Introduction
On Tuesday, August 5, 2025, the Nigerian President, Bola Ahmed Tinubu signed into regulation the Nigerian Insurance coverage Business Reform Act (NIIRA or the “Act”) 2025. The Act represents a major milestone within the growth of a sturdy regulatory framework designed to help the aim of rising the Nigerian economic system to the tune of 1 trillion US {dollars} by 2030. The Nigerian Insurance coverage sector faces a historic transition because the Act replaces previous laws and unifies disparate insurance coverage legal guidelines right into a single, modern framework.
This text highlights key provisions of the Act corresponding to scope and license categorization, capital necessities, shopper safety and regional coverage integration by means of the introduction of the ECOWAS Brown Card Scheme.
A. Scope & License Categorization
The Act is relevant to all insurance coverage companies and insurers in Nigeria besides:
i. an affiliation of individuals with no share shaped for the aim of aiding its members or their dependents;
ii. a company or unincorporated physique whose enterprise is established outdoors Nigeria and engaged solely in re-insurance transactions with insurers licensed below the Act;
iii. deposit insurance coverage carried out by the Nigerian Deposit Insurance coverage Company below the Nigerian Deposit Insurance coverage Company Act.
Moreover, the Act broadly supplies for 2 (2) license classes – life insurance coverage and non-life insurance coverage. Whereas the life insurance coverage license class is split into 4 (4) lessons that are: particular person life assurance, group life assurance, annuity and medical insurance companies’, the non-life insurance coverage license embrace: hearth insurance coverage, basic accident insurance coverage, motorcar insurance coverage, marine and aviation insurance coverage, power (oil, gasoline and energy) insurance coverage, engineering insurance coverage, bonds credit score assure and suretyship insurance coverage and agricultural insurance coverage apart from these coated by the
Nigerian Agricultural Insurance coverage Company Act.
However the above, the Act authorizes the Nationwide Insurance coverage Fee (the “Fee”) to publish extra insurance coverage lessons within the Federal Authorities Gazette.
B. Capital Necessities
To enhance operators’ monetary stability, the Act stipulates the minimal share capital requirement for insurers licensed below the Act. This new share capital requirement is the primary recapitalization in over 20 years within the insurance coverage trade.
The minimal capital necessities are listed under:
i. Non-Life Insurance coverage Enterprise: The larger of fifteen billion naira (N15,000,000,000) or the risk-based capital decided by the Fee.
ii. Life Insurance coverage Enterprise: The upper of ten billion naira (N10,000,000,000) or the risk-based capital decided by the Fee.
iii. Reinsurance Enterprise: The upper of thirty-five billion naira (N35,000,000,000) or the risk-based capital decided by the Fee.
Additionally, the Act requires all insurers registered earlier than the graduation of the Act to adjust to the minimal share capital necessities inside 12 months of the graduation of the Act. Moreover, the Act empowers the Fee to require an insurer to extend its capital past the minimal capital requirement the place the Fee considers acceptable having regard to the character, dimension and complexity of the insurance coverage enterprise of the insurer.
C. Regulatory Filings
The Act requires each insurer not later than June 30 of every yr, to submit in writing to the Fee its duly audited monetary statements, income account and assertion of investments earlier than presentation at its annual basic assembly. Following the approval of the Fee; the insurer should publish its basic annual assertion of monetary place, assertion of revenue or loss and different complete revenue in not less than two broadly circulated newspapers in Nigeria. The Act additionally requires all insurers to submit quarterly returns within the kind prescribed to the Fee not later than 10 days after the final day of every quarter or such different interval because the Fee might specify.
D. Client Safety Mechanisms
Part 212 of the Act introduces the Insurance coverage Policyholders’ Safety Fund (the “Fund”) to provide policyholders monetary safety within the occasion that an insurer goes bankrupt or is unable to meet its tasks.
The Fund shall comprise of:
i. 0.25% of the gross premium of revenue of each insurer and reinsurer; and
ii. 0.25% of the stability standing within the Safety and Insurance coverage Improvement Fund as of December 31 of the previous yr.
The aim of the Fund is to safeguard customers, protect stability within the insurance coverage sector, and enhance public belief by guaranteeing that reliable claims are paid within the occasion of an insurer’s default. Different funds within the Act embrace Fireplace Companies Upkeep Fund and Street Accidents Victims Compensation Fund.
E. ECOWAS Brown Card Scheme
To make sure Nigeria’s seamless integration into the Financial Neighborhood of West African States Brown Card Scheme (the “Scheme”), the Act creates the Nationwide Bureau on the ECOWAS Brown Card Scheme (the “Bureau”). The Scheme is a motor insurance coverage scheme that gives immediate and honest compensation to victims of motor accidents attributable to visiting motorists. In keeping with targets of the Scheme, the Bureau is chargeable for sustaining claims for cross-border auto accidents in West Africa, guaranteeing adherence to ECOWAS procedures and implementing the Scheme.
F. Faster Declare Evaluation and Disbursement
The Act goals to enhance the responsiveness of insurers in claims disbursement by setting out strict deadlines to make sure that coverage holders promptly obtain monetary reduction, which is usually important in emergencies corresponding to accidents or property losses. In additional particular phrases, Part 210 of the Act requires all insurers to settle all claims in writing by the insured or entitled events inside the timelines specified within the Fee’s Service Constitution, not later than 60 days of notification. The failure by any insurer to adjust to these necessities will appeal to a penalty along with compound curiosity on the declare quantity.
G. The Insurtech Tips and the Act.
In a earlier article on the Tips for Insurtech Operations in Nigeria , the regulatory framework governing insurtech operations in Nigeria was highlighted. Whereas the Tips set out the minimal necessities for insurtechs’, the Act expands their regulatory compliance obligations. Subsequently, each laws function the regulatory framework for Insurtech’s in Nigeria.
H. Sanctions
The place an individual transacts insurance coverage enterprise with out holding a legitimate license, the Act prescribes a penalty of twenty-five million Naira (N25,000,000), two years imprisonment or each for people. Whereas within the case of firms, corporations or such different mixture of individuals, every principal officer of the corporate, agency or such different mixture of individuals accountable shall be sanctioned to pay a tremendous of fifty million Naira (N50,000,000), two years imprisonment or each.
Conclusion
With the enactment of the Nigerian Insurance coverage Business Reform Act 2025, the Nigerian insurance coverage trade is about to expertise an enormous transformation. The Act supplies the much-needed regulatory readability by establishing complete shopper safety procedures, exact declare processing timelines, and stricter regulatory requirements. Nonetheless, the onus of compliance and enforcement of the Act rests with insurers and the
Fee
Their skill to implement compliance, embrace innovation, and ship on the overarching targets of the Act will finally decide whether or not the Act achieves its aim of constructing a stronger, extra inclusive, and reliable insurance coverage sector in Nigeria.
Seun Timi-Koleolu is a Founding Companion at Pavestones, a full-service regulation observe located in Lagos Nigeria
