The Nigerian Insurance Industry Reform Act (NIIRA) 2025 has introduced a modern framework for the nation’s insurance sector, focusing on stronger policyholder protection, ethical market conduct, increased insurance penetration, and sustainable economic growth.
While the law covers all aspects of insurance practice, one of its most consequential provisions for the real estate sector is the mandatory insurance of public buildings, a measure designed to safeguard lives, property, and investments.
Under Section 76(6) of the Act, public buildings are defined as tenement houses of more than one floor; hostels and buildings occupied by tenants, lodgers, or licensees; and any structure accessible to the public for education, medical care, recreation, or business purposes.
The compulsory insurance requirement covers risks such as building collapse, fire, flood, storm, and injury or death of occupants, with policies to be renewed annually. Non-compliance attracts a penalty of up to three years imprisonment or a ₦2 million fine, or both, as stated in Section 76(5–7).
However, as real estate expert Dotun Bamigbola, a chartered surveyor and senior partner at Bamigbola Consulting, explains, effective implementation of NIIRA 2025 depends heavily on accurate property valuation conducted by registered estate surveyors and valuers.
“Professional valuation is central to the effective implementation of NIIRA 2025. Insurers and the insured rely on registered valuers to determine accurate reinstatement costs, fair indemnity values, and assess risks across different stages of a building’s lifecycle,” Bamigbola said.
He noted that valuation is vital not only during construction but also throughout the building’s operational lifespan. During construction, valuers help determine the value of work done and assets on-site for “all-risk” insurance coverage, which protects against incidents such as partial collapse, fire, or site accidents.
Upon completion, a full reinstatement valuation—along with a market valuation and depreciation schedule—must be conducted before occupancy to ensure the building’s insurance reflects its true replacement and economic value.
Bamigbola added that periodic revaluations are essential once a building is in use to account for inflation, material cost fluctuations, extensions, or depreciation, ensuring that insurance renewals remain realistic and adequate.
He warned that using arbitrary figures for a building’s insured value could result in underinsurance and inadequate compensation in the event of loss.
“Valuation is a professional safeguard. It determines a fair sum assured and guarantees that payouts—especially under Section 79 of NIIRA, which mandates that fire insurance proceeds be used for rebuilding—are based on current economic realities,” he explained.
With the costs of construction materials and exchange rate volatility influencing property values, Bamigbola stressed that regular professional valuation ensures insurance coverage remains aligned with market conditions, whether the policy is based on reinstatement or indemnity.
He concluded that embedding valuation into the framework of NIIRA 2025 will enhance compliance, protect investments, and strengthen trust between insurers and policyholders.
“A building insurance policy protects your most valuable asset. By integrating professional valuation into NIIRA 2025’s implementation, stakeholders will not only meet statutory obligations but also promote a transparent and resilient insurance ecosystem,” he said.
