NAICOM introduces insurance protection fund to address insolvency

The National Insurance Commission (NAICOM) has stated that the newly introduced Insurance Protection Fund embedded in the Nigerian Insurance Industry Reform Act (NIIRA) is targeted at addressing insolvency in the sector and boosting growth. Daily Trust reports that one major concern among Nigerians with bank accounts or insurance policies is the persistent fear of insolvency, […]

The National Insurance Commission (NAICOM) has stated that the newly introduced Insurance Protection Fund embedded in the Nigerian Insurance Industry Reform Act (NIIRA) is targeted at addressing insolvency in the sector and boosting growth.

Daily Trust reports that one major concern among Nigerians with bank accounts or insurance policies is the persistent fear of insolvency, a situation where financial institutions collapse, prompting regulators to revoke their licenses and appoint liquidators to oversee their winding down.

In the insurance industry, this concern is far from unfounded. Over the years, several insurance companies have folded up, leaving policyholders stranded and confidence in the sector shaken.

At a seminar organized by NAICOM for insurance correspondents on Tuesday in Abuja, the Commissioner for Insurance, Mr. Olusegun Ayo Omosehin said NIIRA had come to stay as part of efforts to strengthen the insurance sector.

“Some of the other key initiatives in the NIRA 2025 include the risk-based capital requirements, which I have discussed earlier. “It has also provided better consumer protection through stronger market conduct rules, clearer timelines for claim settlements and stiffer penalties for regulatory breaches. It has also introduced a very pivotal concept, the Insurance Policy Holders Protection Fund, which is designed to safeguard consumers in cases of insurance insolvency, as well as a creation of other funds that are geared towards the safety of Nigerians. NIRA is therefore not just a law, it is a blueprint for a stronger, more inclusive insurance industry,” the CFI said.

 

 

 

Speaking on the ongoing recapitalisation, he said, “The ongoing recapitalization exercise in the Nigerian insurance industry is more than just a regulatory milestone. It is a bold transformation that will redefine the Nigerian insurance industry for global relevance. By raising capital thresholds and introducing a risk-based capital framework, we are laying the foundation for a stronger, more resilient insurance capable of underwriting complex risks and driving national development.”