The recently enacted New Insurance Act has introduced sweeping reforms to Nigeria’s aviation insurance framework, mandating tougher capital thresholds and stricter compliance rules for operators.
Managing Director of AXA Mansard Insurance, Mr. Kunle Ahmed, described the law as a game changer. He spoke during the 5th CHINET AviaCargo Conference in Lagos, stressing that stronger capitalization would boost local insurer capacity and reduce reliance on foreign reinsurance.
“The bigger the capital of a company, the more likely its capacity is enhanced. This means we can retain more aviation risk locally,” Ahmed said.
₦15 Billion Capital Requirement
Under Section 15 of the New Insurance Act, companies that previously needed a minimum of ₦3 billion capital must now hold at least ₦15 billion to write aviation policies.
Ahmed argued this measure would improve risk retention in Nigeria and reduce exposure to international recovery delays. He cited a case where Nigerian insurers paid their share of an airline loss immediately but waited five years to recover from the foreign reinsurance market.
Stronger Oversight from NAICOM
Ahmed emphasized that aviation insurance remains one of the most tightly supervised segments in Nigeria, with the National Insurance Commission (NAICOM) keeping close watch.
“Once you write an aviation policy, you must inform the regulator. You cannot reinsure abroad without first exhausting local capacity,” he said.
Currently, only 40 percent of Nigerian insurers underwrite aviation.
Ahmed noted that NAICOM permits partnerships with A-rated foreign firms if local capacity is insufficient, but such approvals require official clearance.
Compliance Obligations
The New Insurance Act also introduced new compliance measures. Section 81 (1–5) requires aviation operators including airlines, cargo handlers, and service providers to submit valid insurance policies to NAICOM at least seven days before operations begin.
“This is very, very important,” Ahmed stressed. “Every practitioner must have an insurance policy deposited with the commission before starting operations.”
Industry Reactions to New Insurance Act
Industry experts believe the ₦15 billion capitalization rule and stricter compliance deadlines will enhance local underwriting, speed up claims, and improve sector stability.
The reforms are part of the broader Nigerian Insurance Industry Reform Act, 2025, signed by President Bola Ahmed Tinubu on 5 August 2025. The legislation is designed to strengthen Nigeria’s insurance market and align it with global standards.
Analysts argue that while compliance may challenge smaller insurers, the Act could ultimately position Nigeria’s aviation sector for growth, stability, and reduced foreign dependence.
