Addressing Non-Patronage, Fixing Claims Delays in Nigeria’s Insurance Sector
The Nigeria Insurance Industry Reform Act 2025 (NIIRA 2025) has introduced sweeping measures designed to end the long-standing problems of delayed claims settlement and weak public confidence—issues widely seen as the biggest barriers to insurance uptake in the country.
Among the most consequential reforms is the law’s strict new regime for fast-tracking claims payment. Section 210 mandates that insurers must process and settle claims within the timelines defined in the National Insurance Commission (NAICOM) Service Charter—and under no circumstances beyond 60 days after a claim is filed.
Failure to comply comes with penalties and mandatory compound interest on unpaid claims, signalling what the Act describes as a “zero-tolerance” stance on delayed claims. The reform is expected to significantly boost public trust and broaden insurance patronage, which has historically been hampered by widespread scepticism about insurers’ willingness to pay claims.
Streamlining Claims, Reducing Bottlenecks
NIIRA 2025 also modernises communication processes by allowing electronic channels—including email—for delivering policy documents and other claim-related communication. It further removes the long-criticised requirement for police reports in motor accident claims, except in cases involving death or serious injury, provided proof of loss is sufficient.
Sector observers say the combined effect of these reforms will be transformative—provided insurers comply and NAICOM enforces the stated sanctions. They argue that the law eases the burden of documentation, cuts delays and removes loopholes often exploited to deny claims.
A Sector Long Haunted by Distrust
For years, insurers and regulators have struggled to expand insurance penetration and improve the sector’s contribution to GDP. Despite investments in awareness campaigns, digital channels and innovative products, many Nigerians remain convinced that insurers “do not pay claims.”
Operators acknowledge that this perception—sometimes based on misunderstanding, other times rooted in genuine grievances—has been the sector’s greatest obstacle.
Many complaints stem from policyholders not understanding the limits of their coverage. Insurers say customers often assume every policy covers every risk. When a claim is rejected for exclusions or lack of coverage, the narrative becomes that insurers simply refuse to pay.
Yet there have also been cases of genuine claims going unpaid, especially by financially weak insurers. A few years ago, policyholders of Niger Insurance, Standard Alliance, and Investment and Allied Insurance (IAA) staged public protests, demanding their claims. Eventually, regulators revoked the licences of the troubled firms and appointed liquidators.
Even among healthier companies, disputes over “hanging claims” persist, further denting the industry’s reputation.
Regulator Confident New Law Will Reset the Sector
At a recent media retreat in Abeokuta, the Commissioner for Insurance, Mr. Olusegun Ayo Omosehin, expressed optimism that NIIRA 2025 marks the beginning of the end for claims controversies.
He said NAICOM has tightened rules on disclosures, sales practices, pricing and claims handling—all aimed at strengthening transparency and ensuring policyholders receive clear information about their coverage.
“Our stance on claims settlement is unequivocal,” Omosehin declared. “We maintain zero tolerance for non-settlement of genuine claims. Insurers must sell only what they can service.”
He added that response windows for complaints have been shortened and escalation channels clarified to ensure timely resolution of policyholder grievances.
Hope for Increased Patronage
Analysts say that if implemented faithfully, NIIRA’s claims settlement provisions could finally push Nigerians toward genuine insurers—particularly for compulsory policies like Motor Third Party Insurance.
Despite the law raising premiums for the policy from N5,000 to N15,000 and increasing compensation from N1 million to N3 million, many motorists still buy fake insurance certificates for as little as N2,000. Such motorists—and their victims—receive nothing when accidents occur.
Experts say the new law is clear: seamless claims settlement is guaranteed only when policies are purchased from licensed insurers.
With NIIRA 2025 now in force, stakeholders hope a more transparent, efficient claims process will drive mass patronage and reposition the Nigerian insurance sector closer to global standards.
