As Nigeria marks its 65th year of independence in 2025, reflections abound on the nation’s progress across key sectors from oil and agriculture to banking and technology. Amidst these, the insurance industry stands as one of the lesser spotlighted but increasingly critical pillars of Nigeria’s economic development. From a colonial legacy to a transforming sector poised for digital disruption and deeper penetration, the Nigerian insurance landscape tells a story of resilience, reform, and renewed relevance.
A Modest Beginning
The history of insurance in Nigeria predates independence. As early as 1921, foreign-owned companies like Royal Exchange Assurance began operating in Lagos, catering mainly to expatriate and commercial interests. At the time, insurance was largely alien to indigenous Nigerians, both in concept and cultural relevance. By the time Nigeria gained independence in 1960, the sector comprised just a handful of companies — mostly foreign subsidiaries — offering general insurance to urban elites and businesses.
It wasn’t until the post-independence years, particularly in the 1970s and 1980s, that Nigerian-owned firms began to emerge, spurred by government indigenisation decrees and a rising wave of economic nationalism. This period saw the establishment of notable firms such as NICON Insurance and Leadway Assurance, NEM Insurance, which began to lay the foundation for a more domestically controlled industry.
Growth Amidst Challenges
Over the decades, the Nigerian insurance sector has experienced both gradual growth and systemic constraints.
As of August 2023, the Nigerian insurance market had 67 licensed insurance companies and three reinsurers, with the total number of licensed operators increasing from 54. These 67 companies consist of various types, including life, non-life, composite, microinsurance, and Takaful regulated by the National Insurance Commission (NAICOM), established in 1997.
Despite Nigeria’s position as Africa’s largest economy, insurance penetration remains stubbornly low — hovering between 0.4% and 0.5% of GDP according to recent data, compared to South Africa’s over 13% and Kenya’s 3%. A combination of low awareness, distrust, economic volatility, and regulatory bottlenecks has limited the industry’s expansion, particularly among the informal and rural population that make up the bulk of Nigeria’s over 200 million citizens.
Reform and Regulation: Turning the Tide
Efforts to reform and strengthen the industry have intensified over the past two decades. NAICOM has introduced several regulatory frameworks aimed at improving transparency, capital adequacy, and corporate governance. Notable among these was the Market Development and Restructuring Initiative (MDRI) launched in 2009, which focused on enforcing compulsory insurance policies, including motor third-party, group life, builders’ liability, and healthcare professional indemnity.
Capitalisation remains a focal point. Several recapitalisation efforts, including the current push to increase minimum capital requirements, aim to ensure that insurers are better equipped to underwrite large risks, especially in key sectors like oil and gas, aviation, and infrastructure.
NIIRA 2025 In Perspective
Under the Nigerian Insurance Industry Reform Act (NIIRA) 2025, signed into law recently by President Bola Ahmed Tinubu, the minimum capital requirements for Nigerian insurers are N10 billion for life (from N2 billion), N15 billion for non-life (from N3 billion), N25 billion for composite( from N5 billion), and N35 billion for reinsurance companies (from N10 billion), which are subject to a risk-based capital (RBC) framework where the actual requirement for an insurer will be the higher of the specified amount or their risk-based capital.
The Commissioner for Insurance, Mr. Olusegun Ayo Omosehin, has described the Nigeria Insurance Industry Reform Act (NIIRA 2025) as a transformative milestone for the sector, introducing substantial structural changes to capital requirements, regulatory oversight, and innovation frameworks.
At the 2025 NAICOM seminar for journalists in Abeokuta, Omosehin emphasized that NIIRA 2025 offers enhanced consumer protection through an Insurance Policy Protection Fund, tighter licensing and classification criteria for insurers, and stronger supervisory tools to monitor and manage industry risks. He noted that the legislation also formally recognises innovation by creating frameworks such as an Innovation Hub and Regulatorqy Sandbox, and imposes strengthened data reporting obligations to boost regulatory transparency and market discipline.
On implementation, the Commissioner has moved swiftly to operationalise key provisions of NIIRA. He inaugurated an 11‑member Recapitalisation Committee charged with developing a roadmap, guidelines, and compliance mechanisms to fulfill the new capital mandates. He also warned that insurers failing to recapitalise within the stipulated 12‑month window may have their licences revoked, underscoring that industry renewal and regulatory compliance are non‑negotiable under the new law.
Technology and Innovation: A New Chapter
One of the most transformative trends in recent years is the embrace of Insurtech. As digital technology reshapes finance in Nigeria — from mobile banking to fintech — the insurance sector is increasingly leveraging digital platforms to drive product innovation, customer acquisition, and claims processing.
Startups like Curacel, Cassava, and ETAP are deploying ArtificialIntelligence (AI), Application Programming Interfaces (APIs), and data analytics to digitise claims, reduce fraud, and enhance underwriting. Traditional firms, too, are investing in digital channels to reach underserved markets, particularly through microinsurance products designed for low-income earners.
“Digital platforms are helping us scale our reach,” says Tope Smart, Chairman of NEM Insurance Plc and a former President of the Nigerian Insurers Association. “From mobile-based distribution to automated claims settlement, innovation is lowering entry barriers and changing the customer experience.”
Microinsurance and Inclusion
In a country where over 60% of the population still operates outside the formal financial system, microinsurance is gaining traction as a tool for financial inclusion. These low-premium, high-volume insurance products are tailored to farmers, traders, transport workers, and other vulnerable segments.
Collaborations between insurers, telcos, and cooperatives are bringing basic coverage for health, crop, and property losses to millions previously excluded from traditional insurance. For instance, partnerships between insurers and platforms like MTN’s Y’ello Cover or Paga are simplifying access and premiums through mobile wallets.
Still, education and trust remain significant hurdles. “Insurance is not just about affordability; it’s also about. cultural relevance,” notes Mrs. Yetunde Ilori, President, Chartered Insurance Institute of Nigeria (CIIN)“We need continuous engagement at the grassroots to demystify insurance and showcase its value.”
The Role of Reinsurance and Risk Management
As the Nigerian economy becomes more complex and interconnected, the role of reinsurance has grown in prominence. Local reinsurers such as Continental Reinsurance and Nigeria Re play a vital role in risk absorption, especially in high-value sectors like energy and infrastructure.
However, the sector still grapples with capacity constraints, prompting many local firms to rely heavily on foreign reinsurers. NAICOM has sought to address this with the Local Content Policy and the “No Premium, No Cover” directive to enforce premium payment before risk assumption — a move widely seen as a discipline-enhancing tool.
COVID-19 and the Post-Pandemic Reset
The global pandemic of 2020-2021 tested the mettle of Nigeria’s insurance industry. While the health crisis revealed gaps in product design and claims management, it also accelerated digital adoption and prompted a renewed focus on health and life insurance.
Many insurers began offering COVID-19-specific products, and awareness of health risk protection soared. For a sector often viewed as reactive, the pandemic created an opportunity to reimagine offerings, improve responsiveness, and demonstrate value to a skeptical public.
The Road Ahead: Opportunities and Outlook
As Nigeria navigates its 65th year of independence, the insurance industry stands at a crossroads — between its underwhelming past and a potentially transformative future. With a burgeoning population, expanding middle class, and increasing awareness of risk in a volatile world, the demand for insurance is set to grow.
To unlock this potential, experts point to five strategic imperatives including Deepening Insurance Education: A national campaign to improve public understanding and perception is essential; Leveraging Data and Technology: Real-time data and AI can revolutionize underwriting and claims management; Expanding Compulsory Insurance Compliance: Enforcement across sectors can boost penetration and public safety; Enhancing Product Relevance: Tailored products for SMEs, farmers, artisans, and youth can broaden appeal;and Strengthening Regulatory Oversight: Clearer policies and consistent enforcement will bolster investor and consumer confidence.
A Future Built on Trust
As Nigeria charts its next decades of development, insurance must move from the periphery to the mainstream of economic planning. Whether in climate resilience, health coverage, pension protection, or entrepreneurship support, a vibrant insurance industry is indispensable.
The last 65 years have shown that the path to a robust insurance culture is neither linear nor quick — but it is necessary. With the right mix of regulation, innovation, and education, the next chapter could see Nigeria’s insurance industry finally deliver on its promise as a force for stability, empowerment, and inclusive growth.
