US Tariff Hike Prompts Nigerian Insurance Sector to Strengthen Risk Management Amid Export Pressure
The Nigerian insurance industry has been advised to bolster its risk management frameworks in response to a 15% tariff imposed by the United States on Nigerian exports, effective from August 2025. This directive follows a July 31 executive order by President Donald Trump, targeting around 40 countries with what the U.S. deems “unbalanced” trade relationships. Industry analysts warn that this policy change may threaten the momentum of Nigeria’s insurance sector, which has shown strong growth despite economic uncertainties.
The newly enforced 15% tariff escalates the earlier 14% rate, which had been temporarily suspended for negotiations. Under this revised U.S. tariff regime, countries with a trade deficit against the U.S., like Nigeria, face higher duties. A further complication looms with President Trump’s threat of an additional 10% tariff on countries aligning with BRICS. Nigeria’s recent admission into BRICS as the ninth member in January 2025 could mean a total tariff burden of 25%, further straining export-based businesses.
Despite looming trade pressures, Nigeria’s insurance market demonstrated strong performance in 2024, recording N1.56 trillion in gross written premiums—a 56% increase from 2023. Non-life insurance dominated with N1.1 trillion, while life insurance contributed N470 billion. The industry’s total assets rose 46.1% to N3.9 trillion, and market capitalization jumped 41% to N1.2 trillion. However, this upward trajectory is at risk as sectors dependent on U.S. exports may face disruptions, impacting insurers’ underwriting and claim patterns.
According to insurance analyst Ade Adesokan, key insurance segments—particularly marine, trade credit, property & casualty, and business interruption—are likely to feel the immediate effects of the tariff increase. Exporters may reduce shipments, causing pricing model revisions in marine insurance. Trade credit insurance could see increased demand and higher claims, while property and casualty insurers must reassess asset valuations for export-driven firms. Business interruption coverage may also face increased claims as revenue declines affect operations linked to U.S. markets.
The current trade shift is expected to accelerate Nigeria’s push toward export diversification, a move with long-term implications for insurance providers. Insurers must now expand their capabilities to assess risk in emerging trade markets beyond the U.S. Adesokan also urged industry regulators—such as the National Insurance Commission and related associations—to provide adaptive guidance. He emphasized the need for regulatory flexibility that allows innovation while ensuring consumer protection and financial stability amid evolving global trade dynamics.
Source: punch