There is a major development in the Nigerian property market aimed at bolstering the country’s financial sector. The country’s president, Bola Ahmed Tinubu, recently signed the Nigerian Insurance Industry Reform Act of 2025 into law.
This landmark legislation, which is intended to ensure consumer protection and drive economic growth, mandates that all public buildings must be insured against various hazards, including collapse, fire, earthquake, storm, and flood. Non-compliance with this requirement will result in severe penalties, including a fine of N1 million (about $650) or a jail term of 12 months.
The law, part of a wider strategy to achieve a $1 trillion economy, was detailed in a press release dated August 5. It consolidates several outdated insurance laws into a modern framework, aiming to increase insurance penetration and foster financial stability.
The National Insurance Commission (NAICOM) is tasked with implementing these provisions, ensuring that the insurance industry unlocks its full potential and significantly improves coverage across Nigeria.
The legislation, which was drafted by NAICOM, passed by the National Assembly, and signed by the president in August, emphasises the compulsory nature of the insurance, covering risks such as fire, flood, storm, collapse, and earthquake, and extends protection to injuries, deaths, or damages to users and visitors of these buildings.
Key facts about the new scheme include the broad definition of public buildings under Section 76(6) of the Act, which encompasses tenement houses with more than one floor, hostels, and any building accessible to the public for education, medical services, recreation, or business transactions.
This definition potentially includes a wide array of properties, from residential complexes to commercial and governmental buildings. For example, a two-story house with ten tenants, a university hostel housing 500 students, churches, mosques, private hospitals, shopping malls, petrol stations, and government offices are all subject to the mandate.
Landlords are required to insure their buildings, keep certificates of insurance, and renew policies annually. Their failure to comply could lead to increased operational costs, which may be passed on to tenants, potentially raising rents.
Insurers must also contribute a percentage of the premiums to a fire fund, benefiting the national government. The new law also demands that all public buildings, including government properties, must adhere to these regulations. The implications of this law are far-reaching.
While it aims to protect property and occupants from unforeseen disasters, it also raises concerns about the financial burden on property owners and tenants. An analysis by the online platform, Nairametrics, on August 11, suggests that these provisions could promote insurance business but warns of potential inflation if measures are not taken to insulate tenants from additional costs.
Critics express scepticism about the law’s implementation, questioning whether insurance companies will honour claims and worrying about the broader economic impact, including potential rent increases.
In spite of these concerns, the government views this as a step towards discipline and economic advancement, albeit with potential challenges for non-compliant landlords facing fines, jail, or sealed properties. The new law is a majorshift in Nigeria’s approach to insurance and property management, aiming to safeguard assets and lives while pushing the country towards greater financial resilience, government sources say.
