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With the recent signing of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 into law by President Bola Tinubu, the sector is entering a new era of stricter oversight.
It has handed the National Insurance Commission (NAICOM) powers to sanction erring operators and tighten oversight.
The document comes with tough provisions to stamp out terrorism financing, shut down rogue online insurers and tackle long-standing industry loopholes undermining trust and stability.
Precisely, Section 201 of the Act mandates that people running insurance businesses online obtain a license from the National Insurance Commission to practice in Nigeria.
The law states that “the Commission shall have the power to impose administrative sanctions against insurance institutions for non-compliance with its provisions”, a move that applies to all platforms providing insurance services online.
In a bid to regulate the fast-growing digital insurance space, Section 201(1) of the Act warns that “a person shall not commence or carry on web, internet, or electronic-based insurance or related business unless licensed by the Commission.” It further empowers NAICOM to issue regulations from time to time for web, internet, or related electronic-based insurance businesses in Nigeria.
The legislation also adopts a zero-tolerance stance on terrorism financing, mandating all insurance institutions to implement policies in compliance with Know Your Customer (KYC), Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Combating the Financing of Proliferation of Weapons of Mass Destruction (CPF) obligations.
Insurers are required to maintain internal controls that prevent transactions linked to the proliferation of weapons of mass destruction, while NAICOM is authorized to issue guidelines and policies to combat money laundering and terrorism financing in line with global best practices. The Act further directs the Commission to collaborate with foreign regulators to exchange information and intelligence in pursuit of these goals.
Penalties for violations are steep. Individuals operating unlicensed insurance businesses face fines of N25 million, while companies are liable for double that amount. Principal officers of offending firms could each be fined N50 million and face up to two years in prison.
President Bola Ahmed Tinubu, who assented to the NIIRA 2025, described it as a transformative legal framework aimed at modernizing Nigeria’s insurance industry, boosting investor confidence, and accelerating the country’s march toward a $1 trillion economy. The Act repeals and consolidates outdated insurance laws into a single, modern statute, introducing higher capital requirements, compulsory insurance enforcement, digitization mandates, and broader supervisory powers for the Commission.
