…What employees should know
By Henry Uche
Insurance awareness, an intricate and crucial fabric of modern business, is largely trivialised in Nigeria.
In the country’s labour market, a recent vox pop conducted revealed that only four out of 10 employees actually have a full knowledge of their mandatory insurance rights. Two out of these four are not really interested in enforcing the right when the inevitable happens, while the remaining six are totally ignorant of workplace insurance cover.
According to experts, when employees lack knowledge of their mandatory insurance rights, and businesses fall short in educating or complying, the consequences can be severe and range from legal exposure, financial strain, diminished employee trust and reputational damage.
They insist that fostering a culture of insurance literacy is not just about ticking regulatory boxes, but safeguarding the very foundation of a resilient enterprise.
However, some employers remain, from recent findings, are either unwilling or indifferent when it comes to helping uninformed or careless employees exercise their insurance rights, often ignoring the long-term risks this poses to all parties, including their own organisations. Labour experts have urged that young employees should be thoroughly educated on this critical area at the point of hiring. They further advise that human resource managers should, as a matter of necessity, implement regular training and orientation programmes to sensitise staff on safety measures, a proven cost-saving strategy, and to equip them with the knowledge required to claim compensation in the event of unforeseen incidents.
An insurance expert and public affairs commentator, Mr. Ade Adesokan, further illuminated this point in an interview.
How vital is employee rights awareness?
To be candid, boosting awareness of mandatory insurance covers for Nigerian workers, estimated at 113,349,564 in 2024, according to the World Bank’s collection of development indicators, is a pressing national imperative, particularly at a time when both individuals and businesses pay a heavy price for ignorance and non-compliance.
Level of ignorance
From research, despite legal mandates requiring insurance protections that span from Employer’s Liability Insurance, to Group Life Assurance and Workmen’s Compensation, many workers remain unaware of their rights.
The implication of this ignorance has left countless employees vulnerable when accidents, injuries, or unforeseen circumstances occur in the course of their job and it often results from small-scale employers neglecting their obligations out of ignorance or, at times, deliberate non-compliance.
Examples
Now consider the plight of Wale Adebayo, a 42-year-old factory worker who lost his right hand in an industrial accident after 15 years on the job. Although his employer was legally bound to secure Workmen’s Compensation insurance, Adebayo received no support and now struggles to provide for his family. Similarly, Amina, a 36-year-old nurse, sustained severe injuries when her hospital building partially collapsed during renovations and found herself bearing steep medical bills because the required Occupiers Liability Insurance was not in place. Then there is the case of Joseph, a 28-year-old delivery driver, whose fatal accident left his family unsupported after his employer fraudulently obtained third-party motor insurance. Such stories are far too common, with workers missing out on entitlements worth millions of naira—a gap that not only devastates families but also exacerbates socioeconomic inequalities.
What covers exist for the Nigerian workforce?
First, the Employee Compensation Act (ECA) of 2010 represents a fundamental shift in employer liability insurance regulations, superseding the previous Workmen’s Compensation Act with more comprehensive protections. Under this legislation, Nigerian employers must contribute 1% of their total payroll to the Nigerian Social Insurance Trust Fund (NSITF), creating a financial safety net for employees who experience work-related injuries, illnesses, or fatalities. This mandatory contribution ensures that affected workers receive appropriate compensation without placing undue financial burden on individual employers.
Working in tandem with the ECA, the Pension Reform Act of 2014, which mandates ‘Group Life Assurance’ coverage for employees. This regulation requires employers to maintain life insurance policies equivalent to a minimum of three times an employee’s annual total emoluments. The federal government has demonstrated commitment to this mandate through recent approval of N17.3 billion for the 2025/2026 Group Life Insurance Scheme, extending coverage to federal workers, paramilitary personnel, and various government employees.
Then the Insurance Act of 2003, as amended, provides the regulatory framework for Professional Indemnity Insurance in Nigeria. This critical coverage is particularly relevant for professionals such as medical practitioners, lawyers, accountants, architects, and engineers.
The Act empowers the National Insurance Commission (NAICOM) to supervise and regulate professional indemnity coverage, ensuring professionals have protection against claims arising from negligence, errors, or omissions in their professional services. Recent regulatory updates have strengthened requirements for professional bodies, with some sectors now mandating minimum coverage limits proportionate to potential liability exposure. These regulations protect both the professionals and their clients, ensuring adequate financial resources are available to address claims of professional negligence.
NAICOM has also enhanced enforcement mechanisms to ensure compliance across professional sectors, contributing to greater market discipline and consumer protection. These regulatory developments collectively demonstrate Nigeria’s growing emphasis on comprehensive insurance coverage, establishing minimum standards while creating mechanisms for sustainable funding and implementation. The framework balances obligations with rights, contributing to a more secure and protected workforce and professional landscape across the nation.
Consequences of employer negligence
The consequences of non-compliance are not only significant but spelt out. Employers who neglect their statutory duties may face penalties as high as N1 million for failing to maintain Employer’s Liability Insurance, or fines commencing at N250,000 for lapses in Group Life Assurance, escalating every day that the default continues. Similarly, the mandatory Motor Third-Party Insurance policy—often overlooked or subverted through counterfeit documents—carries harsh penalties such as vehicle impoundment, fines of up to N250,000, and even imprisonment for up to a year.
What is at stake for professionals?
In the healthcare sector, many professionals operate without the required Professional Indemnity Insurance, risking fines of up to N500,000 and the suspension of their licenses. The neglect of Occupiers Liability and Builders Liability Insurance further exposes workers, building occupants, and the public to grave dangers, with violations inviting fines of up to N500,000 or imprisonment, alongside potential project suspensions and exclusions from lucrative government contracts.
Relationship with the insurance industry
While the Nigerian insurance industry continues to grow, recording N1.2 trillion in gross premium income for the third quarter of 2024, a 61% year-on-year increase, with projections pointing to a N2.5 trillion close in 2025. The overall insurance penetration remains dismally below 1%. Although public awareness has contributed to a 14.4% rise in the insurance sector’s contribution to GDP in 2024, these impressive figures mask the reality that millions of workers remain insufficiently protected.
Cost of ignorance
The human cost is profound: injuries and disabilities often lead to overwhelming medical bills and lost wages, while grieving families contending with the death of a breadwinner face severe financial insecurity.
Hopes
Well, encouraging signs have emerged from a renewed focus on enforcement and public education. Since February 2025, a nationwide collaboration among NAICOM, the Nigeria Police Force, the Federal Road Safety Corps, and various stakeholders has been intensifying efforts to stamp out fake insurance documents and enforce third-party motor insurance compliance. With directives from senior officials, such measures were designed to protect both motorists and third parties by imposing vehicle impoundments, significant fines, and even imprisonment on defaulters. These enforcement efforts underscore the critical importance of mandatory insurance policies in shielding citizens against the devastating financial consequences of accidents.
Role of judiciary
In parallel, the judiciary is stepping forward to ensure accountability in other sectors that impact public safety. Chief Justice of Nigeria (CJN), Kudirat Kekere-Ekun recently urged judges to hold electricity sector operators accountable following an alarming report of 112 electricity-related deaths and 95 injuries recorded in 2024. The CJN at a national seminar organized by the Nigerian Electricity Regulatory Commission and the National Judicial Institute, the CJN emphasized the need for strict judicial oversight to enforce safety standards and to ensure that regulatory bodies, such as NERC, operate transparently and in the public interest. Her call to action highlights how coordinated governmental and judicial measures can help restore safety and accountability across critical sectors of the economy.
Other benefits
Ultimately, increasing awareness of compulsory insurance policies is essential not only for bolstering regulatory compliance but also for ensuring greater financial security for workers and their families.
Role of media
National newspapers, radio broadcasts, television programs, and social media must also play a role in disseminating clear, accessible information about insurance rights and responsibilities. Aggressive public enlightenment campaigns, combined with strict regulatory enforcement and unwavering judicial oversight, can help create a more secure and resilient workforce, paving the way for a stable and prosperous Nigerian economy.