Shareholders have called on the federal government to grant temporary tax exemption to insurance companies to ease the financial burden of complying with the new Nigerian Insurance Industry Reform Act (NIIRA) 2025.
Speaking at a briefing in Lagos, the Chairman of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, emphasised the need for “financial breathing space” as insurers work to meet the stricter capital requirements set by the sweeping reform law recently signed by President Bola Tinubu. NIIRA 2025 raises the minimum capital base for life insurers to N10 billion, N15 billion for non-life companies, N25 billion for composite insurers, and N35 billion for reinsurers.
While Okezie acknowledged the importance of the reforms—which also mandate compulsory insurance enforcement, digital operations, stricter claims settlement timelines, and the establishment of a policyholder protection fund—he stressed that government backing through tax reliefs was critical for successful implementation.
“The NIIRA 2025 calls for recapitalisation, and to support these companies, the government should grant tax exemptions for a while. Once firms stabilise, tax payments can resume. Without this relief, the implementation will be challenging,” he said.
He also criticised the current fiscal policies for not adequately addressing the insurance sector’s specific challenges. He urged the government to increase patronage of local insurers, arguing that supporting indigenous companies would strengthen the domestic industry.
The insurance sector has faced previous recapitalisation efforts in 2005 and 2019, but delays, litigation, and resistance hindered progress. Stakeholders now hope that with adequate government support and transparent regulation, NIIRA 2025 can finally transform Nigeria’s undercapitalised insurance industry into a competitive sector that contributes significantly to the nation’s GDP.
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 online insurance transaction regulation.
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 when 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 the 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, Sonny Nwosu, founder of the Independent Shareholders Association of Nigeria, welcomed the reform but questioned its timeliness given Nigeria’s current economic strain.
“This reform is long overdue, but it comes when companies grapple 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 and adopt comprehensive insurance coverage 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.
