOM in the licence.
A person who acts as an insurance broker without a valid licence commits an offence. In the case of companies or firms, each principal officer is liable to a fine of at least ₦10 million, while individuals shall be liable to a fine not exceeding ₦5 million or imprisonment for a term not exceeding 12 months. The Commission may also impose further penalties based on the amount gained and can order the refund of any money collected to the rightful owners. Insurers that knowingly or recklessly transact with unlicensed brokers, or pay commission to brokers whose licences have expired and have not submitted application for renewal, shall be liable to a penalty of a sum equal to the commission due on the transaction. In addition, brokers are required to provide risk assessment information before placing business with underwriters. Where a broker knowingly or recklessly fails to do so, he loses the right to commission, and the transaction will be treated as a direct placement with the insurer.
1.2.3. Reinsurance Broker
A person is prohibited from transacting as a reinsurance broker without a licence. The Commission may grant a licence where:
a. The reinsurance broker has the required expertise to conduct reinsurance business.
b. At least one partner or director has a minimum of seven years' middle-management experience in a reinsurance broking firm or reinsurance unit of an insurance company; or, where the firm is an insurance broker combining reinsurance broking to its practice, at least three years' experience in a reinsurance broking firm or reinsurance department of an insurance company.
Any person who acts as a reinsurance broker without a valid licence commits an offence. In the case of companies or firms, each principal officer is liable to a fine not exceeding ₦1 million, while individuals are liable to a fine of at least ₦500,000 or imprisonment for a term not exceeding 12 months. In addition, the Commission may order that any money collected be refunded to the rightful owners. Reinsurance brokers are also required to renew their licenses within six (6) months of their expiry or such longer date as may be prescribed by NAICOM in the licence.
1.2.4. Loss Adjusters
A person is prohibited from transacting business as a loss adjuster in Nigeria without a licence. The Commission may grant a licence where:
a. The applicant has the prescribed qualifications.
b. The applicant is a partnership or a limited liability company registered under CAMA with the minimum fully paid-up share capital prescribed by the Commission.
c. The chief executive or executive director is a member of the Institute and a registered member of a recognised professional body of loss adjusters.
d. No partner or director of the applicant company is an employee or director of any insurance operator.
e. The applicant has met all other requirements as prescribed by the Commission.
A person who transacts business as a loss adjuster without a licence commits an offence and is liable on conviction to a penalty of at least ₦500,000 in the case of a company, firm, or other combination of persons, and at least ₦250,000 or imprisonment for a term not exceeding twelve months in the case of an individual. An insurer who knowingly or recklessly engages the services of an unlicensed loss adjuster also commits an offence.
1.3. Foreign Entities
NIIRA prohibits any foreign insurer, or its subsidiaries, from operating in Nigeria where the insurer does not have a physical presence in its country of incorporation and is not part of a financial services group subject to effective consolidated supervision. Nigerian insurers and their subsidiaries are also prohibited from establishing or maintaining any relationship with such insurers.8
1.4. Powers to Vary the Conditions of a Licence
Under the New Act, NAICOM has enhanced supervisory and regulatory powers to enforce compliance. Notably, the Commission can now vary any category or class of license granted to an insurance institution and can also take over or assume control of the insurance institution and carry out its business or appoint persons to do so on its behalf for such period as may be determined.9
1.5. Capital Recapitalisation
The New Act has made significant changes to the capital requirements for various categories of insurance operators in Nigeria. An insurance business in Nigeria must have and maintain the following minimum capital:
a. Non-life insurance business - the higher of ₦15,000,000,000 or risk-based capital determined by the Commission.
b. Life assurance business- the higher of ₦10,000,000,000 or risk-based capital determined by the Commission.
c. Reinsurance business- the higher of ₦35 billion, or risk-based capital determined by the Commission.
In addition to the above capital threshold, NIIRA mandates all insurers to always maintain a capital adequacy ratio of 100%.10 This guarantees that businesses are not only robustly capitalized on paper but also financially stable in their daily activities. These changes represent the first major revisions of capital requirements in nearly twenty years, aimed at strengthening the sector's resilience and reducing systemic risk.
Importantly, all registered insurers have 12 months from the commencement of the New Act to comply with the revised capital requirements.11 Also, individuals or companies intending to commence insurance business in Nigeria must now deposit the equivalent of the minimum capital requirement with the CBN.12 Existing companies are required to deposit 10% of the minimum share capital.13
1.6. Establishment of the Insurance Policyholders' Protection Fund
To safeguard policyholders in the event of the insolvency of an insurer or reinsurer, NIIRA establishes the Insurance Policyholders Protection Fund (the "Fund'). The Fund is financed by 0.25% of the gross premium income of every insurer or reinsurer and 0.25% of the balance in the Security and Insurance Development Fund as at 31 December of the preceding year after meeting all financial obligations for the Fund as prescribed by the Commission.
1.7. Mandatory Insurance Policies
NIIRA introduces new policies and strengthens the applicability and enforcement of the following compulsory insurance policies:
a. Group Life Assurance: Employers are required to maintain a Group Life Insurance Policy with a minimum cover of three times each employee's annual total emoluments. Under the Old Act, this obligation was not stipulated; it was instead introduced by the Pension Reform Act. NIIRA has now expressly incorporated the requirement under section 68(1), and employers are required to pay the premium no later than the commencement date of the cover.
b. Buildings Under Construction: Under NIIRA, the penalty for not obtaining insurance in respect to the construction of any building of more than one floor, has been increased from N250,000 or imprisonment for 3 years or both under the Old Act to N5,000,000 or imprisonment for a maximum of 12 months or both under the NIIRA.14
c. Public Buildings: The New Act retained the requirement for compulsory insurance of public buildings but increased the penalty for non-compliance from N100,000 under the Old Act to N1 million under the NIIRA.15 In the case of Onyeanusi v. Miscellaneous Offences Tribunal (2002) LPELR-2066 the Supreme Court defined the term "public building" as "any building, structure or edifice belonging to, occupied by or operated on behalf of the Government of the Federation or of a State or any department or statutory corporation thereof."
d. Government Assets and Employees: The New Act introduces the mandatory insurance of all assets and employees of the Federal Government and its agencies against hazards, significantly expanding the market size.16
e. Petroleum and Gas Stations: NIIRA has introduced the compulsory insurance of all petroleum and gas refilling stations and installations against third-party losses occasioned by accidental fire outbreak or explosion. Penalty for non-compliance is a fine of at least N1,000,0000 or a minimum term of two years imprisonment or both.17
f. Credit Life: The New Act obligates credit providers or lenders to mandate borrowers who take out loans exceeding N10,000,000 to obtain credit life insurance, covering the loan balance in the event the borrower dies or becomes permanently disabled.18
g. Container Insurance: NIIRA has introduced the compulsory insurance of containers used to deliver goods from the Nigerian Ports to any destination within Nigeria. The penalty for non-compliance is a fine of at least N1,000,000. 19
1.8. Digitalisation of the Insurance Market
Unlike the Old Act, NIIRA recognises carry-on web, internet, or electronic-based insurance business in Nigeria and provides that a person shall not engage in such business without obtaining a licence issued by the Commission.20 This development will pave the way for faster and more efficient licensing, product approval, claims processing, and regulatory filings.
1.9. Expanded Regional Coverage
In addition to the provision of the ECOWAS Brown Card Scheme under the Old Act, NIIRA establishes the National Bureau on the ECOWAS Brown Card Scheme. It provides for the composition of the bureau, tenure, and functions of the bureau. 21 This provision will aid collaboration across borders and wider coverage.
Conclusion
The implementation of the New Act is poised to usher in a transformative era for the Nigerian insurance sector. This legislation introduces clearly defined measures and rules that outline the operational framework for all categories of insurance businesses and prescribes stricter penalties for non-compliance. These measures are expected to enhance accountability, sustainability and transparency within the industry. With these enhanced regulatory measures, the likelihood of effective enforcement has significantly increased. This positive shift encourages both the NAICOM and insurance entities to prioritise adherence to the established legal frameworks. Overall, effective implementation and enforcement of the provisions under the New Act are expected to create an enabling environment for innovation, growth, financial inclusion and greater efficiency within the insurance industry.
Footnotes
1 Section 5 of the NIIRA
2 Sections 3 & 6 of the NIIRA3
3 Section 10(a) (b) of the NIIRA
4 Section 37(2) of the NIIRA
5 Section 37 (10) of the NIIRA
6 Section 39 (1) of the NIIRA
7 Section 39 (4) of the NIIRA
8 Section 5 (6) of the NIIRA
9 Section 9 (1)- (2) of the NIIRA
10 Section 24 of the NIIRA
11 Section 15(6) of the NIIRA
12 Section 16 (1) of the NIIRA
13 Section 16(3) of the NIIRA
14 Section 75 of the NIIRA
15 Section 76 of the NIIRA
16 Section 77 of the NIIRA
17 Section 78 of the NIIRA
18 Section 91(3) of the NIIRA
19 Section 203 of the NIIRA
20 Section 201 of the NIIRA
21 Section 103 of the NIIRA
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
