The Federal Government has been urged to grant temporary tax reliefs to insurance companies to facilitate the smooth implementation of the Nigerian Insurance Industry Reform Act (NIIRA) 2025, a sweeping law aimed at overhauling the sector.

The call was made by the Progressive Shareholders Association of Nigeria (PSAN) through its Chairman, Boniface Okezie, during a briefing in Lagos. According to Okezie, insurers need “financial breathing space” to meet the stringent capital requirement introduced under the new law.

NIIRA 2025, signed by President Bola Tinubu recently, raised the minimum capital base for operators to N10 billion for life insurers, N15 billion for non-life companies, N25 billion for composite firms and N35 billion for reinsurers.

The Act also mandates compulsory insurance enforcement, digital operations, stricter claims settlement timelines, a policyholder protection fund and regulation of online insurance transactions.

While acknowledging the necessity of the reforms, Okezie stressed that the government’s backing would be crucial for their successful implementation.

“The NIIRA 2025 entails recapitalisation. The government needs to support these companies by granting them tax exemptions for a while. Once they stabilise, they can resume tax payments. Without this, implementation will be difficult,” he said.

He criticised Nigeria’s regime for failing to account for sector-specific challenges, urging policymakers to align fiscal policies with the insurance industry’s growth agenda. Okezie also appealed to the government to increase patronage of local insurers, rather than awarding contracts to foreign firms, arguing that such a move would strengthen domestic capacity.

“This is the time the government must sit up and make the sector contribute meaningfully to GDP. We cannot continue with one per cent penetration, which is abysmal. Looking at the banking sector, insurance should be elevated to the same level of competitiveness,” he added.

“This is the time government must sit up and make the sector contribute meaningfully to GDP. We cannot continue with one per cent penetration, which is abysmal. Insurance should be elevated to the same level of competitiveness,” he added.

Echoing Okezie’s concerns, Founder of the Independent Shareholders Association of Nigeria, Sonny Nwosu, welcomed the reform but questioned its timeliness given Nigeria’s current economic strain.

“This reform is long overdue, but it comes at a time when companies are grappling with inflation, high interest rates, and weak consumer spending. Tax reliefs are necessary if insurers are to focus on recapitalisation. Without that support, some firms may not survive,” Nwosu warned.

He urged the National Insurance Commission (NAICOM) to demonstrate leadership and integrity in enforcing the act, stressing that corruption and tax supervision could derail its objectives.

“The regulator must show seriousness by eliminating corruption and ensuring transparent enforcement. Otherwise, the goals of NIIRA 2025 will remain on paper,” he said.

Nwosu also called on the government to lead by example by adopting comprehensive insurance cover instead of limiting itself to third-party policies.

This is not Nigeria’s first attempt at recapitalising the insurance industry. Previous efforts in 2005 and 2019 were marred by delays, litigation and stiff resistance from operators, leaving the sector undercapitalised compared to peers in South Africa, Kenya and Morocco.