A new Reform Act—called the Nigerian Insurance Industry Reform Act (NIIRA) 2025—has mandated any individual or company that want to operate online insurance businesses in Nigeria to secure an operating license from the National Insurance Commission (NAICOM).
This new reform act is on the same page with the section 201 of the Nigerian Insurance Industry Reform Bill, which was recently signed into law by President Bola Tinubu. The purpose of the reform is to make sure that all online insurance operators fall under regulatory oversight.
The new law is applicable to all platforms that provide insurance businesses and services online. Henceforth, National Insurance Commission will oversee activities of online insurance companies and impose administrative sanctions against insurance institutions that failed to comply with the Reform Act.
The reform Act made it explicitly clear that no individual or entity may commence or operate any insurance business through web, internet, or electronic platforms in Nigeria unless they are duly licensed by NAICOM.
Individuals found guilty of operating unlicensed digital insurance services will face a stern penalty—N25 million or up to two years’ imprisonment, or both. On the other hand, companies or businesses found guilty will be hit with fine doubles to N50 million alongside potential imprisonment for principal officers or executives. However, it's important to note that the licensing requirement is part of a set of reforms made for the purpose of modernizing Nigeria’s insurance sector.
The Act consolidates and replaces multiple outdated laws with a unified regulatory framework. These laws include:
- Insurance Act
- Marine Insurance Act
- Motor Vehicle (Third Party)
- Insurance Act
The law enforces stringent capital requirements, including substantial minimum capital thresholds for non-life, life, and reinsurance operators. In addition to that, the Act strengthens compliance mandates, from Anti-Money Laundering (AML) to Know Your Customer (KYC) protocols, and policies to counter terrorism financing and proliferation risks.
In addition to that, combating Financing of Proliferation of Weapons of Mass Destruction (CPF) is part of the insurers warned against Terrorism Financing. However, affected insurance companies are required to implement internal control measures to prevent any transactions related to the proliferation of weapons of mass destruction.
In a nutshell, Section 201 of the NIIRA 2025 is crystal-clear in the sense that any company or individual offering insurance services online must secure a valid license from NAICOM before operating in Nigeria. This is for the purpose of enhancing industry integrity, protecting policyholders, increasing investor confidence, and improving insurance penetration across the country.
