NIIRA 2025: An Insurance Masterstroke In Financial Cosolidation

Tola Ogunnubi

The financial arrangement that makes provisions against potential losses or risks is called Insurance. Insurance is a means of managing uncertainties and all forms of inherent risks in everyday activities through financial compensation.

In Nigeria, individuals, organisations and many business owners go through financial ruins from events that are beyond their control, but with insurance, there is stability and continuity of their business when the unexpected event happens. In essence, Insurance is the protection, the cover, the shield from total loss which enables an insured or policyholder to bounce back after a loss.

Insurance is an everyday requirement for all activities, and the importance of insurance cannot be over emphasized and must be deepened. With the growing Nigerian population estimated to be over 200M, one will expect that the country has a very big and active insurance industry contributing significantly to the GDP. But alas that is not the case. Nigerians have not fully embraced and appreciated the important role of insurance in the country.

The low level of insurance penetration and appreciation at just 1% is alarmingly embarrassing for a country like Nigeria with the potential for growth necessitated the signing into law of the Nigerian Insurance Industry Reform Act, 2025 aka NIIRA 2025 marks a fresh beginning in the practice and administration of insurance in Nigeria. The act which was signed by President Bola Ahmed Tinubu GCFR is a turning point in the risk sector of the Nigerian economy. The new bill will rebuild public trust and attract investment, while also making insurance a key pillar in national development.

This new act repeals and consolidates the 2023 insurance law, with the NIIRA 2025 act; the present administration’s drive in achieving a $1 trillion economy has further been reassured. The act provides for a comprehensive regulation and supervision of all insurance and reinsurance activities in Nigeria.

Expectedly, the National Insurance Commission (NAICOM) will be administering and enforcing the provisions of the new act by ensuring the following:

•     A strong capital base for all insurance operators so as to boost the financial strength of insurance practitioners.

•     Ensure prompt settlement of claims and impose fines/sanctions on defaulting underwriters.

•     Introduction of modern technological and innovative digital access to enhance insurance penetration.

•     Enforcement of all statutory insurance policies to protect consumers.

•     A strong presence in regional insurance operations which will also include the ECOWAS Brown Card System.

•     Provision of a dedicated fund for the protection of  policyholders in instances of insolvency by operators.

In taking this bold move, President Bola Ahmed Tinubu must be commended and the National Insurance Commission (NAICOM) led by the Commissioner for Insurance (CfI), Mr. Olusegun Ayo Omosehin, a seasoned industry professional deserves some accolades. Indeed it is a new dawn for everybody and a the beginning of better things to come.

This is going to be a major boost in revenue generation for the government, provisions of more jobs and a huge guarantee for businesses to thrive in the economy. Government spending on social safety net programs will reduce significantly. It is now time for the various underwriters to role-up their sleeves and start educating the populace through insurance education dissemination.

•Tola Ogunnubi wrote in from Abuja.