By David Akinmola
The National Insurance Commission (NAICOM) and the Islamic Financial Services Board (IFSB) are working on measures to strengthen Nigeria’s Takaful market, with the regulator indentifying the Islamic insurance model as a potential driver of wider insurance penetration, financial inclusion and long-term economic development.
The development followed a five-day Diagnostic Assessment Mission by IFSB experts, who engaged regulators, Takaful operators, industry associations and development partners to examine the legal, regulatory and supervisory framework governing the segment.
The outcome could mark a new phase for Nigeria’s relatively young Takaful market, as the industry seeks to move beyond its niche positioning and attract millions of Nigerians and businesses that remain outside the formal insurance system.
Receiving the IFSB delegation led by Dr.Hamim Syahrum Ahmad Mokhtar in Lagos, the Commissioner for Insurance, Olusegun Omosehin, said, the commission is committed to unlocking the potential of Takaful as a strategic vehicle for expanding insurance coverage and promoting financial inclusion.
Omosehin, urged the experts to provide “frank, practical and data-driven” recommendations that could support ongoing regulatory reforms and market development initiatives.
The commissioner stressed that Takaful should be viewed as an alternative insurance model rather than merely a subset of conventional insurance, arguing that it could serve a broad spectrum of consumers while operating within established Shariah governance principles.
He said the development of the segment would require stronger risk-based capital and supervisory frameworks, improved data transparency and prudent surplus management practices capable of protecting participants while ensuring the sustainability of operators.
The intervention comes at a critical point for Nigeria’s insurance industry, where penetration remains low despite the country’s large population and growing economic activity.
For the Takaful segment, the challenge is not only to attract customers seeking Shariah-compliant financial products but also to demonstrate that its principles of mutual assistance, shared responsibility, transparency and surplus distribution can provide an attractive alternative for the wider Nigerian market.
Recent developments among Takaful operators have already shown the potential of the model to improve customer engagement.
Nor Takaful Insurance Limited, for instance, recently distributed N427.96 million in surplus to eligible participants and enrollees who did not make claims during the 2024 financial year, reinforcing one of the distinctive features of the Takaful model.
Responding on behalf of the IFSB delegation, Dr. Hamim Syahrum Ahmad Mokhtar said the Diagnostic Assessment Mission was aimed at providing an objective assessment of Nigeria’s Takaful ecosystem and identifying areas where the regulatory and market framework could be strengthened.
Mokhtar said the engagement with Nigerian stakeholders had provided the IFSB team with useful insights into the opportunities and challenges confronting the segment, adding that the organisation would incorporate stakeholders’ perspectives into its final recommendations.
He noted that a sound regulatory and supervisory framework was critical to building confidence in the Takaful market, particularly as the segment seeks to attract new participants and support broader financial inclusion.
According to him, the assessment was not merely about identifying gaps but also about highlighting opportunities for Nigeria to build a stronger, more sustainable and internationally aligned Takaful industry.
The IFSB delegation’s assessment is expected to provide recommendations on strengthening the legal, regulatory and supervisory architecture for Takaful, as well as improving risk management, governance, disclosure and consumer protection.
For Nigeria, the significance of the exercise goes beyond the development of a specialised insurance segment.
The country continues to face a wide insurance protection gap, with millions of households and small businesses exposed to financial risks without adequate formal protection.
