The Nigerian insurance sector is poised for a period of significant adaptation and strategic repositioning following the United States’ decision to impose a 15% tariff on Nigerian exports. This new trade policy, effective August 2025, comes as part of a broader recalibration of the US reciprocal tariff system, impacting approximately 40 countries deemed to have an “unbalanced” trade relationship with the US. While the Nigerian insurance market has demonstrated robust growth and resilience in recent years, this tariff hike presents both challenges and opportunities for the sector. Experts emphasize the need for proactive risk management strategies and innovative product development to navigate the evolving trade landscape and support Nigerian exporters facing heightened uncertainty.
The increase from the initially imposed 14% tariff in April 2025, followed by its suspension and subsequent reinstatement at a higher rate, underscores the escalating trade tensions between the two nations. The new tariff structure differentiates between countries based on their trade balance with the US, with those in deficit facing the 15% levy and those in surplus subject to a lower 10% rate. Nigeria’s bilateral trade relationship with the US is further complicated by its recent admission into the BRICS economic bloc, a move that could potentially trigger an additional 10% tariff as threatened by the US, bringing the total potential tariff to a substantial 25%. This dynamic and evolving trade environment necessitates a proactive and adaptable approach from the Nigerian insurance sector.
The Nigerian insurance market has showcased impressive growth, reaching N1.56 trillion in the 2024 financial year, a significant 56% increase from the previous year. This growth has been predominantly driven by the non-life insurance segment, which accounted for N1.1 trillion, while life insurance contributed N470 billion. The industry’s total assets have also expanded considerably, reaching N3.9 trillion, a 46.1% increase from 2023. Similarly, market capitalization has witnessed substantial growth, reaching N1.2 trillion, up 41% from the previous year. The robust performance of the insurance market underscores its resilience and capacity for growth, even in the face of challenging economic conditions. The sector’s ability to pay out N622 billion in claims further solidifies its stability and reliability.
The imposed tariffs are expected to have a multi-faceted impact on various segments within the Nigerian insurance industry. Marine insurance, a critical component of international trade, is anticipated to be one of the most directly affected areas. Insurers providing coverage for goods in transit will need to adjust their pricing models to account for the increased costs exporters face. Trade Credit Insurance, which protects businesses against non-payment by buyers, is likely to see increased demand as exporters seek to mitigate the financial risks associated with the US market uncertainty. Consequently, insurers may also experience a rise in claims if Nigerian exporters face payment delays or contract cancellations from US customers struggling to absorb the increased tariff costs.
Furthermore, the tariffs are expected to ripple through other sectors, impacting property and casualty insurance as manufacturing facilities and agricultural processing plants tied to US exports potentially reassess their asset utilization and expansion plans. This may necessitate revisions in property valuations and coverage limits by insurers. Business interruption insurance is another area where claims could rise as Nigerian businesses heavily reliant on the US export market might experience operational disruptions or reduced revenue streams. The interconnectedness of these various insurance segments necessitates a holistic approach to risk management and mitigation strategies within the industry.
The evolving trade dynamics, including the US tariffs and Nigeria’s alignment with BRICS, are likely to accelerate the ongoing trend of export diversification within Nigeria. This shift carries implications for the insurance industry, requiring insurers to develop expertise in assessing risks associated with new trade corridors and destination countries. While this diversification of risk can offer benefits through portfolio spread, it also demands investments in market intelligence and risk assessment capabilities for new territories. The regulatory bodies, including the National Insurance Commission, the Nigerian Insurers Association, and the Nigerian Council of Registered Insurance Brokers, have a crucial role to play in providing guidance and maintaining stability within the sector. Regulatory flexibility may be necessary to allow insurers to innovate and adapt to the changing market conditions while ensuring consumer protection and financial stability.
