Nigeria’s insurance and reinsurance companies have been given 12 months to comply with new, significantly higher capital requirements under the recently enacted Nigerian Insurance Industry Reform Act (NIIRA) 2025.
The Act, described as one of the most sweeping reforms in the sector in decades, repeals outdated provisions, introduces a risk-based capital framework, and is expected to play a central role in the Federal Government’s drive to expand the economy to $1 trillion.
According to Section 15(6) of Part IV of the law, all insurers registered before NIIRA’s commencement must meet the new thresholds within one year or risk losing their licences. The National Insurance Commission (NAICOM) is mandated to publish a list of compliant firms within 30 days after the deadline.
The Act makes it unlawful for any company to conduct insurance business in Nigeria without maintaining either the prescribed minimum capital or a higher risk-based capital as determined by NAICOM. The new thresholds are as follows:
- Non-life insurance: N15 billion or a risk-based capital requirement, whichever is higher.
- Life assurance: N10 billion or a risk-based capital requirement, whichever is higher.
- Reinsurance: N35 billion or a risk-based capital requirement, whichever is higher.
The risk-based model requires NAICOM to assess firms’ exposure to insurance, market, credit, and operational risks, applying capital charges to account for possible asset deterioration or liability uncertainties caused by adverse events.
For new companies, capital may be provided in the form of government bonds, treasury bills, or cash equivalents. For existing firms, capital will be assessed as admissible assets exceeding liabilities, excluding own shares, approved subordinated debt, and other specified instruments.
Section 15(7) authorises NAICOM to revoke the registration of any insurer or reinsurer that fails to comply within the one-year grace period. Furthermore, Section 15(8) gives the Commission discretion to raise capital requirements beyond the stated thresholds, depending on the size, complexity, and risk profile of individual firms.
