NAICOM building
By David Akinmola
For millions of Nigerians, insurance remains a distant concept, something required by law but rarely felt in daily life.
When road accidents occur, buildings collapse, workplaces record injuries, or fires consume markets, the financial burden is often borne directly by individuals, families, and small businesses.
Compensation is uncertain, litigation is slow, and recovery depends largely on personal resilience.
This reality persists despite decades of compulsory insurance provisions, highlighting a deep contradiction in an economy where risk exposure is high, but insurance coverage remains marginal.
Nigeria’s insurance penetration has hovered below 1% of Gross Domestic Product (GDP) for years, far below continental and global averages. This weak performance has limited the sector’s ability to contribute meaningfully to financial stability, investor confidence, and social protection.
For policyholders and industry operators, the enduring question has been why Africa’s largest economy continues to underutilize one of the most basic tools of modern risk management.
The Nigerian Insurance Industry Reform Act (NIIRA) 2025 is the most ambitious attempt yet to confront this anomaly. Enacted in response to persistent enforcement failures and public distrust, the law goes beyond a routine consolidation of existing insurance statutes. It represents a deliberate shift in regulatory thinking, designed to move insurance from the margins of economic activity to the centre of national risk governance.
By expanding the scope of compulsory insurance, strengthening the enforcement authority of the National Insurance Commission (NAICOM), and embedding technology-driven compliance and monitoring systems, NIIRA 2025 seeks to address structural weaknesses that have long undermined the sector. Central to the reform is a recognition that insurance laws, no matter how well-drafted, have little practical impact if they are not enforced, understood, or trusted.
Industry stakeholders have consistently argued that Nigeria’s challenge is not rooted in legislative gaps, but in weak enforcement, low public awareness, and a history of uneven claims settlement that has eroded confidence. NIIRA 2025 directly includes elements widely regarded as essential to restoring trust and driving sustainable market growth.
At the heart of the reform is the understanding that compulsory insurance is not merely a regulatory obligation, but a public-interest instrument designed to protect third-party citizens who often suffer the consequences of accidents, negligence, or systemic failures without any contractual relationship with the insured.
The Commissioner for Insurance, Segun Omosehin, in several industry forums in 2025, repeatedly stressed that the social value of insurance only becomes evident when laws are enforced, and claims are paid promptly and transparently.
NIIRA 2025 reinforces this philosophy by tightening compliance obligations and empowering NAICOM to deploy technology, data integration, and inter-agency collaboration more effectively. Motor third-party insurance remains the most immediate test case. Although it is mandatory for all vehicles on Nigerian roads and provides compensation for bodily injury, death, and up to N3 million in property damage to third parties, its impact has historically been weakened by fake certificates and poor verification.
The new law strengthens the legal backing for digital platforms such as the Nigerian Insurance Industry Database (NIID), enabling real-time policy confirmation by law enforcement agencies and helping to ensure that valid covers result in actual claims payments.
Beyond motor insurance, NIIRA 2025 brings renewed regulatory focus to builders’ liability insurance, a compulsory cover for buildings above two floors under construction. Frequent incidents of building collapse across urban centres have exposed the human and financial costs of non-compliance.
By reinforcing enforcement provisions, the Act aims to ensure that developers internalize safety standards and that victims are not left without compensation.
Similarly, occupiers’ liability insurance for public building including markets, malls, hotels, schools, and event centres, is positioned as a critical mechanism for protecting the public from hazards such as fire and structural failure.
The reform agenda also deepens protection for labour and human capital. Group life assurance, mandated for employers with five or more staff, and employers’ liability under the Employees’ Compensation framework administered by the Nigeria Social Insurance Trust Fund (NSITF), are reinforced as essential pillars of social security.
According to the President and Chairman in-Council of the Chartered Insurance Institute of Nigeria (CIIN), Mrs. Yetunde Ilori, effective enforcement of these policies improves worker confidence, productivity, and industry harmony.
In high-risk sectors, NIIRA 2025 aligns compulsory insurance with Nigeria’s evolving commercial realities. Health care professional indemnity insurance has become increasingly critical as patient awareness and malpractice claims rise, while compulsory insurance for petroleum and gas retail outlets addresses severe third-party risks associated with fires and explosions in densely populated areas.
One of the most notable policy expansions under the Act is compulsory container insurance, designed to protect cargo owners, port users, and the broader supply chain. The Nigerian Insurers Association (NIA) has described this as a strategic opportunity to deepen penetration, recently convening specialized workshops to build underwriting and compliance capacity.
Industry leaders caution, however, that enforcement alone will not be sufficient. The Chairman of the NIA, Kunle Ahmed, argued that visible claims settlement is critical to building trust, noting that when insurance protection becomes tangible, public perception shifts and voluntary uptake increases.
Speaking on the development, the President of the Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs. Ekeoma Ezeibe, stressed that enforcement must be matched with sustained education, as many Nigerians default simply due to a lack of understanding.
Ultimately, NIIRA 2025 reframes compulsory insurance not as a bureaucratic requirement, but as a cornerstone of Nigeria’s economic and social infrastructure. If effectively implemented, the law could finally make insurance count, transforming it from paper compliance into practical protection for lives, assets, and livelihoods.
