The Nigerian stock market stayed hot for the 11th straight week, with the All-Share Index jumping 4,491.86 points to close at 145,754.91, a 3.18% gain week-on-week.
Market activity surged, with 7.7 Action shares traded up from 4.8 Action the week before pushing market capitalization to N92.2 trillion, just a step away from the N100 trillion milestone.
But the real fireworks came from the insurance sector.
Insurance index leads the rally
The NGX Insurance Index was the week’s star performer, soaring 41% as investor sentiment turned sharply bullish on the back of the newly enacted Nigeria Insurance Industry Reform Act (NIIRA) 2024.
All ten of the market’s top gainers came from the sector, with Mutual Benefits Assurance leading the charge, up 60.44%, followed by AIICO Insurance and Royal Exchange, both up nearly 60%.
Overall, the All-Share Index rose 3.18% to close at 145,754.91 points. Market capitalization climbed to N92.2 trillion, now within striking distance of the N100 trillion mark. Trading activity surged to 7.7 billion shares, compared with 4.8 billion the prior week.
Why investors are piling in
The NIIRA 2024, which took effect this month, introduces sweeping reforms designed to strengthen the sector and drive penetration in Africa’s most populous nation.
- “The NIIRA Act ushers in a new era of transparency and competitiveness,” said government spokesperson, Onanuga. “It aligns with the Federal Government’s Renewed Hope Agenda and the broader goal of building a resilient financial sector.”
The Act ushers in sweeping changes that tighten capital requirements, embed risk-based supervision, expand compulsory insurance lines, and push the sector deeper into the digital era.
One of the most consequential provisions is the sharp increase in minimum paid-up capital: N25 Action for non-life insurers, N15 Action for life insurers, and N45 Action for reinsurance companies.
- The National Insurance Commission (NAICOM) retains the discretion to demand risk-based capital higher than these floors.
- For new entrants, this capital must be in cash or government securities, while existing players may include excess assets over liabilities and approved subordinated liabilities.
Risk-based supervision will become the operational backbone of the sector. Companies must maintain a 100% capital adequacy ratio, with NAICOM empowered to impose additional capital requirements for specific exposures such as insurance, market, credit, and operational risks.
- This marks the end of the one-size-fits-all regulatory model rewarding strong risk management with capital relief while penalising poor underwriting practices.
Compulsory insurance is also set for a major upgrade, with broader coverage, explicit penalties, and coordinated enforcement.
- The Act mandates cover across multiple areas, including motor third-party insurance, builders’ liability for construction projects.
- Others include public building occupiers’ liability, mandatory insurance for federal government assets and employees, and coverage for petroleum and gas stations, including products in transit.
- Other compulsory categories include professional indemnity for healthcare providers, aviation liabilities, and insurance for imports, which must now be placed with local insurers.
- An ad-hoc NAICOM-led committee will coordinate compulsory classes a move that could significantly boost gross written premiums (GWP) and market penetration.
The legislation also embraces digital delivery and accelerates product approvals.
- Policies can now be delivered electronically, while new products are subject to regulatory approval with a 30-day “deemed approval” clause if NAICOM fails to respond.
- This is a win for InsurTech, enabling embedded insurance models, API-driven issuance, and faster time-to-market.
Foreign participation is permitted under stricter conditions.
- Insurers without a physical presence or consolidated supervision in their home country will be barred from operating in Nigeria, while Nigerian entities operating abroad will still be regulated as doing business locally.
- Capital composition rules have been made more flexible, and CBN deposit arrangements are clearly regimented.
- This framework welcomes credible global players and partnerships, keeps shell operators out, and expands financing options.
- Composite insurers will have five years to split their operations, separating life and non-life businesses.
Dividend payouts will be strictly tied to solvency and full provisioning.
- No insurer will be allowed to declare dividends until it has written off preliminary and organisational expenses, made adequate provisions for risk assets and liabilities, and met all capital and solvency requirements.
- Non-compliance attracts fines or imprisonment, effectively ending the practice of funding payouts from thin capital and reinforcing policyholder protection.
The Act also formally recognises microinsurance and financial inclusion.
- By classifying “financial inclusion insurance” under miscellaneous business and giving NAICOM the authority to introduce new classes, the law creates a legal foundation for micro-covers, parametric products, and low-ticket policies targeted at informal and MSME segments.
Taken together, the Nigerian Insurance Industry Reform Act, 2024, represents the most comprehensive overhaul of the sector in decades one that will test the adaptability of insurers, reward operational discipline, and open new growth frontiers for the industry.
Analysts say the Act could spark fresh capital inflows into the industry, lift consumer confidence, and position Nigeria as a regional insurance hub.
- The law’s focus on compulsory coverage and digital adoption is also expected to fuel innovation, deepen distribution, and extend services to underserved communities.
- Beyond underwriting policies, the law embeds insurance into Nigeria’s real estate and property market.
- From mandatory builders’ liability to insurers funding real estate projects, NIIRA integrates coverage at every stage of the property lifecycle planning, construction, occupancy, and investment funding.
For investors, this means insurers could benefit from new premium streams while also participating in property-backed investment opportunities.
