Need for Compulsory Builders’ Insurance Implementation

The collapse of a three storey shopping mall at old Ojo road, near Alakija bus stop in Lagos penultimate week, has spelt the need for implementation of section 75 and 76 of NIIRA 2025 on compulsory builders’ insurance,  writes Ebere Nwoji 

The two incidences of building collapse in  Alakija area of Lagos State and PortHarcourt  area of River State the same day,  Thursday June 25th, 2026 spells the need for speedy  implementation of sections 75 and 76 of Nigeria Insurance Industry Reform Act NIIRA 2025 on compulsory builders’ insurance.

A three-story shopping complex collapsed on June 25, 2026, in Alakija area of Lagos State, killing nine people at the spot while 26 others were rescued with different degree of injuries. 

The building, an over 30 year old shopping mall  located along old Ojo road near Alakija bus stop is a public building housing different business out fits such as  a cyber cafe, a photography studio, mobile phone repair shops, printing press / business centre, a cold room, retail shops and travel agency. It was said to have been marked  for demolition  years back  due to  obvious structural weakness  of the building but was neglected by government agency in charge.

Similarly, the four storey building located  along Peter Odili Road,  Port Harcourt was said to be under construction before the unfortunate incident happened trapping several workers three of which were rescued shortly after. 

Compulsory builders insurance Laws 

This is happening whereas both repealed insurance Act 2003 and NIIRA 2025 made compulsory insurance of the categories in which the two buildings fall within. Investigation by THISDAY reveals that for  the two incidences, there is no confirmation that any of them has insurance cover as no insurance underwriting firm or brokerage firm has confirmed any form of insurance cover for any of the buildings. This is common  in Nigeria as in recent past  a good number of building collapses that happened in different parts of the country did not have insurance cover.

But statutorily, both buildings which fall within the categories  of public building should have an insurance cover. Indeed, both the repealed 2003 insurance act and the prevailing Nigeria Insurance  Industry Reform Act NIIRA 2025  made provisions for compulsory insurance of such buildings.

Section 64 and 65 of insurance Act 2003  states: “No person shall cause to be constructed any building of more than two floors without insuring with a registered insurer his liability in respect of construction risks caused by his negligence or the negligence of his servants, agents or consultants which may result in bodily injury or loss of life to or damage to property of any workman on the site or of any member of the public.”

Sub section two of it explained that the  duty to insure under subsection (1) of this section shall arise when a building is under construction.

Subsection three warns that a person who contravenes subsection (1) of this section commits an offence and on conviction shall be liable to a fine of N250,000 or imprisonment for three years or both.

Section 65 in respect of insurance of public buildings  under which the collapsed Alakija shopping mall falls within states: “Every public building shall be insured with a registered insurer against the hazards of collapse, fire, earthquake, storm and flood.”

The act defines public building to  include a tenement house, hostel, a building occupied by a tenant, lodger or licensee and any building to which  members of the public have ingress and aggress for the purpose of obtaining educational or medical service, or for the purpose of recreation or transaction of business. The section went further to explain that, “Insurance policy under subsection (1) shall cover the legal liabilities of an owner or occupier of premises in respect of loss of or damage to property or bodily injury or death suffered by any user of the premises and third parties, adding that 0.25 percent of the net premium received by every direct insurer on policies issued under subsection (1) of this section shall be paid quarterly by every insurer into a Fire Services Maintenance Fund which shall be established, administered and disbursed by the  National Insurance Commission for the purpose of providing grant or equipment to institutions engaged in fire fighting services.”

Subsection 5 of the act spelt the punishment awaiting offenders saying, ”An insurer who defaults in making payment as required under subsection (4) of this section commits an offence and is liable on conviction to a fine ten times the amount payable provided that persistence in non-compliance with the provision shall be a ground for the cancellation of registration of an insurer.”

Compulsory building insurance was not in any way expunged from NIIRA 2025, rather it significantly expanded compulsory building insurance in Nigeria. It targeted buildings under construction and existing public buildings, with strict penalties for non-compliance. Section 75 of  NIIRA 2025 on Insurance for Buildings Under Construction 

requires Mandatory Builders’ Liability Insurance before construction begins for any building exceeding two floors. The act said the policy covered Owner/contractor negligence causing death/injury to workers/public. A fine up to N5 million, 12 months imprisonment, or both is attached for defaulters. 

Section 76 of the act spells out compulsory insurance for public buildings  under which the Act said compliance is compulsory  for Owners/occupiers of public buildings (multi-floor tenements, hostels, schools, hospitals, malls, hotels).

Need for enforcement  

Unfortunately, Nigerians have vague understanding of the value of insurance as such expose their workers and building occupiers to risk of building collapses.

However some state governments have even before the NIIRA 2025 started implementation of the compulsory building insurance law.

The Ogun State Government two years back  announced the implementation and enforcement of compulsory building insurance insisting that all buildings above two floors in the state must have insurance cover that was under insurance Act 2003.

The Lagos State Government is actively enforcing mandatory insurance for commercial buildings above two floors, but the policy is in its early stages and faces compliance challenges

Similarly, the  Lagos State Government has announced compulsory insurance for multi-storey commercial buildings. It aimed to hold owners accountable by using digital mapping (e-GIS) to verify property information.

The Lagos State Building Control Agency ( LASBCA) in 2025  verified 782 building insurance policies . However, as of mid-2025, only 159 buildings had verified policies, against thousands of infractions detected.

This  calls for enforcement of  the NIIRA 20254 Insurance Act, which requires insurance for buildings under construction and public structures. The punishment spelt out for Non-compliance should be meted out to the later.

NAICOM’s stand

The commissioner for Insurance, Mr Olusegun Ayo Omosehin had at several insurance forums said that the NIIRA 2025 would be implemented to the later by his administration. Omosehin had  described the NIIRA 2025 as a  game changer, a transformative blueprint for modernising Nigeria’s insurance sector. On the  implementation, Omosehin said NIIRA 2025  was a roadmap for regulatory reform, financial inclusion, digital transformation, and global competitiveness, aimed at building a technology-driven industry that protects lives, businesses, and investments.

He said for every aspect of the law to be implemented, it  needed full compliance and  enforcement support. 

The commissioner has entered into partnerships with  relevant government agencies including the Nigeria Police Force to tackle illegal operators and enforce compulsory insurances such as third-party motor insurance, compulsory builders insurance, Policyholders’ Protection Fund (IPPF)

Touching Compulsory builders insurance,  Omosehin had outlined a clear strategy for implementing compulsory Builders’ Liability Insurance under the NIIRA 2025, focusing on structured enforcement and a preventive philosophy.

NAICOM Enforcement Drive

Lao, Omosehin has made enforcing all compulsory insurances a central pillar of NIIRA 2025. Builders’ Liability is specifically included in the mandate of the Compulsory Insurance Working Group, with former President of Nigerian Council of Registered Insurance Brokers (NCRIB), Mr Shola Tinubu  as the Chairman. His team was tasked with  the responsibility of strengthening enforcement and adoption nationwide. 

According to the commissioner, the group will collaborate with federal and state agencies to ensure compliance.

Enforcement As Prevention strategy

Omosehin emphasised that the enforcement was not punitive but preventive in nature.

According to him, the enforcement would ensure that developers internalise safety standards to prevent building collapses.

The implementation, according to him, will guarantee that victims and affected communities were not abandoned after a disaster.

“The implementation will shift public perception to see insurance as a practical tool for financial resilience. Builders’ Liability Insurance is mandatory for buildings with more than two floors under construction. It covers risks like collapse, injury, or damage, ensuring that developers are financially responsible for third-party harm caused by their negligence,”he said.

Industry analysts said full implementation of NIIRA 2025 especially on compulsory builders insurance has become  necessary because of cases of building collapses round the country.

Cases of building collapses

Tales of building collapses  abound in different parts of the country with victims left in their own fate as in most cases the owners run away so as not to be caught by the law enforcement agents.The  BBC news on September 1,2024 reported that in Lagos, during the year   building   collapses were  on average of one every two weeks.

The BBC report quoted a Lagos based building expert as saying that in Lagos alone in the past 12 years, there have been cases of no less than 90 collapsed buildings with many lives and properties wasted without the least compensation because none of the buildings was insured.

The BBC report quoted the Council of Regulation of Engineering as saying that in these cases no less than 350 lives were lost.

The most remarkable building collapse recorded in Lagos was the 21 storey building collapse in Ikoyi which  happened  in 2021 in which 21 people were killed and investigation revealed that the building which was under construction had no insurance cover.

Aside the cases in Lagos, other states in different regions of the country also  record cases of building collapses, a situation which made Lagos State Government to  embark on implementation of  the NIIRA 2025 on building and building under  construction.