Insurance regulator compels operators to remit 0.25% of net premium income annually by June 30, with failure to do so risking licence cancellation as the May 31 assessment return filing takes effect.
The National Insurance Commission has issued binding guidelines for a mandatory Insurance Policyholders’ Protection Fund, compelling every licensed insurer and reinsurer in Nigeria to make annual cash contributions or risk suspension or cancellation of their operating licences, in a decisive move to safeguard policyholders against insurer collapse and unpaid claims.
Under the new directive issued April 7, 2026, and signed by Deputy Director John Falade on behalf of Commissioner for Insurance Olusegun Ayo Omosehin, insurers are required to remit 0.25% of their net premium income annually into the fund, with contributions payable to designated accounts with deposit money banks not later than June 30 each year. NAICOM will also inject 0.25% of the balance from the Security and Insurance Development Fund into the protection scheme annually.
The guidelines, established under the Nigerian Insurance Industry Reform Act 2025, signed into law by President Bola Tinubu last August, position the fund as a financial lifeline for policyholders in the event of insurer insolvency or distress. The commission set May 31, 2026, as the deadline for insurers to submit their assessment returns for the 2025 financial year, with subsequent submissions required by March 31 annually, detailing gross written premiums and brokerage deductions used to determine net premium income.
The fund will be used for resolving distress and insolvencies of licensed operators and paying claims that remain unpaid due to insolvency or licence cancellation. Access to the fund will not function as a bailout but as structured loans to distressed insurers, subject to rigorous conditions including actuarial valuation, claims verification, and regulatory approval. Repayment will be tied to the Monetary Policy Rate, with a maximum tenor of 24 months or earlier upon recovery. Beneficiaries must be paid within 10 working days of disbursement.
To safeguard the fund, NAICOM mandated independent management by a Securities and Exchange Commission-registered fund manager with a minimum capital of ₦5 billion. Investments are restricted to low-risk, government-backed instruments, with emphasis on liquidity, capital preservation, and asset-liability matching. Fund managers must submit quarterly performance reports, annual audited accounts, and stress test results.
The guidelines introduce a robust whistleblowing mechanism requiring insurance operators to report imprudent practices within five days of becoming aware of them. NAICOM stipulated that no whistleblower shall be subjected to retaliation, intimidation, threat, or any form of adverse action. The commission warned that strict compliance was expected, signaling a zero-tolerance stance on non-compliance as it seeks to address a longstanding vulnerability where policyholders holding valid claims against failed insurers faced prolonged settlement delays or total loss.
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