Nigeria’s property and petroleum sectors face a major shake-up following the signing of the Nigerian Insurance Industry Reform Act (NIIRA), which introduces stiff penalties for failure to insure public buildings, government assets, and petroleum installations.
Under the law, landlords and occupiers of public buildings who fail to obtain insurance coverage risk fines of at least ₦1 million, imprisonment of up to 12 months, or both. The law also extends to petrol station operators and transporters of petroleum products, who face a minimum penalty of ₦1 million or a jail term of two years if found non-compliant.
A Broader Definition of Public Buildings
Public buildings, as defined by Section 76 (6) of the Act, include hostels, tenement houses with more than one floor, rental properties, and all structures accessible to the public for education, medical services, recreation, or commercial use.
These must be insured against risks such as collapse, fire, earthquakes, storms, floods, and other hazards. Coverage must extend beyond physical structures to include lives, injuries, and liabilities arising from accidents affecting occupants, visitors, and third parties.
Speaking on the development, insurance consultant, said:
“This law is long overdue. For years, Nigerians have suffered needless losses from building collapses, market fires, and fuel explosions without compensation. Making insurance compulsory means landlords and business operators will now take responsibility for the safety of their premises.”
Fire Services Fund: A New Lifeline
The law also mandates insurance companies issuing such policies to remit 0.25% of their net premiums quarterly into a Fire Services Maintenance Fund, to be managed by NAICOM.
The fund will finance the purchase of modern firefighting equipment and support fire service agencies nationwide. Defaulting insurers face fines up to 10 times the required contribution and possible license cancellation for persistent non-compliance.
According to expert in a risk management lawyer,
“The Fire Services Fund could be a game changer if properly implemented. Our fire brigades are underfunded and ill-equipped. This funding model will improve response to disasters, which has been a weak link in Nigeria’s emergency management system.”
Petroleum Sector Under Tight Watch
In addition to property, Section 78 makes insurance compulsory for all petroleum and gas refilling stations, installations, and vehicles transporting such products.
Owners must provide a Certificate of Insurance, displayed at the station or included in transport documentation. This measure is designed to protect the public against third-party damages in cases of fire or explosions.
Owner of a Lagos-based filling station in Ikeja area, welcomed the reform but expressed concern about compliance costs:
“We understand the need for compulsory insurance, but smaller operators may struggle with the additional cost of premiums. The government and NAICOM should provide clarity and maybe even phased implementation to avoid putting small businesses out of operation.”
Government Assets Also Covered
Beyond private operators, Section 77 mandates that all Federal Government assets and employees must now be adequately insured. This move is expected to boost accountability in the public sector and reduce the burden of compensation claims on government coffers.
What This Means for Nigerians
Analysts, Celestine Ukpong, say the law is a turning point for Nigeria’s insurance sector. By widening the scope of compulsory insurance and enforcing penalties, it is expected to:
- Increase insurance penetration, which remains below 1% in Nigeria.
- Protect citizens from avoidable financial losses due to disasters.
- Improve fire service preparedness through sustainable funding.
- Encourage safety consciousness among landlords, occupiers, and petroleum operators.
Ukpong stressed that enforcement will be the real test of the new law.
“NAICOM management must be armed with a formidable enforcement team to overcome the stubborn resistance that often greets regulatory reforms,” Ukpong said. “The challenge is that the insurance laws have an open-ended compliance scope, which many operators might try to exploit. Without strong enforcement, the law risks becoming another paper tiger.”
His comments highlight the concerns of industry watchers who believe the success of the Nigerian Insurance Industry Reform Act (NIIRA) will depend not just on its provisions, but on the political will and institutional strength of NAICOM to implement them.
As an economist and lecturer at the University of Lagos, noted:
“While some may see this as an extra burden, in the long run, it will reduce poverty caused by sudden disasters. Nigerians need to move away from seeing insurance as an unnecessary expense and start viewing it as a social safety net.”
With NAICOM empowered to seal off uninsured buildings and enforce compliance in the petroleum sector, the NIIRA signals the beginning of a new era where safety, accountability, and risk management take center stage in Nigeria’s development.
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