BY NGOZI ONYEAKUSI

CFI, NAICOM, Olusegun Omosehin

The National Insurance Commission (NAICOM) has released a guideline for the “Collection, Management, and Administration of the Insurance Policyholders’ Protection Fund (IPPF).”

 

The newly issued guidelines, established under the Nigerian Insurance Industry Reform Act (NIIRA) 2025, introduces a rigorous system of mandatory contributions and oversight designed to ensure that the “protection of policyholders and beneficiaries covered under an insurance policy” remains a top priority.

 

Effective immediately, all insurance and reinsurance companies operating in Nigeria must contribute 0.25% of their annual net premium income to the Fund. The Commission has set a firm deadline for these payments, stating that “contributions shall be paid into the Fund’s designated accounts with deposit money banks not later than 30th June of each year”.

To further strengthen the reserve, NAICOM will also inject 0.25% of the balance from the Security and Insurance Development Fund (SIDF) into the IPPF annually.

 

The stakes for non-compliance are remarkably high. The regulator has made it clear that “failure by any insurer or reinsurer to remit the full amount of its assessed contribution to the Insurance Policyholders’ Protection Fund within the stipulated timeframe shall constitute a ground for suspension or cancellation of its operating licence”.

 

This zero-tolerance approach extends to the repayment of loans, as the Fund is primarily intended to “resolve distress and insolvency of licensed insurers and reinsurers” and facilitate the “payment of claims admitted by or allowed against a licensed insurer or reinsurer which remains unpaid by reason of insolvency”.

 

To ensure the integrity of the capital, the Fund will be managed independently by a qualified Fund Manager with a minimum paid-up capital of N5 billion. Investment strategies are strictly limited to “low-risk, government-backed instruments” to maintain maximum liquidity and security. Governance is further tightened through a dedicated Committee, including industry and regulatory representatives, who must adhere to a strict Code of Conduct that prohibits the use of their positions for “personal advantage or to influence decisions for the benefit of any insurer, reinsurer, or related party”.

 

The guidelines also introduce a robust whistleblowing mechanism to catch “imprudent practices” before they lead to corporate collapse. Insurance operators are required to report such activities within five days of becoming aware of them.

 

In a bid to protect those who speak out, NAICOM stipulates that “no whistleblower shall, under any circumstance, be subjected to retaliation, intimidation, threat, or any form of adverse action”. Through these measures, the Commission aims to create a transparent ecosystem where “no entity profits from misconduct,” ultimately securing the financial future of millions of Nigerian policyholders.