Upper legislative chamber replaces two-decade-old insurance law with stricter regulations

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The Senate has repealed the nearly three-decade-old National Insurance Commission Act of 1997, saying the legislation had become outdated and was no longer adequate to regulate Nigeria’s evolving insurance industry.

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To address the gaps in the old law, lawmakers on Tuesday passed the Insurance Regulatory Commission Bill, 2025, which seeks to establish a modern legal framework for supervising the insurance sector, strengthen regulatory oversight and align Nigeria’s insurance industry with global best practices.

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The bill, which scaled third reading after the Senate adopted the report of the Committee on Banking, Insurance and Other Financial Institutions, will replace the existing NAICOM Act if approved by the House of Representatives and assented to by President Bola Tinubu.

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Under the proposed law, the National Insurance Commission will be renamed the Insurance Regulatory Commission, while the regulator will receive broader powers to supervise operators, enforce compliance and impose stiffer penalties for regulatory violations.

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Presenting the committee’s report, Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Tokunbo Abiru, said the current insurance law no longer reflects the realities of the country’s insurance market.

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Abiru explained that the committee consulted widely before recommending the bill for passage, holding a public hearing and reviewing more than 50 memoranda submitted by stakeholders across the insurance industry.

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According to him, the proposed legislation is designed to strengthen the independence of the insurance regulator by giving it enhanced authority to carry out its responsibilities without undue interference.

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He said the commission would have powers to issue regulations, work with local and international regulatory bodies and intervene in distressed insurance companies to protect policyholders and preserve financial stability.

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Abiru added that the bill introduces stricter corporate governance standards by prescribing professional qualifications and fit-and-proper requirements for members of the commission’s governing board.

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He noted that the legislation also provides tougher sanctions for regulatory breaches, including higher fines, licence suspensions, additional liabilities and the disqualification of individuals found responsible for regulatory failures.

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According to the lawmaker, supervisory and inspection provisions have been updated to enable the regulator to respond more effectively to emerging risks and developments within the insurance sector.

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He further disclosed that the bill empowers the Minister of Finance to constitute an interim management committee within 30 days if the commission’s governing board expires or is dissolved, ensuring continuity in the regulator’s operations.

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Abiru said the proposed law also expands the commission’s statutory mandate to cover the effective administration, supervision, regulation, control, integrity and development of insurance business in Nigeria.

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He added that the legislation protects the commission and its officials from legal actions arising from duties performed in good faith while strengthening the regulator’s legal standing in court proceedings.

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Explaining the proposed name change, Abiru said renaming the National Insurance Commission as the Insurance Regulatory Commission would eliminate ambiguity and better reflect the institution’s broader regulatory mandate.

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According to Senator Osita Izunaso, the new Act provides a comprehensive reform that would strengthen regulation of the insurance industry and provide the country with a more holistic legal framework.

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