The National Insurance Commission (NAICOM) has introduced a new regulatory framework aimed at protecting insurance policyholders from losses arising from failing insurers.
The new guidelines, issued in a circular dated April 7, 2026, establish the operational structure for the Insurance Policyholders’ Protection Fund (IPPF), a statutory scheme created under the Nigerian Insurance Industry Reform Act 2025.
The Commission said the Fund would serve as a financial buffer to ensure that valid claims are settled even when an insurer or reinsurer becomes insolvent or loses its licence.
Under the provisions, insurance and reinsurance companies are required to contribute 0.25 per cent of their net premium income annually to the Fund.
In addition, NAICOM will inject 0.25 per cent of the balance in the Security and Insurance Development Fund, with the option of additional support where necessary.
Insurers are expected to remit their contributions by June 30 each year, while returns for the 2025 financial year must be filed by May 31, 2026.
The framework also outlines strict conditions for accessing the Fund.
Disbursements will be made as loans to distressed insurers, subject to regulatory approval, and must be used strictly for settling policyholder claims within a specified timeframe.
To ensure prudent management, NAICOM said the Fund would be handled by an independent manager, with investments restricted to low-risk, government-backed instruments to preserve liquidity and security.
Oversight will be provided by a dedicated committee comprising representatives of the regulator and the insurance industry.
The Commission warned that failure to comply with the guidelines, including non-remittance of contributions, could attract sanctions ranging from penalties to the cancellation of operating licences.
Industry observers say the move is expected to boost public confidence in the insurance sector by guaranteeing claims settlement and strengthening regulatory oversight.
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