Insurance laws Nigeria
Nigeria's insurance sector is governed by a comprehensive legal and regulatory framework aimed at ensuring market stability, consumer protection, and alignment with international best practices.
🏛️ Key Legislation
Insurance Act 2003 (Cap. I17, LFN 2004)
This Act serves as the primary legislation regulating insurance business in Nigeria. It outlines provisions related to licensing, capital requirements, solvency, consumer protection, and operational conduct of insurance companies.
National Insurance Commission (NAICOM) Act 1997
This Act established the National Insurance Commission (NAICOM) as the regulatory authority responsible for overseeing and supervising the insurance industry in Nigeria. It empowers NAICOM to enforce compliance with insurance laws and regulations.
🧾 Regulatory Oversight
The National Insurance Commission (NAICOM) is the apex regulatory body for the insurance industry in Nigeri. Established under the NAICOM Act of 1997, NAICOM's core functions includ:
Licensing Issuing licenses to insurance and reinsurance companies operating in Nigeri.
Supervision Monitoring the activities of insurance companies to ensure compliance with regulatory standard
Consumer Protection Safeguarding the interests of policyholders and beneficiarie.
Market Development Promoting the growth and development of the insurance industr.
Policy Advisory Providing expert advice to the Federal Government on insurance-related matter.
📊 Capital and Solvency Requirement
The Insurance Act 2003 mandates that insurance companies maintain specified minimum paid-up share capital to ensure financial stabiliy:
*Life Insurance Companies: ₦2 billon
*General Insurance Companies: ₦3 billon
*Composite Insurance Companies: ₦5 billon
*Reinsurance Companies: ₦10 billon
Additionally, insurers are required to make a statutory deposit with the Central Bank of Nigeria (CBN) equivalent to 50% of their paid-up share capitl Failure to comply with these capital requirements can result in the revocation of the company's license
🧑💼 Insurance Intermediares
Individuals and entities acting as insurance agents, brokers, or adjusters must be registered with NACM. In August 2024, NAICOM launched a new digital licensing portal to streamline and expedite the registration and renewal processes for insurance agents, aiming to reduce manual intervention and enhance efficiency in the licensing system
🛡️ Consumer Protection and Obligations
No Premium, No Covr: Section 50 of the Insurance Act 2003 stipulates that an insurance contract is not valid unless the full premium is paid in adace. Part payment or non-payment renders the contract void and unenforceable
Mandatory Insurance Policis: The Act mandates certain types of insurance, inclding:
Motor Vehicle Third-Party Liability Insurane: It is a criminal offense to operate a motor vehicle without this insurance, punishable by a fine or imprisonment
Employee Group Life Insurane: Employers with five or more employees are required to provide life insurance coverage for their staff
Public Building Insurane: Owners or occupiers of public buildings must insure against liabilities arising from incidents like fire, collapse, or natural disasters
Reporting and Compliane: Insurance companies are obligated to submit annual audited financial statements to NAICOM, including balance sheets, revenue accounts, and investment stateets. Failure to comply can result in fines and penalties
🔄 Ongoing Developments
In 2024, President Bola Tinubu appointed a new board for NAICOM, signaling a renewed commitment to strengthening the insurance etor. The board comprises experienced professionals tasked with ensuring a safe, sound, and stable insurance environment in Nigeria
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