Credit rating agency DataPro Nigeria has said the recently signed Nigerian Insurance Industry Reform Act (NIIRA) 2025 will reshape how insurance firms are assessed, placing stronger emphasis on capital quality, business resilience, and regulatory compliance.
The firm made this known in its September edition of the Rating Brief, released on Monday.
President Bola Tinubu signed the NIIRA 2025 into law in August, ushering in sweeping reforms for the insurance sector. The Act raises minimum capital requirements, mandates compulsory insurance in critical areas, enforces stricter claims settlement timelines, introduces digital integration for wider market access, and expands regional participation through platforms like the ECOWAS Brown Card Scheme.
According to DataPro, the law consolidates outdated regulations and introduces a Risk-Based Capital framework that will directly influence credit ratings. “An insurer’s strength is closely linked to the economic and regulatory context in which it operates,” the firm noted. “The NIIRA 2025 has significantly changed this context… Companies will be assessed on their ability to adjust to these new standards while also navigating macroeconomic and competitive pressures.”
Business Models Under Scrutiny
DataPro said insurers will now be judged on the depth and sustainability of their business models. Key factors include:
- Market share and branding: Larger firms may benefit from economies of scale, but smaller players can compete through niche focus or customer loyalty.
- Diversification: A spread across products, geographies, and clients reduces concentration risk.
- Revenue stability: Recurring premiums and renewals are more reliable than one-off income streams.
With compulsory insurance expanding to cover group life assurance, public buildings, and government assets, DataPro said firms with strong distribution networks and compliance capacity will be better placed for revenue growth.
Capital Adequacy and Profitability
The rating agency stressed that beyond size, the quality and flexibility of capital will be decisive in determining ratings. Well-capitalised firms are more resilient, it said, while weaker players may need to consider mergers or acquisitions to meet the 12-month compliance deadline.
Profitability will also weigh heavily. “Sustainable earnings come from diversified products, disciplined underwriting, and efficient claims management,” DataPro noted, adding that the Act’s emphasis on prompt claims settlement will force companies to tighten underwriting practices and customer service.
Stronger Oversight, Higher Standards
NIIRA 2025 also gives the National Insurance Commission (NAICOM) expanded supervisory powers. DataPro said this means regulatory compliance will become a central measure of credibility. “Insurers that demonstrate transparency, timely reporting, and adherence to new rules will be better placed to achieve stronger ratings and market credibility,” it stated.
The agency concluded that companies combining strong capitalisation, sound governance, prudent risk management, and operational resilience will stand out in the reformed industry.
“As the sector embraces digitisation and insurtech, companies must balance the efficiency gains with risks of cyber threats or system failures,” it warned.
