Tinubu Shakes Up Nigeria’s Insurance Sector with Game-Changing Reform Bill

President Bola Ahmed Tinubu has officially signed the Nigerian Insurance Industry Reform Act, 2025 into law, ushering in a sweeping overhaul of the country’s insurance and reinsurance sectors.

The announcement was made in a statement issued on Tuesday by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, who described the new law as a significant step toward strengthening financial stability, promoting economic development, and enhancing investor confidence.

The legislation, which was passed by the Senate in December 2024 and later approved by the House of Representatives in March 2025, introduces robust regulatory measures to ensure the sustainability and competitiveness of insurance operations in Nigeria.

Among its major reforms is the substantial increase in minimum capital requirements across insurance categories. Non-life insurers are now expected to meet a capital threshold of ₦25 billion or a risk-based capital (RBC) as determined by the National Insurance Commission (NAICOM), up from the previous ₦10 billion. Life insurance firms will require ₦15 billion, up from ₦8 billion, while reinsurance companies must meet a new benchmark of ₦45 billion, compared to the previous ₦20 billion, or comply with RBC standards as prescribed by the regulator.

The RBC model compels insurers to align their capital base with the level of risk exposure in areas such as underwriting, investments, operations, and market conditions.

Beyond capital adjustments, the new law mandates compulsory insurance policies to enhance consumer protection, enforces faster claims settlement, encourages digitisation to expand accessibility, and establishes policyholder protection funds to cover insolvency-related liabilities. It also supports greater regional integration through frameworks like the ECOWAS Brown Card System.

Describing the reform as transformational, Onanuga noted that the Nigerian Insurance Industry Reform Act, 2025 positions the sector for global relevance and competitiveness, aligning with the federal government’s ambition of building a $1 trillion economy. He emphasised that the Act reflects the administration’s resolve to promote transparency, innovation, and resilience within the financial ecosystem.

The legislation, sponsored by Senator Tokunbo Abiru, Chairman of the Senate Committee on Banking, Insurance, and Other Financial Institutions, repeals several outdated laws including the Insurance Act of 2004, the Marine Insurance Act, and the National Insurance Corporation Act, among others. It now provides a unified legal and regulatory framework for all insurance-related activities within Nigeria.