How Lagos’ Building Insurance Scheme will protect homeowners, businesses

Lagos State recently launched a compulsory Building Insurance Scheme aimed at protecting homeowners, businesses and property developers against the financial consequences of building collapse, fire and flooding, in a move expected to deepen insurance penetration and strengthen urban resilience in Nigeria’s commercial capital.

The initiative is expected to transform the enforcement of compulsory building insurance by leveraging digital technology, geospatial intelligence and coordinated regulatory oversight. The scheme also aligns with the Nigerian Insurance Industry Reform Act (NIIRA) 2025, which strengthened compulsory insurance provisions and enhanced consumer protection.

Speaking at the launch, Olusegun Ayo Omosehin, commissioner for Insurance/CEO National Insurance Commission (NAICOM) described the initiative as a turning point in the relationship between Lagos residents and the buildings where they live, work, trade and worship.

He said recent incidents of building collapse and fire disasters underscore the urgent need for a system that ensures victims are not left to bear devastating financial losses alone.

“For too long in this country, the burden of disasters has fallen almost entirely on victims,” Omosehin said, adding that the Lagos Building Insurance Scheme is designed to ensure that when tragedy strikes, families, businesses and communities have financial support to rebuild rather than start from nothing.

According to him, insurance should not be viewed merely as a financial product but as an essential instrument for social protection and economic recovery. He explained that insured property owners will have access to compensation following losses arising from fire, flooding or building collapse, while third parties affected by such incidents will also be protected under the compulsory insurance framework.

He noted that without insurance, disasters often push households, businesses and governments into severe financial distress, whereas effective insurance coverage enables faster recovery and reduces economic disruption.

Omosehin said Lagos had distinguished itself by moving beyond legislation to practical enforcement, describing the state’s adoption of digital verification and geospatial mapping as a model for implementing compulsory insurance nationwide.

“Nigeria has never lacked insurance laws; our greatest challenge has been enforcement,” he said, noting that weak compliance and fake insurance certificates have undermined public confidence for years.

He added that the Lagos initiative directly addresses those challenges by combining technology with systematic enforcement, making compulsory insurance a practical reality rather than a legal obligation that exists only on paper.

The NAICOM chief said the scheme also presents a significant growth opportunity for Nigeria’s insurance industry by bringing thousands of uninsured buildings into the formal insurance market, expanding the industry’s premium base and supporting the Federal Government’s ambition of building a more resilient economy.

However, he warned insurers that the success of the initiative would ultimately depend on their ability to honour legitimate claims promptly.

“A scheme that collects premiums efficiently but delays claims settlement will fail,” he said, stressing that NAICOM will enforce high standards of pricing, transparency, policy terms and claims payment across participating insurers.

Omosehin also pledged that only insurers licensed and supervised by NAICOM would participate in the scheme, while the Commission would work with the Lagos State Government to eliminate fake insurance certificates and ensure that all qualified insurers have equal access to participate in the programme. He said the regulator intends to use Lagos as a national reference point for similar initiatives across other states.

Also speaking, Ebelechukwu Nwachukwu, chairman of the Nigerian Insurers Association, said the launch represents more than another insurance programme, describing it as “a new way of protecting lives, property and the future of Lagos State.”

She said the initiative demonstrates what can be achieved when government, regulators and the insurance industry collaborate to strengthen public safety and economic resilience.

According to Nwachukwu, compulsory building insurance has existed in Nigeria’s laws for many years, but enforcement has remained weak. She said Lagos is changing that narrative by combining digital technology, geospatial intelligence and structured enforcement to translate legal requirements into practical protection for residents and businesses.

She urged property owners and developers to view insurance as an investment rather than an additional regulatory burden.

“Behind every building are families, businesses, livelihoods and years of investment,” she said. “Insurance cannot prevent every tragedy, but it can ensure that tragedy does not become permanent hardship.”

Nwachukwu added that the scheme offers insurers an opportunity to extend financial protection to more Nigerians while placing a greater responsibility on operators to deliver professional underwriting, quality service and prompt claims settlement.

She emphasised that trust remains the industry’s most valuable asset, noting that every policy issued and every claim paid promptly will either strengthen or weaken public confidence in insurance.

She expressed hope that the Lagos model would be replicated across the country, saying the NIA is prepared to work with state governments to improve compliance with compulsory insurance laws, increase public awareness and expand access to insurance protection nationwide.