In a bold move to sanitize Nigeria’s insurance sector, President Bola Ahmed Tinubu has signed into law the Nigerian Insurance Industry Reform Act (NIIRA) 2025 a landmark legislation that introduces sweeping reforms, including stiff penalties for unlicensed insurance agents and companies operating without proper regulatory approval.
The newly signed Act mandates that individuals who transact insurance business without a valid license face up to six months in prison or a fine of up to ₦500,000, or both. This is stipulated in Section 37 (1) under PART VI INSURANCE INTERMEDIARIES of the NIIRA 2025.
But it doesn’t stop there insurers that knowingly transact with unlicensed agents are now liable to pay five times the premium collected during the illegal transaction.
In addition, unqualified agents may also be ordered by a court to refund any money collected from clients while operating illegally.
“No person shall transact business in Nigeria as an insurance agent unless licensed under the provisions of this Act,” the law firmly states.
New Licensing Standards and Zero Tolerance for Ex-Convicts
The Act sets a higher bar for licensing. To become a licensed insurance agent, applicants must:
- Possess a certificate of proficiency from the Chartered Insurance Institute of Nigeria (CIIN).
- Have at least 10 years of experience in an underwriting firm (if not certified).
- Be free from criminal convictions involving dishonesty or fraud.
- Not have been declared bankrupt in the past five years.
Corporate bodies must ensure that at least one principal officer meets these criteria before the firm can operate legally.
According to NIIRA, anyone with a criminal record or bankruptcy history cannot be licensed a move industry observers say will clean up the ranks and restore trust among consumers.
The National Insurance Commission (NAICOM) is tasked with screening applicants and can reject any application that fails to meet the requirements. However, rejected applicants have the right to appeal to the NAICOM Board.
Harsh Penalties for Unlicensed Insurance Firms
The NIIRA 2025 also takes a hard line on companies that operate insurance businesses without registration:
- ₦25 million fine for individuals.
- ₦50 million fine per principal officer for firms.
- Two-year jail sentence for executives of guilty companies.
These penalties underscore the government’s no-nonsense stance on illegal insurance operations, which have long plagued the industry with fraudulent claims, unpaid settlements, and consumer distrust.
Driving Toward a $1 Trillion Economy
The NIIRA 2025 isn’t just about penalties it’s part of a larger economic vision.
According to Nairametrics, the Tinubu administration views this Act as a cornerstone of its $1 trillion economy agenda. It’s expected to reposition Nigeria’s insurance sector for global competitiveness by enhancing transparency, digitization, and risk management.
Key features of the Act include:
- Higher capital requirements for insurance firms to ensure financial stability.
- Mandatory enforcement of compulsory insurance (e.g., motor, buildings).
- Digital transformation mandates to improve access and user experience.
- Dedicated policyholder protection funds in case of insolvency.
- Stricter timelines for claims settlement reducing bottlenecks and fraud.
- Expanded participation in ECOWAS Brown Card cross-border insurance schemes.
What This Means for Nigerians
For everyday Nigerians, the implications are far-reaching. The new framework aims to increase insurance penetration, which remains below 2% in Nigeria among the lowest in Africa.
Analysts believe the stricter enforcement, especially on licensing and claims settlements, will lead to greater consumer trust, improved financial inclusion, and more robust coverage, especially in sectors like agriculture, health, and SMEs.
The NIIRA 2025 replaces a patchwork of outdated insurance laws that failed to address modern realities such as online insurance, fraud, and low market participation.
Bottom Line:
With NIIRA 2025 now signed into law, the era of “anybody-can-sell-insurance” in Nigeria is officially over. Unlicensed agents and firms must either comply or face legal and financial consequences. For honest operators and policyholders, this reform could finally usher in a more professional, credible, and consumer-focused insurance industry.
