Agusto & Co. Limited, the pan-African credit rating agency and leading business intelligence provider, has released its 2026 insurance industry report, offering a detailed review of Nigeria’s insurance sector amid sweeping reforms.
The report evaluates performance in 2025 and outlines near-term prospects, particularly in the context of the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
Strong Growth Amid Economic Headwinds
Despite persistent economic challenges, Nigeria’s insurance sector recorded robust growth in 2025. Insurance revenue surged by 40.8% to ₦1.9 trillion, while total assets approached the ₦5 trillion mark, underpinned by steady expansion of investment portfolios.
Key drivers of this growth include:
1. Intensified Business Generation:
Insurers have embraced more agile, customer-focused solutions, revising products to meet the demands of a high-inflation environment. Strengthened relationships with insurance brokers, expanded agency networks, and deeper collaboration with financial institutions, especially via bancassurance, have enhanced market reach. Direct sales now contribute 11% of total premiums.
2. A Firm Regulatory Stance:
The National Insurance Commission (NAICOM) has taken a more assertive approach, enhancing enforcement of compulsory insurance policies and implementing reforms in the annuity sector to rebuild trust among retirees. Publishing lists of insurers defaulting on claims has improved market discipline and boosted public confidence.
3. Efficient Investment Management:
Insurers are increasingly focusing on investment portfolios as a hedge against underwriting volatility, prioritizing high-yield assets while managing risk.
NIIRA 2025: Transforming the Regulatory Landscape
The enactment of NIIRA 2025 represents the most significant overhaul of Nigeria’s insurance regulatory framework in decades. The Act updates outdated laws, consolidates multiple statutes, and strengthens NAICOM’s powers to sanction erring operators, including license withdrawals and modernized penalties.
New Capital Regime
A central feature of NIIRA 2025 is the shift from a shareholder-based capital requirement to a Net Admissible Assets (NAA) model. This ensures that insurers’ capital is liquid, high-quality, and readily available to meet obligations.
Figure 1: Minimum Capital Requirement (New vs. Old)
This is inferred from the combination of the life and non-life capital requirements as the composite insurance license is expected to be phased out over the next five years.
Sources: NAICOM and Agusto & Co. Research
Composite licenses are expected to be phased out within five years, requiring separation into life and non-life entities.
Agusto & Co. estimates that the industry will need an additional ₦270 billion to meet the new capital thresholds, with 64% of this funding required in the non-life segment, 13% in life, and 24% in composite operations.
The NAA mechanism also excludes fixed assets, intangibles, and unquoted equities from capital computations, improving liquidity and resilience across the industry.
Expanding Compulsory Insurance Coverage
To boost insurance uptake and reduce accident-related losses, NIIRA 2025 introduces 11 compulsory policies, up from six previously. These include:
Insurance of buildings under construction
Public building third-party liability insurance
Government assets and employees’ insurance
Petroleum retail outlets and products in transit
Professional indemnity for healthcare providers
Aviation insurance
Marine import insurance
Container insurance
Credit insurance for exposures above ₦10 million
Compulsory group life insurance
Third-party motor vehicle insurance
Persistent Challenges
Despite reforms, the industry still faces hurdles:
Low penetration and awareness: Many Nigerians remain unfamiliar with the benefits of insurance.
Compliance gaps: Historically low adherence to compulsory policies could impede enforcement efforts.
Trust deficits: Delayed or defaulted claims by some insurers have hampered public confidence. NIIRA 2025’s focus on liquidity and prompt claims settlement is expected to address this over time.
Outlook: Towards a Half-Trillion Naira Milestone
Looking forward, growth momentum is expected to continue, supported by fresh capital injections and the digitalization of the value chain. While declining yields may limit investment income and raise financing costs, the core underwriting business remains strong.
Agusto & Co. projects pre-tax profits to reach ₦531.7 billion in 2026, reflecting a 37% increase. Return on equity (ROE) is expected to remain at 28%, comfortably above projected inflation, delivering positive real returns to shareholders in a more capital-efficient market.
#copied.
The report evaluates performance in 2025 and outlines near-term prospects, particularly in the context of the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
Strong Growth Amid Economic Headwinds
Despite persistent economic challenges, Nigeria’s insurance sector recorded robust growth in 2025. Insurance revenue surged by 40.8% to ₦1.9 trillion, while total assets approached the ₦5 trillion mark, underpinned by steady expansion of investment portfolios.
Key drivers of this growth include:
1. Intensified Business Generation:
Insurers have embraced more agile, customer-focused solutions, revising products to meet the demands of a high-inflation environment. Strengthened relationships with insurance brokers, expanded agency networks, and deeper collaboration with financial institutions, especially via bancassurance, have enhanced market reach. Direct sales now contribute 11% of total premiums.
2. A Firm Regulatory Stance:
The National Insurance Commission (NAICOM) has taken a more assertive approach, enhancing enforcement of compulsory insurance policies and implementing reforms in the annuity sector to rebuild trust among retirees. Publishing lists of insurers defaulting on claims has improved market discipline and boosted public confidence.
3. Efficient Investment Management:
Insurers are increasingly focusing on investment portfolios as a hedge against underwriting volatility, prioritizing high-yield assets while managing risk.
NIIRA 2025: Transforming the Regulatory Landscape
The enactment of NIIRA 2025 represents the most significant overhaul of Nigeria’s insurance regulatory framework in decades. The Act updates outdated laws, consolidates multiple statutes, and strengthens NAICOM’s powers to sanction erring operators, including license withdrawals and modernized penalties.
New Capital Regime
A central feature of NIIRA 2025 is the shift from a shareholder-based capital requirement to a Net Admissible Assets (NAA) model. This ensures that insurers’ capital is liquid, high-quality, and readily available to meet obligations.
Figure 1: Minimum Capital Requirement (New vs. Old)
This is inferred from the combination of the life and non-life capital requirements as the composite insurance license is expected to be phased out over the next five years.
Sources: NAICOM and Agusto & Co. Research
Composite licenses are expected to be phased out within five years, requiring separation into life and non-life entities.
Agusto & Co. estimates that the industry will need an additional ₦270 billion to meet the new capital thresholds, with 64% of this funding required in the non-life segment, 13% in life, and 24% in composite operations.
The NAA mechanism also excludes fixed assets, intangibles, and unquoted equities from capital computations, improving liquidity and resilience across the industry.
Expanding Compulsory Insurance Coverage
To boost insurance uptake and reduce accident-related losses, NIIRA 2025 introduces 11 compulsory policies, up from six previously. These include:
Insurance of buildings under construction
Public building third-party liability insurance
Government assets and employees’ insurance
Petroleum retail outlets and products in transit
Professional indemnity for healthcare providers
Aviation insurance
Marine import insurance
Container insurance
Credit insurance for exposures above ₦10 million
Compulsory group life insurance
Third-party motor vehicle insurance
Persistent Challenges
Despite reforms, the industry still faces hurdles:
Low penetration and awareness: Many Nigerians remain unfamiliar with the benefits of insurance.
Compliance gaps: Historically low adherence to compulsory policies could impede enforcement efforts.
Trust deficits: Delayed or defaulted claims by some insurers have hampered public confidence. NIIRA 2025’s focus on liquidity and prompt claims settlement is expected to address this over time.
Outlook: Towards a Half-Trillion Naira Milestone
Looking forward, growth momentum is expected to continue, supported by fresh capital injections and the digitalization of the value chain. While declining yields may limit investment income and raise financing costs, the core underwriting business remains strong.
Agusto & Co. projects pre-tax profits to reach ₦531.7 billion in 2026, reflecting a 37% increase. Return on equity (ROE) is expected to remain at 28%, comfortably above projected inflation, delivering positive real returns to shareholders in a more capital-efficient market.
#copied.
