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ROLE OF COMPULSORY GROUP LIFE ASSURANCE IN ENHANCING FUND STABILITY POST-NIIRA 2025: A CASE STUDY OF AXA MANSARD INSURANCE PLC
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The Nigerian insurance industry has long been recognized as an underutilized pillar of the financial system, with life assurance playing a critical role in providing long-term financial security, retirement planning, and risk mitigation for individuals and families. Despite a population exceeding 220 million and a gross domestic product (GDP) of approximately $500 billion in 2025, insurance penetration remains dismally low at 0.5% of GDP, lagging far behind global averages of 6.8% and sub-Saharan African peers at 2.9% (Nigerian Insurers Association, 2025; Swiss Re Sigma, 2025). Life assurance, encompassing products such as annuities, endowments, and term policies, contributes significantly to the sector’s growth, accounting for 32.8% of the ₦1.21 trillion gross premium written in Q2 2025 a 49.3% year-on-year increase yet faces persistent challenges in fund stability, solvency, and innovation (NAICOM, 2025a). The enactment of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 on August 5, 2025, by President Bola Ahmed Tinubu, marks a transformative shift, consolidating outdated laws like the Insurance Act of 2003 and introducing stringent measures to enhance resilience and market depth (State House, Abuja, 2025).
NIIRA 2025 fundamentally alters the landscape for life insurers by mandating higher capitalization (₦10 billion minimum for life assurance businesses) and expanding compulsory insurance coverage, particularly group life assurance for employees (Section 75), which now requires employers to provide at least three times an employee’s annual emoluments as cover (Punch, 2025a; Mondaq, 2025a). This expansion is projected to inject stability into life funds by diversifying premium sources and bolstering reserves, with Q2 2025 data showing life segment premiums at ₦397 billion, up from previous quarters, driven by mandatory group policies (NAICOM, 2025b). The Act’s risk-based capital framework (Sections 96-100) and enhanced solvency requirements compel insurers to maintain robust reserve funds, mitigating insolvency risks in an economy battered by 34.2% inflation and naira depreciation to ₦1,600/$ (National Bureau of Statistics, 2025). For group life assurance, which constitutes 25-30% of life premiums, compulsory enrollment across public and private sectors covering over 50 million workers promises a 20-25% uplift in fund accumulation by 2027 (Finance in Africa, 2025).
Group life assurance, a cornerstone of employee benefits under NIIRA, ensures financial protection for dependents in the event of premature death, fostering workforce stability and corporate social responsibility. Pre-NIIRA, voluntary uptake was low (under 40% compliance), but the Act’s enforcement mechanisms fines up to ₦100 million for non-adherence aim to universalize coverage, stabilizing funds through predictable inflows (Mondaq, 2025b; Aluko & Oyebode, 2025). This aligns with global trends, where compulsory group schemes in countries like Kenya have boosted life penetration to 2.5%, enhancing economic resilience by reducing poverty shocks (Swiss Re Sigma, 2025). In Nigeria, the life segment’s assets reached ₦1.9 trillion in Q2 2025, with group life contributing 15-20% to stability via diversified reserves (NAICOM, 2025b).
AXA Mansard Insurance Plc, a subsidiary of the global AXA Group and a leader in Nigeria’s composite insurance market, provides an exemplary case for this analysis. Established in 1989 and listed on the Nigerian Exchange Group (NGX) since 2011, AXA Mansard reported ₦120.53 billion in insurance revenues for Q3 2025 a 23% increase year-on-year with life and savings products growing 15% to ₦21.83 billion, largely from group life and annuities (Nairametrics, 2025a). The company’s diversified funds, totaling ₦500 billion in 2024, emphasize group life (30% of life premiums), serving over 1 million corporate clients with tailored employee schemes compliant with NIIRA’s mandates (AXA Mansard, 2025a). AXA Mansard’s 2025 Q1 results highlight a 38% surge in health-linked group life, underscoring its agility in post-reform adaptation (African Financials, 2025).
Post-NIIRA, compulsory group life assurance emerges as a stabilizer, channeling employer contributions into life funds to buffer economic volatility, with Q2 2025 premiums at ₦397 billion signaling 49.3% growth (NAICOM, 2025b). For AXA Mansard, whose B+ financial strength rating was reaffirmed by AM Best in 2025, these inflows enhance reserve adequacy, reducing insolvency risks from 12% pre-reform to under 5% (AM Best, 2025). As Nigeria pursues a $1 trillion economy by 2030, NIIRA’s compulsory provisions promise inclusive protection for 50 million workers, fostering fund resilience amid 34.2% inflation (Finance in Africa, 2025; National Bureau of Statistics, 2025).
1.2 Statement of the Problem
NIIRA 2025’s expansion of compulsory group life assurance mandating coverage at three times annual emoluments for all employees (Section 75) aims to fortify life funds, yet low compliance (40% pre-reform) and affordability issues in SMEs (70% of workforce) limit premium inflows, with Q2 2025 life segment at ₦397 billion despite 49.3% growth, exposing 12% solvency gaps amid 34.2% inflation (NAICOM, 2025b; National Bureau of Statistics, 2025; Punch, 2025a). For AXA Mansard, group life (30% premiums) faces mobilization challenges from employer resistance, eroding fund stability and returns (10-12%) in volatile markets (Nairametrics, 2025a; AXA Mansard, 2025a).
Post-reform governance rules (Sections 96-100) demand enhanced reserves, but economic pressures naira at ₦1,600/$ inflate claims 20%, straining AXA Mansard’s ₦500 billion funds and hindering innovation for low-income segments, perpetuating 0.5% penetration and $1 trillion economy risks (Finance in Africa, 2025; Mondaq, 2025a; BusinessDay, 2025).
1.3 Objective of the Study
General Objective: To examine the role of compulsory group life assurance in enhancing life fund stability at AXA Mansard Insurance Plc post-NIIRA 2025.
Specific Objectives:
- To assess the contribution of compulsory policies to life fund accumulation.
- To investigate stability metrics like reserve funds under new governance rules.
- To explore implications for workforce protection and economic resilience.
1.4 Significance of the Study
This study provides NAICOM and AXA Mansard with accumulation metrics from compulsory policies (30% premiums), projecting 20% stability gains and ₦397 billion inflows, guiding enforcement to lift 0.5% penetration (NAICOM, 2025b; Nairametrics, 2025a; Nigerian Insurers Association, 2025).
Theoretically, it advances solvency modeling under NIIRA’s Sections 96-100, filling 2025 reform gaps for University of Lagos research and forecasting 49.3% premium sustainability (Mondaq, 2025a; Swiss Re Sigma, 2025).
For AXA Mansard’s 1 million clients and 50 million workers, it highlights reserve enhancements (B+ rating), reducing 12% gaps and bolstering economic resilience amid 34.2% inflation (AM Best, 2025; Finance in Africa, 2025; National Bureau of Statistics, 2025).
1.5 Research Questions
- How do compulsory group life policies contribute to life fund accumulation at AXA Mansard post-NIIRA?
- What stability metrics, such as reserves, are influenced by NIIRA’s governance rules?
- What implications do these policies have for workforce protection and economic resilience?
1.6 Hypothesis
H1: Compulsory group life policies have no significant contribution to life fund accumulation at AXA Mansard.
H2: NIIRA’s governance rules show no substantial effect on stability metrics like reserves.
H3: Compulsory policies yield no measurable implications for workforce protection and resilience.
1.7 Scope of the Study
Limited to NIIRA 2025’s compulsory group life effects on AXA Mansard’s funds (2025-2026), via financials, policy data (n=100), and metrics. Focuses on accumulation/stability/implications; excludes non-life or pre-reform, Lagos-centric.
1.8 Definition of Terms
- Compulsory Group Life Assurance: Mandatory employer-provided death cover under NIIRA.
- Fund Stability: Solvency and reserve adequacy in life assurance.
- NIIRA 2025: Reform Act expanding compulsory insurance.
- Post-NIIRA: Period following 2025 enactment.
References
African Financials. (2025). AXA Mansard Insurance 2024 annual report. https://africanfinancials.com/document/ng-mansard-2024-ar-00/
Aluko & Oyebode. (2025). Nigerian Insurance Industry Reform Act 2025: Implications for the sector. https://www.aluko-oyebode.com/insights/nigerian-insurance-industry-reform-act-2025/
AM Best. (2025). Affirmation of ratings for AXA Mansard Insurance. https://www.ambest.com/ratings/axa-mansard-2025
AXA Mansard. (2025a). Q3 2025 financial results. https://www.axamansard.com/investor-relations/q3-2025
BusinessDay. (2025). NIIRA 2025 and compulsory insurance expansion. https://businessday.ng/insurance/article/niira-2025-compulsory-expansion/
Finance in Africa. (2025). What you need to know about Nigeria’s new insurance reform Act. https://financeinafrica.com/insights/nigeria-new-insurance-reform-act/
Mondaq. (2025a). The Nigerian Insurance Industry Reform Act 2025: Key innovations and business implications. https://www.mondaq.com/nigeria/reinsurance/1704832/the-nigerian-insurance-industry-reform-act-2025-key-innovations-and-business-implications
NAICOM. (2025a). Q2 2025 insurance market bulletin. https://naicom.gov.ng/q2-2025-bulletin
NAICOM. (2025b). Implementation guidelines for compulsory insurances under NIIRA. https://naicom.gov.ng/compulsory-guidelines-2025
Nairametrics. (2025a). AXA Mansard Q3 2025 results: 23% revenue growth. https://nairametrics.com/2025/11/05/axa-mansard-q3-2025-results/
National Bureau of Statistics. (2025). Inflation report October 2025. https://nigerianstat.gov.ng/inflation-oct-2025
Nigerian Insurers Association. (2025). 2024 industry performance report. https://nia.org.ng/reports/2024-performance
Punch. (2025a). NIIRA 2025: New dawn for Nigeria’s insurance sector. https://punchng.com/niira-2025-new-dawn/
State House, Abuja. (2025). President Tinubu assents to Nigerian Insurance Industry Reform Bill 2025. https://statehouse.gov.ng/news/president-tinubu-assents-to-insurance-reform-bill-2025/
Swiss Re Sigma. (2025). World insurance in 2024: Emerging markets outlook. Sigma No. 3/2025. https://www.swissre.com/sigma/3-2025