Insurance firms operating online in Nigeria require licensing under the new Reform Act
The Nigerian Insurance Industry Reform Act (NIIRA) 2025, recently signed into law by President Bola Tinubu, brings about significant changes to the insurance sector in Nigeria. This comprehensive legislation aims to regulate and supervise all insurance and reinsurance businesses operating within the country.
The Act consolidates several outdated insurance laws into a single, modern legal framework. It introduces stringent capital requirements, compulsory insurance enforcement, and digitization mandates. The Commission, the regulatory body for the insurance industry, is authorized to issue regulations for web, internet, or related electronic-based insurance businesses in Nigeria from time to time.
Online or electronic companies providing insurance services are prohibited from commencing operations unless they are licensed by the National Insurance Commission. Section 201(1) of the Act states that no person should commence or carry on web, internet, or electronic-based insurance or related business without a license from the Commission. Affected insurance companies are required to implement internal control measures to prevent any transactions related to the proliferation of weapons of mass destruction.
The Act warns online insurance companies against engaging in terrorism financing activities. Insurance institutions are required to adopt policies reflecting their commitment to comply with Know Your Customer (KYC), Anti-Money Laundering (AML), Combating Financing of Terrorism (CFT), and Combating Financing of Proliferation of Weapons of Mass Destruction (CPF).
For companies or firms found guilty of the same offense, the penalty doubles. Principal officers of the organization face fines of N50 million each, alongside the possibility of a two-year prison sentence. Individuals found operating unlicensed insurance businesses in Nigeria are liable for a penalty of N25 million.
The Commission is empowered to make regulations, guidelines, and policies from time to time to fight against money laundering, combat the financing of terrorism, and the proliferation of weapons of mass destruction for insurance institutions, in line with international best practices and standards. The Commission is also authorized to liaise with relevant bodies in other countries with similar objectives for the purposes of sharing information and relevant data to aid the fight against these activities.
However, the Act does not specify any exceptions or conditions for the licensing requirement for online insurance businesses, nor does it provide details on the administrative sanctions that may be imposed for non-compliance. It also does not state the penalties for operating an online insurance business without a license. As of September 2025, there is no publicly available, verifiable information indicating who signed the Nigerian Insurance Industry Reform Act 2025.
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