LAGOS: Nigeria’s insurance recapitalisation could significantly strengthen the protection available to manufacturers and provide a fresh boost to industrial investment, according to a report by the Pan-African Manufacturers Association (PAMA).
The report, contained in PAMA’s June edition, said stronger capital positions among Nigerian insurance companies could enable them to assume larger industrial risks while offering manufacturers more specialised and reliable coverage.
The development is particularly important for manufacturers whose operations face risks including factory fires, machinery breakdowns, engineering failures, marine cargo losse
For years, limited capital has restricted the ability of Nigerian insurers to retain major industrial risks, forcing manufacturers seeking comprehensive coverage to rely substantially on foreign reinsurance arrangements.
According to the PAMA report, while foreign reinsurance has provided additional protection, the arrangement can increase costs, lengthen underwriting processes and sometimes create complications around claims settlement.
The implementation of enhanced capital requirements under the Nigeria Insurance Industry Reform Act (NIIRA) 2025, the report noted, is expected to reshape the insurance landscape by improving the financial strength and resilience of local insurers.
The reform is designed to enable insurance companies to absorb larger risks and provide stronger support for long-term economic activities.
For manufacturers, the impact of recapitalization could extend beyond the cost of insurance premiums.
Better-capitalised insurers are expected to retain a greater portion of industrial risks within the domestic market while developing insurance products specifically suited to the needs of manufacturers and other large-scale businesses.
The PAMA report said this could provide stronger protection for companies investing in new factories, industrial parks, production facilities and export-oriented operations.
A stronger domestic insurance market could also reduce manufacturers’ dependence on foreign risk-transfer arrangements, potentially making industrial insurance more accessible and efficient.
The report also highlighted the potential relationship between stronger insurance companies and access to project financing.
Banks and other financial institutions typically require comprehensive insurance coverage before providing funding for major industrial projects.
Consequently, insurers with greater financial capacity could help create a more secure environment for lenders and investors financing large manufacturing projects.
This could become particularly significant as businesses seek funding for new production facilities and expansion projects requiring substantial long-term capital.
The PAMA report described Nigeria’s insurance recapitalisation as having implications beyond the financial services sector.
It argued that a stronger insurance industry could become an important enabler of industrial development by giving manufacturers greater confidence to invest and expand.
With better-capitalised insurers capable of carrying larger risks, manufacturers could gain access to more dependable protection against operational disruptions and major losses.
Over time, this could strengthen investment confidence and contribute to the expansion of Nigeria’s manufacturing capacity.
The report therefore positioned insurance recapitalisation as a potential strategic tool for supporting the next generation of industrial investments and strengthening the broader Nigerian economy.
For manufacturers, the emerging landscape could mean stronger local risk protection, improved access to project finance and greater confidence in undertaking large-scale investments.
