Insurance Act Will Transform Sector, Says Ex-NAICOM Boss Thomas

Sunday Olorundare Thomas, former Commissioner for Insurance and a past Managing Director at NAICOM, has said that the newly enacted Nigeria Insurance Industry Reform Act 2025 will fundamentally change Nigeria’s insurance sector. He described the law as a “game-changer” that corrects long-standing weaknesses in regulation, capital structure, and public confidence, and will enable the industry to become more competitive both locally and globally.

Thomas pointed out that before the Act, the insurance industry was governed mostly by the Insurance Act of 2003 and several other scattered laws that had become outdated. He said this fragmentation meant that many insurers could operate under weak capital bases, risk exposures were improperly managed, and there was a general lack of trust from the public. The new legislation addresses these concerns by consolidating the legal framework and establishing clearer rules for capitalization, supervision, and market operations.

Under the Act, minimum capital requirements for different classes of insurance business have been raised dramatically. Non-life insurers will now need far more capital than before, while life insurance, composite, and reinsurance businesses also face higher thresholds. Thomas explained that these changes are essential because many firms previously lacked capacity to underwrite large risks, and often policyholders had to seek insurance services abroad or rely on foreign reinsurers. By increasing minimum capital, the intention is to ensure Nigerian insurance companies are strong enough to handle larger risks and provide more reliable services.

Thomas also emphasized that the Act introduces a risk-based regulatory framework, which he believes is a major leap forward for oversight. Rather than applying a one-size-fits-all model, regulators will assess individual insurers according to the risks they pose, their financial strength, governance, and operational practices. He said that this will enhance solvency, prevent failures, and protect policyholders.

Another area he highlighted was the strengthening of consumer protection. Thomas said that under the old regime many policyholders suffered from delays or outright non-fulfillment of claims, opaque terms, or poor dispute resolution. He believes the new Act, with clearer mandates for transparency, stricter licensing requirements, and enforcement of penalties for non-compliance, will help restore public confidence in the insurance market.

Thomas also spoke about insurance penetration, which remains very low in Nigeria. He said that many people are still unaware of insurance products, or do not trust insurance companies because of past bad experiences. With reforms aimed at raising both visibility and trust—through better regulation, enforcement, education, and product innovation—Thomas expects more people to participate in insurance, which will help the industry scale up and contribute more significantly to national GDP.

He drew attention to the role of technology in supporting these reforms. Thomas mentioned that deploying digital solutions will make insurance more accessible, reduce administrative costs, speed up claims processing, and allow insurers to reach underserved populations. He suggested that combining regulatory reform with digital innovation could help drive down costs and improve reliability.

In response to the new law, many in the industry are reportedly preparing for a wave of consolidation. Some smaller firms are expected to merge in order to meet the new capital requirements, or be acquired by stronger players. Thomas noted that while this may be disruptive in the short term, the long-run result will be a healthier, more stable, and more resilient insurance sector.

Thomas appealed to all stakeholders—including regulators, insurers, brokers, consumer protection groups, and the government—to support full implementation of the provisions of the Act. He said that enactment of the law is only the first step; what really matters now is consistent enforcement, regulatory capacity, fair competition, and a culture of accountability.

He also cautioned that reforms might introduce short-term costs and disruptions, particularly for smaller firms, but said these should be viewed as necessary investments. Thomas argued that the greater good—stronger companies, better protection for policyholders, higher economic contribution from insurance—is well worth the effort and adjustment.

 

Overall, Thomas expressed optimism that the Nigeria Insurance Industry Reform Act 2025 will turn the insurance sector much more robust, trustworthy, and capable of playing a larger role in the financial system. He believes that over time, with steady implementation, these reforms can unlock investment, improve risk management, raise public participation in insurance, and help the sector meaningfully support the broader economy.