by NIyi JACOBS
Nigeria’s sweeping insurance industry reform has set off a wave of optimism among investors, after the Federal Government raised minimum capital requirements for insurers by 400% and gave companies just one year to comply.
The directive, announced by the National Insurance Commission (NAICOM) under the new Insurance Industry Reform Act signed by President Bola Ahmed Tinubu earlier this month, lifts the capital floor for non-life insurers from ₦3 billion to ₦15 billion, life insurers from ₦2 billion to ₦10 billion, and reinsurers from ₦10 billion to ₦35 billion.
While the jump is steep, analysts say the move could be transformative.
“A capitalized insurance sector means insurers can take on bigger risks, give businesses the confidence to expand, and create the stability the economy needs,” Ikeoluwa Alabi, an analyst at Afrinvest West Africa, told Bloomberg.
“Recapitalization, combined with compulsory insurance enforcement, means stronger balance sheets, better claims-paying ability, and more trust from the public.”
The markets appeared to agree. Insurance stocks on the Nigerian Exchange (NGX) surged nearly 8% on the day of the announcement, even as the broader All-Share Index dipped 0.1%, signaling targeted investor confidence in the sector’s future.
The reform is part of a wider economic push by the Tinubu administration to grow Nigeria’s economy from $243 billion to $1 trillion by 2030. Similar measures include a tenfold hike in bank capital requirements, currency liberalisation, subsidy removal, and tax reforms.
To ensure a clean transition, NAICOM has set up an 11-member oversight committee to verify that the new capital is sourced legitimately. The one-year compliance window is expected to trigger mergers and acquisitions, especially among smaller players struggling to meet the new benchmarks.
The changes mark the first significant adjustment to insurance capital requirements since 2007. Industry leaders say the update is long overdue, citing inflation, rising operational costs, and growing market risks. The reforms also adopt a risk-based capital model, allowing firms to align their reserves with their actual risk exposure while meeting the new minimum thresholds.
For investors, the capital hike is being seen not just as a compliance hurdle, but as a catalyst for a stronger, more competitive Nigerian insurance industry—one better equipped to pay claims, underwrite bigger policies, and deepen penetration in Africa’s largest economy.
