The Progressive Shareholders Association of Nigeria (PSAN) has urged the federal government to grant temporary tax reliefs to insurance companies to ease the smooth implementation of the Nigerian Insurance Industry Reform Act (NIIRA) 2025.

Its chairman, Boniface Okezie, said on Tuesday in Lagos that operators needed financial breathing space to enable them to meet the new capital requirements set out in the law.

NIIRA 2025, which was recently unveiled, mandates a new capital base of N10 billion for life insurers, N15 billion for non-life companies, N25 billion for composite firms, and N35 billion for reinsurance companies.

The Act also introduces compulsory insurance enforcement, digitisation of operations, stricter claims settlement timelines, a policy protection fund, and regulation of online insurance businesses.

Mr Okezie said that while the reform was timely and necessary to reposition the industry, government support would determine whether companies survive the transition.

“The NIIRA 2025 entails recapitalisation. The government needs to support these companies by granting them tax exemptions for a while. Once they stabilise, they can resume tax payments. Without this, implementation will be difficult,” he said.

He noted that Nigeria’s tax reforms had been largely insensitive to the peculiar challenges of different industries and must now be designed with insurance growth in mind.

Mr Okezie also called on the government to increase patronage of local insurers instead of awarding contracts to foreign firms.

“This is the time government must sit up and make the sector contribute meaningfully to GDP.

“We cannot continue with one per cent penetration, which is abysmal. Look at the banking sector; insurance should be elevated to the same level of competitiveness,” he said.

The PSAN chairman also urged operators to win back investor confidence by prioritising dividend payments and strengthening corporate governance.

He assured insurers that shareholders would continue to support them in building profitability if they reciprocated by rewarding investors.

He further appealed to law enforcement agencies to adopt professionalism in enforcing compulsory insurance under the new act.

“We don’t want a situation where people are harassed. Enforcement must be firm but civil. The idea is to build confidence in insurance, not fear,” Mr Okezie stressed.

Also speaking, Sunny Nwosu, founder of the Independent Shareholders Association of Nigeria, welcomed the NIIRA 2025 but said its timing raised concerns given the nation’s current economic headwinds.

“This reform is long overdue, but it comes at a time when companies are struggling with inflation, high interest rates, and a weak consumer base.

“Tax reliefs are necessary if insurers are to focus fully on recapitalisation. Without that support, some firms may not survive,” he warned.

Mr Nwosu also urged the National Insurance Commission (NAICOM) to lead by example in implementing the law, stressing that corruption and poor supervision could derail the reforms.

“The regulator must show seriousness by eliminating corruption and ensuring transparent enforcement. Otherwise, the goals of NIIRA 2025 will remain on paper,” he said.

He further advised the government to embrace comprehensive insurance coverage rather than restricting itself to third-party policies.

According to him, if the government wants Nigerians to take insurance seriously, it must lead by example.

“Comprehensive insurance shows responsibility and builds confidence in the industry,” Mr Nwosu explained.

This is not the first time the Nigerian insurance sector has embarked on recapitalisation.

Previous efforts in 2005 and 2019 faced delays, litigation, and industry pushback, leaving the sector undercapitalised compared to its peers in other African markets.

For instance, in South Africa, Kenya, and Morocco, stronger capitalisation has helped insurers weather economic shocks and improve claims payment capacity.

Nigeria’s penetration rate remains one of the lowest in Africa, in spite of being the continent’s largest economy.

(NAN)