Landlords, property owners, and occupiers of public buildings across Nigeria now face stringent penalties for failing to insure their properties against hazards, following the enactment of the Nigerian Insurance Industry Reform Act. Under the new law, offenders risk fines of up to N1 million, imprisonment for 12 months, or both, marking a significant regulatory shift aimed at safeguarding lives, assets, and public safety.
According to the Act, all public buildings—including multi-floor tenements, hostels, offices, hospitals, schools, and recreational facilities—must be insured against risks such as fire, collapse, storm, flood, earthquake, and other hazards designated by the National Insurance Commission (NAICOM).
The legislation also requires coverage of legal liabilities arising from bodily injury, death, or property damage to tenants, visitors, and third parties.
Section 76(6) of the law clarifies that failure to comply will constitute a criminal offence. NAICOM has been empowered to enforce compliance and may seal buildings deemed unsafe if no valid insurance is in place.
Additionally, insurers are required to contribute 0.25 percent of net premiums quarterly to a Fire Services Maintenance Fund, ensuring adequate resources for firefighting and emergency response services nationwide.
Non-compliance by insurers can attract penalties up to ten times the payable amount, with persistent defaults leading to the cancellation of registration.
The new legislation further extends compulsory insurance obligations to federal government assets and personnel, as well as petroleum and gas refilling stations and installations.
Vehicles transporting petroleum and gas products must also be insured against third-party losses arising from accidental fires or explosions.
Owners of these properties and operators are mandated to display valid Certificates of Insurance in conspicuous locations or with transit documentation.
Violations carry fines of N1 million or imprisonment of up to two years, or both.
On claims settlements, Section 79 provides detailed procedures for insurance payouts following fire-related damages.
Insurers are required to pay for rebuilding, reinstatement, or repairs unless a claimant provides alternative security or the payout is distributed as approved by a court.
Property owners retain the right to decide whether to rebuild or receive the insured sum.
Industry experts believe the reform will boost the insurance sector, enhance public safety, and improve disaster preparedness.
“Mandatory insurance coverage for all public and high-risk properties is a proactive measure to mitigate risks, protect tenants, and ensure quick compensation for losses,” said a senior official at NAICOM, who requested anonymity.
Real estate stakeholders are now urged to review their portfolios and ensure all eligible properties are insured in compliance with the law.
Failure to act may result in legal actions, financial penalties, and disruption of business operations.
Analysts have also noted that this regulatory reform could attract increased investments into the Nigerian insurance market, while encouraging property owners to adopt safer building practices.
The Nigerian Insurance Industry Reform Act represents a milestone in strengthening regulatory oversight, promoting accountability among property owners, and reinforcing the role of insurance in national risk management strategies.
With enforcement mechanisms now clearly outlined, the government expects widespread compliance and a reduction in uninsured building risks across the country.