Recapitalisation empowers insurers to protect manufacturing sector — Report
By Rosemary Iwunze
The recent completion of an insurance industry recapitalization exercise in Nigeria is poised to enhance the sector’s ability to safeguard the manufacturing industry from various industrial risks. This development is expected to have far-reaching effects on manufacturers facing hazards such as factory fires, machinery breakdowns, marine cargo losses, engineering failures, and prolonged business interruptions.
These insights were drawn from the June edition of the Pan-African Manufacturers Association (PAMA) report. The document highlighted that for many years, capital limitations constrained Nigerian insurers’ capacity to manage large-scale industrial risks effectively. Consequently, manufacturers often sought comprehensive coverage for factories, specialized machinery, engineering projects, marine cargo, and business interruptions through foreign reinsurance arrangements.
While these external arrangements provided additional security, they also introduced higher costs, lengthened underwriting processes, and occasionally complicated claims settlements. The report noted that the implementation of enhanced capital requirements under the Nigeria Insurance Industry Reform Act (NIIRA) 2025 is anticipated to transform the landscape by bolstering the financial stability of local insurance companies.
“The reform is designed to create a more resilient insurance industry capable of absorbing larger risks while providing stronger support for long-term economic activities,” the report stated.
For manufacturers, the implications extend beyond just insurance premiums. Insurers with improved capital reserves are expected to retain a larger portion of industrial risks, create more specialized insurance products, and offer better support for businesses investing in new production facilities, industrial parks, and export-oriented operations.
Additionally, this development could enhance manufacturers’ access to project financing, as banks and other lenders commonly require comprehensive insurance protection before sanctioning funds for major industrial investments.
The report emphasized that, over time, a more robust insurance industry should provide manufacturers with reliable risk protection, increased investment confidence, and a solid foundation for industrial growth.
“Nigeria’s insurance recapitalization represents more than just a reform of the financial sector,” the report concluded. “It has the potential to serve as a critical enabler for industry by positioning well-capitalized insurers as strategic partners in financing and safeguarding the next generation of manufacturing investments.”
