Business News Editor
By Dave Munachi
Nigeria’s insurance sector received a major boost this week as insurance stocks surged by 10% across the Nigerian Exchange (NGX), following President Bola Tinubu’s signing of a new law aimed at recapitalising the industry. The legislation, which seeks to strengthen the financial foundation and competitiveness of insurance companies, has been widely applauded by investors and analysts alike.
The new law mandates a significant increase in the minimum capital requirement for insurance firms operating in the country, a move long advocated by industry stakeholders to improve risk capacity, enhance underwriting confidence, and attract more investment into the sector.
The immediate market response was bullish, with leading insurance stocks such as AIICO Insurance, Cornerstone Insurance, NEM Insurance, and Mutual Benefits Assurance recording impressive daily gains. Trading volumes also spiked as investor confidence soared on expectations of a more robust and profitable insurance landscape.
Market analysts say the recapitalisation law is a game-changer that could usher in a new era for the sector, which has traditionally underperformed due to limited capitalisation, low penetration, and weak consumer trust. The new capital threshold is expected to spark a wave of mergers, acquisitions, and restructuring among operators, forcing undercapitalised firms to either consolidate or exit the market.
Speaking on the development, the President of the Nigerian Insurers Association (NIA), Mr. Olusegun Omosehin, hailed the move as timely and transformative.
“This law sets a new standard for the industry. It will not only ensure financial soundness but also help restore confidence in insurance as a reliable financial service,” he said.
The recapitalisation effort also aligns with broader economic reforms championed by the Tinubu administration to improve investor sentiment and foster stability across Nigeria’s financial system.
The Director-General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, described the market reaction as a clear indication of how impactful good policy can be.
“Investors are responding positively because they see long-term value. A better-capitalised insurance sector means improved claims payment capacity, expanded product innovation, and stronger institutional trust,” he noted.
Insurance penetration in Nigeria has remained below 1% for years, significantly trailing global averages. However, industry experts believe that the recapitalisation law could drive meaningful change, with more people and businesses likely to trust insurers that demonstrate financial strength.
As the law goes into implementation, regulatory agencies such as the National Insurance Commission (NAICOM) are expected to roll out timelines and compliance guidelines, including minimum paid-up capital thresholds for life, non-life, and composite insurance providers.
While some weaker players may struggle to meet the new requirements, analysts see this as a necessary correction that will ultimately make the industry leaner, stronger, and more competitive in both the domestic and international markets.
With the insurance sector now firmly in the spotlight, investors and policy watchers are optimistic that this bold step marks the beginning of a new chapter—one where insurance becomes a more integral part of Nigeria’s economic growth and financial resilience.
