Joy Agwunobi
Unlicensed insurance agents in Nigeria now face up to six months’ imprisonment or a fine of ₦500,000 under sweeping reforms introduced by the Nigerian Insurance Industry Reform Act (NIIRA) 2025, signed into law by President Bola Ahmed Tinubu.
The legislation, which consolidates and modernises the country’s insurance laws, introduces stringent penalties aimed at curbing malpractice, strengthening professional standards, and rebuilding public trust in the industry. It is part of a broader reform agenda to position the insurance sector as a key driver in Nigeria’s journey toward a $1 trillion economy.
Crackdown on Unlicensed Insurance Agents
Part VI of the Act, which regulates insurance intermediaries, makes it unlawful for any person to operate as an insurance agent without a valid licence issued under the provisions of the law. Section 37(1) explicitly prohibits unlicensed practice, while Subsection (9) prescribes penalties of up to ₦500,000, six months in prison, or both.
In addition, insurers who engage unlicensed agents will face penalties equal to five times the amount of premium collected in connection with the unauthorised business. The law also empowers courts to order refunds of any sums collected by unlicensed agents to the rightful owners.
The Act further requires insurers to maintain a register of all licensed agents, including their names, addresses, contract start and termination dates.
Eligibility requirements for agents
To be licensed, an individual must possess at least a Certificate of Proficiency from the Chartered Insurance Institute of Nigeria (CIIN), have a minimum of 10 years’ experience in an underwriting firm, or meet other professional requirements set by the National Insurance Commission (NAICOM). Applicants must also have a clean record—no convictions for fraud or dishonesty, no bankruptcy in the preceding five years, and no ongoing disqualification under the law.
For corporate entities, at least one principal officer must hold a CIIN proficiency certificate. NAICOM retains the discretion to reject any application, though applicants may appeal such decisions to the Commission’s board.
Tougher rules for insurance brokers
Section 39 of the NIIRA 2025 introduces similar restrictions for insurance brokers, stipulating that no one may operate without a valid licence. Individuals convicted of acting as brokers without a licence face fines of up to ₦500,000 or 12 months’ imprisonment, while companies and firms may be fined up to ₦1 million, with penalties applying to each principal officer.
Insurers are also prohibited from doing business with brokers whose licences have been suspended, with penalties of ₦250,000 or the amount of premium involved—whichever is higher.
The law mandates brokers to provide comprehensive risk assessment data, including claims loss ratios and underwriting expense ratios, in line with International Financial Reporting Standards (IFRS). All brokers must renew their licences within six months of expiry, or within an extended period prescribed by NAICOM.
Brokers risk licence cancellation if they violate the law or professional codes of conduct, act as loss adjusters, falsify income declarations, misappropriate client funds, or are struck off the register of their professional association.
Regulating loss adjusters
Section 48 extends licensing requirements to loss adjusters, who must be registered members of a recognised professional body. Companies, firms, or individuals found operating without a licence face fines of up to ₦500,000 for corporate officers or ₦250,000 for individuals, as well as potential jail terms of up to 12 months.
Insurers who knowingly engage unlicensed loss adjusters are liable to fines amounting to ten times the fees paid for their services.
A wider reform agenda
Beyond tightening rules for intermediaries, the NIIRA 2025 sets out a range of reforms designed to modernise Nigeria’s insurance landscape and align it with global best practices. It prescribes stricter capital requirements to guarantee the financial soundness of operators, while mandating the enforcement of compulsory insurance policies as a means of strengthening consumer protection.
The Act also introduces digitisation mandates aimed at expanding market access and improving operational efficiency across the industry. In addition, it adopts a zero-tolerance stance on delays in claims settlement and establishes dedicated policyholder protection funds to ensure that claims are safeguarded in the event of insolvency.
The reforms further extend to regional integration, with provisions for deeper participation in the ECOWAS Brown Card insurance scheme, positioning Nigeria as a more active player in cross-border insurance arrangements within West Africa.
NAICOM has been tasked with implementing the Act in a manner that unlocks the industry’s growth potential, boosts insurance penetration, and builds public confidence in insurance as a key pillar of Nigeria’s economic strategy.
President Tinubu, in assenting to the legislation, described it as a critical step toward aligning Nigeria’s insurance market with global best practices and equipping it to contribute meaningfully to national economic transformation.
