A New Era for Insurance in Nigeria: Highlights of the NIIRA 2025
The Nigerian Insurance Industry Reform Act (NIIRA) 2025 was formally signed into law by President Bola Ahmed Tinubu on August 5, 2025. The Act represents a landmark development in the regulation of insurance in Nigeria. It repeals and consolidates several outdated enactments, including the Insurance Act 2004, the Marine Insurance Act 2004, the Motor Vehicles (Third Party Insurance) Act 2004, the National Insurance Corporation of Nigeria Act 2004 and the Nigeria Reinsurance Corporation Act 2004, into a single, comprehensive legislation. In doing so, the Act establishes a modern framework for regulating, supervising, and developing the insurance sector.
The capital market responded immediately to the passage of the law. On August 6, 2025, a day after the President’s assent, the volume of insurance stocks traded on the Nigerian Exchange Limited (NGX) surged by 299.15 per cent, rising to 1,883,381,971 units from 471,844,042 units in the previous session. The NGX daily market summary further indicated that 16 insurance stocks recorded gains, with AXA Mansard, Mutual Benefits Assurance and NEM Insurance achieving the highest daily gain of 10 per cent.
Beyond its market impact, the NIIRA introduces reforms that have a direct impact on Nigerians by safeguarding policyholders, strengthening consumer rights, and ensuring wider access to insurance protection. Highlighted below are six notable provisions of the Act and their implications for Nigerians.
- Protection Against Misrepresentation
Sections 4, 5, and 10 of the NIIRA expressly prohibit individuals or entities not licensed under its provisions from describing themselves as “insurers” or “underwriters” or carrying on insurance business. Failure to comply with this provision attracts significant penalties including a fine of ₦25,000,000 and/or two years’ imprisonment for individuals, and ₦50,000,000 fine for companies.
This measure provides an additional layer of security for the public, protecting Nigerians from fraudulent schemes and ensuring that only duly licensed operators can present themselves as insurers.
- Timely Settlement of Insurance Claims
The NIIRA imposes strict timelines for the settlement of admitted claims. Pursuant to section 210, Insurers are required to settle such claims within 60 days of notification (or issuance of a discharge voucher in the case of special risks). Failure to comply attracts a penalty of ₦500,000 and the obligation to pay compound interest at the prevailing bank lending rate. This provision addresses one of the most longstanding issue in the Nigerian insurance market, delayed claims settlement. It ensures that policyholders and third parties receive timely compensation, thereby reinforcing public confidence in the insurance system.
- Mandatory Insurance for Public Buildings
In section 76, the Act mandates the insurance of all public buildings against hazards such as fire, flood, and structural collapse. In addition, insurers are required to contribute a percentage of the net premium from such policies into a Fire Services Maintenance Fund to support firefighting institutions. This requirement enhances public safety and ensures that victims of building-related accidents are entitled to compensation, while also strengthening the country’s institutional capacity to respond to emergencies.
- Compulsory Motor Insurance
Under Section 84, NIIRA reaffirms the requirement of compulsory third-party motor insurance, making it unlawful to operate or permit the operation of a motor vehicle without such cover. Importantly, for vehicles carrying fare-paying passengers, the Act mandates insurance cover of not less than ₦2,000,000 for death or permanent disability. Non-compliance with this section attracts a fine of at least ₦250,000 or imprisonment to a maximum term of 12 months or both. This provision reinforces road safety by ensuring that accident victims have a guaranteed right to compensation.
- Safeguard Against Insurance Fraud
The NIIRA safeguards the public from being misled into exploitative or fraudulent insurance arrangements by placing a statutory obligation of honesty on insurers, brokers, and agents. Section 209 criminalises inducement into insurance contracts by means of misleading, false, or deceptive statements. Persons found guilty are liable to a minimum penalty of ₦500,000 or imprisonment for a term of two years.
- Professional Indemnity by Health Care Providers
By virtue of Section 80, patients harmed by medical negligence now have a clearer path to compensation. The provision mandates every health care provider to maintain professional indemnity insurance with a registered insurer and to prominently display the certificate of insurance within its premises. Non-compliance attracts fines as prescribed by the Commission in consultation with the National Health Insurance Authority. This measure ensures that patients and service users are adequately protected against losses arising from professional negligence, while also fostering accountability and higher standards within the health sector.
NIIRA consolidates and modernises the regulation of insurance in Nigeria. By mandating compulsory insurance in key sectors, protecting consumers from misrepresentation, ensuring timely claim settlements, and extending safeguards to areas such as healthcare, the Act guarantees stronger protection, enhances accountability, and promotes broader participation in the insurance market, thereby reinforcing public confidence in the sector.
