By Rosemary Iwunze
Following the conclusion of the insurance industry recapitalisation exercise, the sector is now expected to protect Nigeria’s manufacturing sector against costly industrial risks.
It is also expected to have significant implications for manufacturers whose operations are exposed to risks ranging from factory fires and machinery breakdowns to marine cargo losses, engineering failures and prolonged business interruptions.
These positions were contained in the June edition of the Pan-African Manufacturers Association (PAMA) report.
The report noted that for many years, limited capital constrained the ability of Nigerian insurers to retain large industrial risks.
As a result, manufacturers seeking comprehensive cover for factories, specialised machinery, engineering projects, marine cargo and business interruption often relied heavily on foreign reinsurance arrangements.
While such arrangements provided additional security, they could also increase costs, prolong underwriting processes and, in some cases, complicate claims settlement.
The report stated: “The implementation of enhanced capital requirements under the Nigeria Insurance Industry Reform Act (NIIRA) 2025 is now expected to change the landscape by strengthening the financial capacity 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.
“For manufacturers, the implications extend beyond insurance premiums. Better-capitalised insurers should be able to retain a larger share of industrial risks, develop more specialised insurance products and provide stronger support for businesses investing in new production facilities, industrial parks and export-oriented operations.
“The development could also improve manufacturers’ access to project finance, as banks and other lenders typically require comprehensive insurance protection before committing funds to major industrial investments.”
The report stressed that, over time, a stronger insurance industry should provide manufacturers with more reliable risk protection, greater investment confidence and a firmer foundation for industrial expansion.
“Nigeria’s insurance recapitalisation is therefore more than a financial-sector reform. It could become an important industrial enabler by positioning better-capitalised insurers as strategic partners in financing and protecting the next generation of manufacturing investments’’.
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