Nigerian Insurers Oppose Tax Breaks for Foreign Firms, Warn of Market Distortion

A proposal to exempt foreign insurance companies from paying taxes on premiums generated in Nigeria has sparked concern among local insurers. Industry players warn that such a move could destabilize ongoing reforms and weaken domestic capacity in the sector.

The recommendations, reportedly under review by KPMG, could tilt competition sharply against Nigerian insurers. Experts say the move risks undermining efforts to rehabilitate the industry, which is currently grappling with low insurance penetration, weak public confidence, and the need for stronger regulatory compliance.

Local operators argue that while the intention may be to increase insurance uptake, giving tax exemptions to foreign firms could backfire. Former FSL Insurance Broker Limited CEO, Alfred Daudu, told The Guardian over the weekend, “You cannot be asking local companies to recapitalise, comply with stricter regulations and still pay full taxes, while foreign firms are given tax holidays. It is not reform, it is market distortion.”

The current Nigerian policy emphasizes protecting local capacity, retaining economic value, and maintaining a level playing field. Industry stakeholders stress that the framework supports job creation, skill development, and the growth of domestic underwriting expertise. Weakening this structure, they say, could reverse hard-earned gains.

This debate comes as the National Insurance Commission (NAICOM) implements a recapitalisation program to strengthen insurers’ balance sheets and improve claims-paying capacity. While foreign participation in specialised or large risks remains important, local insurers insist that tax parity is crucial for sustaining long-term sector development and preventing market disruption.

source: The Guardian