Follow Us on Google
By Henry Uche
There are mixed reactions surrounding the Nigerian Insurance Industry Reform Act (NIIRA) 2025, recently signed into law by President Bola Tinubu.
The new law, described in many quarters as a transformative framework, is designed to address longstanding challenges that have stifled growth, consumer trust and innovation in Nigeria’s insurance industry.
Yet, while many within the insurance ecosystem celebrate the moment as the dawn of a new era, a significant portion of Nigerians remain unconvinced, their skepticism rooted in decades of unmet promises and poor experiences with insurance providers.
Insurance industry’s battle for trust, relevance
The Nigerian insurance sector has often been described as the “weeping child” of the financial industry, a segment full of potential yet hindered by a lack of trust, poor reputation, and low penetration. Despite the vital role insurance plays globally in managing risk and stabilising economies, Nigeria’s insurance market remains underdeveloped, with penetration rates estimated at less than 1% of GDP, far below global averages.
Multiple factors contribute to this scenario. Consumers often perceive insurance products as complicated and unreliable, with complaints centered on delayed or denied claims, opaque policies, and limited awareness. This has bred mistrust, leaving many Nigerians reluctant to engage with insurance companies.
“The insurance sector in Nigeria has faced an uphill battle,” notes a financial analyst. “Consumer confidence is fragile. The industry has long suffered from reputational damage, and any attempt to grow the market must prioritise restoring trust”, an expert said.
Against this backdrop, NIIRA 2025 is positioned as a comprehensive overhaul of Nigeria’s insurance regulatory environment. The law consolidates previous legislation, including the Insurance Act of 2003, into a single, modern framework that promises to strengthen regulation, protect consumers, and promote innovation.
Bayo Onanuga, Special Adviser to President Tinubu on Information and Strategy, described the Act as “a pivotal step to strengthening Nigeria’s financial sector and advancing the President’s ambition of making Nigeria a $1 trillion economy by 2030.”
Some of the key provisions of the Act include: Stricter capital requirements where insurers must maintain higher capital reserves to ensure financial stability and reduce insolvency risks.
Another is mandatory insurance policies which ensures certain insurance products become compulsory, broadening the safety net for Nigerians and encouraging wider coverage.
An aspect is digitisation and technological adoption which emphasises digital platforms to improve accessibility and streamline policy administration.
The document has zero tolerance for delayed claims payments and this entails strengthening consumer protection by holding insurers accountable to timely settlements.
The Act has an aspect speaking to the establishment of policyholder protection funds by providing a safety mechanism to ensure claims are paid even if insurers face financial difficulties.
Also, there is the area of aligning with regional and continental frameworks by integrating with the ECOWAS Brown Card system and African Continental Free Trade Area (AfCFTA) protocols to facilitate cross-border insurance services.
These changes aim to transform Nigeria into an insurance hub for Africa, enhancing the sector’s contribution to the economy while building resilience and public confidence.
NAICOM’s endorsement
The National Insurance Commission (NAICOM), Nigeria’s chief insurance regulator, swiftly embraced NIIRA 2025, calling it a “game-changer” for the sector.
In an official statement, NAICOM described the law as a landmark update that will “unlock the potential of the insurance sector, enabling it to contribute more meaningfully to Nigeria’s economic and development goals.”
“The Act marks a significant milestone in our efforts to reinvigorate the insurance industry, more than two decades after the Insurance Act 2003,” the Commission said. “It provides a modernized regulatory framework to improve penetration, protect consumers, attract investment, and foster innovation.”
Expanding regulatory powers for effective oversight
Speaking in a live broadcast interview, NAICOM’s Commissioner of Insurance and CEO, Mr. Ayo Omosehin, shed light on the expanded regulatory powers granted by NIIRA 2025.
He emphasised that these powers are designed not to intimidate operators but to ensure proper compliance and protect consumers. Omosehin said, “Policyholders are the highest beneficiaries of this new law.”
Highlighting one of the Act’s most innovative provisions, he said: “NIIRA 2025 introduces the Policyholders Protection Fund. This is designed to provide comfort and confidence to policyholders if an insurer becomes insolvent. It’s a win-win for all stakeholders.”
He also noted that the Act’s digitisation measures are targeted at making insurance products more accessible to Nigeria’s younger population, who demand convenience and ease of use.
“This legislation is an answer to Nigerians’ prayers. It aligns with the ECOWAS Protocol on the Brown Card, enabling Nigerians with compulsory third-party insurance to travel seamlessly across West Africa without additional requirements. It also aligns with the African Continental Free Trade Area, facilitating regional trade and economic integration,” Omosehin said.
Implementation
Despite the law’s promise, Omosehin stressed that “the taste of the pudding is in the eating.”
Other News
The true measure of NIIRA 2025’s success will lie in how well its provisions are implemented on the ground. NAICOM is preparing to issue detailed regulations that will specify timelines for claims payments and other critical operational matters to ensure accountability.
“The real test is implementation. We must roll up our sleeves to ensure the law delivers benefits to the economy and to Nigerians. My role is to provide an enabling environment for insurance businesses to thrive — and this law gives us that foundation,” he affirmed.
Securing industry support and collective commitment
The Nigerian Insurers Association (NIA), representing the country’s insurance underwriters, has also voiced strong support for the law.
NIA Chairman Kunle Ahmed said: “This legislation sets the stage for transformative progress across the insurance ecosystem and the broader financial services sector. It strengthens regulation, enhances market penetration, builds public trust, and modernizes operations.”
Ahmed underscored the Federal Government’s commitment to financial inclusion, emphasizing insurance’s key role in Nigeria’s economic architecture: “We pledge our full support to ensure sector-wide understanding and adoption of the Act. We will work with regulators to promote innovation and inclusion. This is a shared mission towards a resilient, customer-centric insurance sector contributing meaningfully to national development.”
Overcoming public skepticism barrier
Despite the widespread optimism among regulators and industry players, many Nigerians remain unconvinced that NIIRA 2025 will deliver meaningful change.
Dissatisfied insurance consumers and the general public harbor deep skepticism based on years of poor claims experiences and perceived lack of transparency.
One anonymous policyholder shared candidly:
“We are watching. Let’s see how it goes. Insurance still can’t compare to banks in terms of acceptance. Banks have their problems with fees, but insurance has a long way to go in redeeming its image. First impressions matter, and Nigerians need to see real change before trusting again.”
Expert perspectives
Social psychologists and industry analysts acknowledge the challenges but emphasize that rebuilding trust is possible with consistent effort.
“Nothing is impossible except death,” one expert said. “Even the most hardened skeptics can turn over a new leaf. To whom much is given, much will be required.”
This underscores the importance of transparency, consumer education, and diligent enforcement to shift public perception over time.
Regional and continental integration
NIIRA 2025’s alignment with the ECOWAS Brown Card system and AfCFTA protocols positions Nigeria as a leader in regional insurance integration.
For Nigerian motorists, the Brown Card scheme enables seamless travel across West Africa without extra insurance hassles, a boon for business and commerce.
At a continental level, harmonizing Nigeria’s laws with AfCFTA facilitates cross-border trade and investment, offering Nigerian insurers opportunities to expand their footprint and contribute to Africa’s economic unity.
High stakes
The stakes are high. NIIRA 2025 is not merely an insurance sector update, it represents a strategic economic lever.
Insurance is vital to managing risk, enabling businesses to grow with confidence, and attracting foreign investment. An effective insurance sector underpins a stable, diversified economy.
Failure to deliver on NIIRA’s promises could deepen public mistrust and hamper Nigeria’s broader economic aspirations.
Future
NIIRA 2025 shines a hopeful light on the future of Nigeria’s insurance industry. Its comprehensive provisions hold the potential to revolutionize regulation, enhance consumer protection, and drive innovation.
However, as Commissioner Omosehin cautioned, laws on paper must translate into action:
“The real challenge is effective implementation. The law provides the framework — the hard work is now on us to make it work for Nigerians.”
For millions of Nigerians who have long viewed insurance with suspicion, the proof will be in timely claims settlements, transparent dealings, and improved service.
If regulators, insurers, and government can unite to deliver on these promises, Nigeria’s insurance industry could finally emerge from the shadows and become a trusted pillar of the nation’s financial architecture.
According to stakeholders, a new dawn has come but the journey to a brighter insurance future has only just begun.
