Lagos-based law firm, Tope Adebayo LP, has commended the signing into law of the Nigerian Insurance Industry Reform Act, 2025 (NIIRA 2025) by President Bola Tinubu, describing the enactment as a defining moment for the insurance and one that ushers the sector into a new phase of regulatory maturity.

In a policy brief titled Nigerian Insurance Industry Reform Act, 2025 (NIIRA 2025), Adebayo noted that with the signing into law, the legislation effectively repealed the 2003 Insurance Act and introduced a modern, risk-sensitive framework towards strengthening financial resilience, improving market conduct and enhancing policyholder protection.

“At its core, NIIRA 2025 reflects a deliberate shift toward global best practice. One of its most consequential provisions is the introduction of a strict licensing and specialisation regime.

“Insurers are now required to operate exclusively as either life or non-life companies, ending the era of composite insurance within a defined transition period. This aligns Nigeria with international standards, improves supervisory clarity, and allows for more focused risk underwriting,” the firm said.

Equally significant is the transition to a risk-based capital (RBC) framework. Under the previous regime, capital requirements were relatively modest and static. The new law raises minimum capital thresholds substantially, N10 billion for life insurers, N15 billion for non-life insurers and N35 billion for reinsurers, while empowering the National Insurance Commission (NAICOM) to calibrate capital requirements based on each firm’s risk profile.

He said the reform is expected to trigger consolidation, recapitalisation and stronger balance sheets across the industry.

With the compliance deadline approaching, insurers will need to proactively evaluate recapitalisation options, including mergers and acquisitions, rights issues, private placements and fresh capital injections, while securing the necessary approvals from shareholders and regulators ahead of the July 30 deadline.

“The Act also closes longstanding regulatory gaps, particularly around foreign participation. By restricting market access to foreign insurers without a verifiable home presence or regulatory oversight, NIIRA 2025 ensures that Nigerian risks are primarily underwritten within the domestic system. This strengthens local capacity, enhances regulatory visibility, and supports the growth of indigenous insurers,” the policy brief said.