Compulsory Insurance: NAICOM’s enforcement push could unlock billions in protection for Nigerians

The National Insurance Commission (NAICOM) is stepping up efforts to transform compulsory insurance from one of the country’s most ignored legal requirements into a functioning social protection system, a move that could shield millions of Nigerians from financial losses while opening significant growth opportunities for insurers.

For years, compulsory insurance laws have existed largely on paper, with weak enforcement, low public awareness and widespread use of fake insurance certificates denying accident victims compensation and leaving businesses and public buildings exposed to avoidable risks.

Now, NAICOM, under the leadership of Olusegun Ayo Omosehin, the commissioner for Insurance is pursuing an aggressive stakeholder engagement strategy involving law enforcement agencies, government institutions and other strategic partners to improve compliance across the country.

The latest step in that strategy was a one-day training programme for officers of the Nigeria Police Force (NPF), Federal Capital Territory (FCT) Command, where the Commission sought to strengthen enforcement of Motor Third-Party Insurance and other compulsory insurance policies, while improving the ability of officers to verify genuine insurance certificates and detect fake policies.

The initiative reflects the current leadership of NAICOM’s broader regulatory approach of working closely with the Nigeria Police Force, the Federal Road Safety Corps (FRSC), state governments, fire services, building regulators and other enforcement agencies to ensure compulsory insurance laws move beyond the statute books into everyday compliance.

Speaking on behalf of Omosehin, the deputy commissioner for Insurance, Finance and Administration, Ekerete Ola Gam-Ikon, said public safety extends beyond crime prevention to protecting citizens against the financial consequences of accidents and disasters.

“Insurance serves as a vital social and economic safety net, providing protection for individuals, families, businesses and public institutions against losses arising from accidents, disasters and other risks,” he said.

According to him, collaboration between NAICOM and the Nigeria Police Force is essential to reducing the number of uninsured vehicles on Nigerian roads, protecting road users, curbing the use of fake insurance certificates and strengthening public confidence in regulatory institutions.

He noted that the initiative aligns with the provisions of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 and NAICOM’s mandate to deepen insurance penetration and compliance across the country.

Industry analysts say Nigeria’s compulsory insurance market remains one of the biggest unrealised opportunities for the insurance sector.

Several insurance policies are already mandatory under existing laws, yet compliance remains weak due to poor enforcement, low public awareness and widespread use of fake insurance certificates.

Among the major compulsory insurance classes are:

Motor Third-Party Insurance, which protects road accident victims by covering liabilities for death, bodily injury and damage to third-party property.

Builders’ Liability Insurance, required for buildings under construction above specified floors to compensate victims of building collapse and construction-related accidents.

Occupiers’ Liability Insurance, which protects members of the public against accidents occurring in public buildings such as hotels, shopping malls, schools, hospitals and office complexes.

Group Life Insurance, mandatory for employers in both the public and private sectors to provide death benefits for employees.

Healthcare Professional Indemnity Insurance, designed to compensate patients affected by medical negligence.

If compliance improves significantly, millions of Nigerians who currently bear the financial burden of accidents, workplace deaths, building collapses and public liability incidents could receive compensation through insurance rather than relying on personal savings or government intervention.

For accident victims, compulsory motor insurance could guarantee prompt compensation. Families of deceased workers would receive financial support under Group Life Insurance. Victims of building collapses or accidents in public places would also have legal access to compensation, reducing lengthy litigation and financial hardship.

Beyond individual benefits, wider insurance coverage could reduce pressure on government relief programmes while improving economic resilience.

While NAICOM is strengthening enforcement through stakeholder engagement, analysts argue that insurers themselves must complement the regulator’s efforts if compulsory insurance is to achieve its intended impact.

Industry operators say insurance companies need to simplify policy purchase and claims processes, invest more aggressively in digital verification platforms, settle genuine claims promptly and improve public education.

Many Nigerians still associate insurance with delayed claim settlements and complex documentation, perceptions that continue to discourage voluntary compliance.

Experts believe insurers should also expand partnerships with transport unions, employers, professional associations, estate developers and market associations to increase awareness of compulsory insurance requirements before enforcement begins.

Digital verification remains another critical area. As fake insurance certificates continue to circulate, insurers are expected to strengthen real-time policy authentication systems that enable law enforcement agencies to instantly verify genuine policies during routine checks.

Claims experience may ultimately determine the success of NAICOM’s enforcement drive. Industry observers note that sustained prompt payment of legitimate claims would reinforce public confidence and encourage more Nigerians to view insurance as financial protection rather than merely a legal obligation.

During the Abuja training, police officers received practical instruction on the objectives and benefits of compulsory insurance, policy verification procedures, methods of identifying genuine insurance certificates and the legal framework governing compliance with Motor Third-Party Insurance and other compulsory insurance classes.

Gam-Ikon stressed that the Nigeria Police Force occupies a unique position because of its daily interactions with motorists, businesses and members of the public.

He said by promoting compliance with compulsory insurance laws, police officers contribute not only to protecting lives and property but also to reducing financial hardship arising from accidents and strengthening public safety.