NAICOM Launches Insurance Policyholders’ Protection Fund, Mandates 0.25% Contributions from Insurers with May 31 Deadline

 

The National Insurance Commission (NAICOM) has introduced the Insurance Policyholders’ Protection Fund (IPPF), a major consumer protection initiative designed to serve as a safety net for policyholders in the event of insurer distress or insolvency.

The framework, issued under the Nigerian Insurance Industry Reform Act (NIIRA) 2025, was announced through a circular to all insurance and reinsurance companies. It establishes clear guidelines for the collection, management, and administration of the fund, marking a significant step in strengthening confidence in Nigeria’s insurance sector.0051b1

According to NAICOM, the IPPF will be financed through mandatory annual contributions from insurers. All insurance and reinsurance companies operating in Nigeria are required to contribute 0.25 per cent of their annual net premium income to the fund. The contribution takes effect immediately, with the first assessment returns for the 2025 year due for submission to the Commission no later than May 31, 2026.ab3785

Non-compliance with the guidelines attracts strict penalties, including the possible revocation of operating licences, the regulator has warned.

The fund aims to protect policyholders from potential losses arising from insurer failure, ensuring that claims and benefits can still be honoured even in difficult circumstances. It forms part of broader reforms under NIIRA 2025, which also include higher minimum capital requirements and enhanced consumer protection measures across the industry.

Industry stakeholders view the IPPF as a welcome development that will boost public trust in insurance products and encourage greater penetration, especially among individuals and businesses that have historically been wary of the sector due to concerns over claims settlement.

NAICOM has emphasised that the fund will be administered transparently and professionally to achieve its core objective of safeguarding the interests of insurance consumers.

Insurance operators are expected to begin calculating and preparing their contributions based on 2025 net premium income, with the May 31 deadline serving as a firm compliance cut-off.

This move aligns with global best practices where policyholder protection schemes exist in many developed insurance markets to mitigate systemic risks and protect the insured public.