Nigeria’s Senate has approved legislation to repeal the National Insurance Commission (NAICOM) Act of 1997, paving the way for a more robust regulatory framework aimed at strengthening oversight of the country’s insurance industry.
The proposed Insurance Regulatory Commission Bill, 2025, which passed third reading after the Senate adopted the report of its Committee on Banking, Insurance and Other Financial Institutions, is intended to modernize insurance regulation and align Nigeria’s supervisory framework with international standards.
If subsequently passed by the House of Representatives and signed into law by President Bola Tinubu, the bill will replace the nearly 30-year-old NAICOM Act, which lawmakers say no longer reflects the complexities of today’s insurance market.
A central feature of the legislation is the transformation of the National Insurance Commission into the Insurance Regulatory Commission, accompanied by expanded regulatory powers to supervise insurers, enforce compliance and impose tougher sanctions for violations.
Presenting the committee’s report, Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Tokunbo Abiru, said the existing legal framework had become inadequate for regulating an increasingly dynamic insurance sector.
According to Abiru, the committee undertook extensive stakeholder engagement before recommending the bill for passage. The review process included a public hearing and consideration of more than 50 memoranda submitted by insurers, industry associations and other stakeholders.
The proposed legislation seeks to reinforce the operational independence of the insurance regulator by granting it broader authority to issue regulations, collaborate with domestic and international supervisory agencies, and intervene in financially distressed insurance companies where necessary to safeguard policyholders and maintain financial system stability.
The bill also introduces stronger corporate governance requirements for the commission, including professional qualification standards and fit-and-proper criteria for members of its governing board. Lawmakers believe these provisions will enhance accountability and improve regulatory effectiveness.
In addition, the legislation significantly increases the penalties for regulatory breaches. Proposed sanctions include higher monetary fines, licence suspensions, additional liabilities and the disqualification of individuals found culpable of serious compliance failures.
The supervisory and inspection framework has also been updated to enable the regulator to respond more effectively to emerging risks, evolving business models and other developments within the insurance market.
To ensure continuity in governance, the bill empowers the Minister of Finance to establish an interim management committee within 30 days where the commission’s governing board expires or is dissolved, pending the appointment of a new board.
Beyond regulatory oversight, the proposed law broadens the commission’s statutory mandate to include the administration, supervision, regulation, control, promotion of integrity and development of insurance business in Nigeria.
The legislation also provides legal protection for the commission and its officials against actions arising from duties performed in good faith, while strengthening the regulator’s legal authority in court proceedings.
The Senate’s approval marks another milestone in the ongoing reform of Nigeria’s financial services sector. Industry observers expect the proposed framework to improve regulatory confidence, strengthen consumer protection, enhance corporate governance and position the insurance industry for sustainable growth once the legislation completes the remaining stages of the legislative process.
