Unlicensed insurance agents in Nigeria now face tougher penalties, including a six-month jail term, under the Nigerian Insurance Industry Reform Act (NIIRA) 2025, recently signed into law by President Bola Tinubu.
The Act makes it an offence for any individual to transact insurance business without a valid license from the National Insurance Commission (NAICOM).
Section 37 of the law prescribes fines of up to N500,000 or imprisonment for six months for violators, while courts may also order the refund of all monies collected illegally.
Insurers who choose to work with unlicensed agents are not spared, as they risk penalties of up to five times the premium collected.
What the law says about Unlicensed Insurance Agents
To qualify as an insurance agent, applicants must demonstrate professional competence and credibility.
- This includes holding a certificate of proficiency from the Chartered Insurance Institute of Nigeria or possessing at least ten years of experience in an underwriting firm.
- They must also have a clean record, free from convictions involving fraud or dishonesty, and must not have been declared bankrupt in the five years preceding their application.
- For corporate entities, at least one principal officer must meet these requirements. NAICOM reserves the right to reject applications, though unsuccessful applicants can appeal to its board.
The Act goes further to impose harsher punishments on individuals and companies running unlicensed insurance businesses. Individuals caught face fines of N25 million, while firms risk penalties of N50 million for each principal officer involved, in addition to possible two-year prison sentences.
Other provisions
Beyond enforcement, the NIIRA 2025 introduces sweeping reforms aimed at modernizing Nigeria’s insurance sector.
- These include stricter capital requirements for operators, compulsory insurance coverage for citizens, digitisation of insurance processes to expand access, and new rules to ensure timely settlement of claims.
- The law also provides for the creation of policyholder protection funds to safeguard consumers in the event of insolvency.
- President Tinubu, while signing the Act into law, mandated NAICOM to oversee its implementation in a way that not only cleans up the industry but also boosts its contribution to economic growth.
The government sees the reform as a key step toward unlocking the sector’s full potential and aligning it with Nigeria’s ambition of becoming a $1 trillion economy.
