Nigerian insurance companies that fail to settle claims within 60 days of notification now face stiff penalties, including a N500,000 fine and monthly compound interest at the prevailing bank rate on the claim amount.

This was part of the provisions in the newly signed Nigerian Insurance Industry Reform Act 2025.

In Section 210, which focuses on claims settlement, the new law mandates a 60-day period for insurers to take action on claims.

Before the signing of the law, the National Insurance Commission had emphasised the need for insurers to pay legitimate claims on time to boost public confidence in the sector. This law stipulates that the mandate has become legally binding on players and protects policyholders from undue delays.

The law says, “Subject to the provisions of Parts X and XI of this Act, in every case where a claim is made in writing by the insured or any other party entitled to claim under an insurance policy, the insurer shall, except in the case of denial of liability, have all claims settled within the number of days as contained in the Service Charter or as prescribed by the Commission.

“Where any claim remains unpaid as provided in subsection (1), the insured may request the Commission to effect the payment from the statutory deposit of the insurer, and the Commission shall have power to effect such payment. Except for special risk cases, all admitted claims shall be settled within 60 days of notification. All special risk claims shall be admitted or denied within 60 days of notification. All admitted special risk claims shall be settled within 60 days of issuance of Discharge Voucher.

“Where the insurer does not accept liability or in the case of incomplete claims documentation, he shall deliver a statement in writing stating the reason for declining such liability to the person making the claim or his authorised representative or stating the incomplete claims documentation not later than 60 days from the date on which the person delivered his claim to the insurer, or such period of time as may be prescribed in regulations made by the Commission.”

The Act added, “An insurer who contravenes the provisions of this section is liable to a penalty of N500,000 and shall pay the claim amount with a monthly compound interest at the prevailing bank rate from the date he ought to have settled the claim within 60 days from the date of notification.”

Commissioner for Insurance/Chief Executive Officer of NAICOM, Olusegun Omosehin, in an interview with Channels following the signing of the Act, said that the Commission would be coming up with a framework for the claim settlement schedule.

He said, “I know this will interest a lot of Nigerians. Provisions are clear in the law. What you will see in the coming days is a situation where the National Insurance Commission, which is the agency that I head, will come up with a clear regulation that will stipulate the timelines and all those requirements that Nigerians can then hold on to. There is a framework already, but the detailed regulation will be rolled out by the Commission.”

Omosehin reiterated that the current administration was keen on restoring public confidence in the sector.

Also, the NIIRA 2025, Capital Requirements (Part IV) Section, Subsection 6 of the new act stipulated one year for insurance firms to comply with the new capital requirements.

 “An insurer registered before the commencement of this Act shall comply with the requirements within 12 months of the commencement of this Act,” read a part of the act.

The new law mandates a new capital threshold for insurance players, with life insurance firms expected to increase their capital to N10bn, non-life insurance to N15bn and reinsurance companies to N35bn.

Meanwhile, the regulator has inaugurated a committee to oversee the recapitalisation process of the sector.

In a statement on Tuesday, NAICOM said that the committee chaired by the Director of Supervision, Mrs Oluwatoyin Charles, would develop a recapitalisation roadmap, guidelines and circulars on recapitalisation, recommend the composition of minimum capital requirements and identify incentives and concessions that may be obtained from other regulatory authorities.