The Nigerian Senate has taken a significant step towards reforming the nation’s insurance sector, passing a bill for its second reading on Thursday.
The bill, sponsored by Senator Adetokunbo Abiru (APC Lagos East), Chairman of the Committee on Banking, Insurance, and Other Financial Institutions, aims to overhaul existing insurance legislation and establish a comprehensive legal and regulatory framework for the industry.
Senator Abiru highlighted the pressing need for reform, citing the alarmingly low patronage of insurance services in Nigeria, which stands at a mere 0.5%. This figure places Nigeria 70th globally and 5th in Africa, despite the industry being one of the oldest in the country’s financial sector.
The proposed bill seeks to repeal and consolidate various existing laws, including the Insurance Act, Cap117 2004; the Marine Insurance Act, Cap M3 Laws of the Federation of Nigeria 2004; and the Nigeria Reinsurance Corporation Act, Cap, N131, Laws of the Federation of Nigeria.
Abiru emphasized that the new legislation would provide a robust framework to enhance the insurance sector’s contribution to Nigeria’s financial system strategy, aiming to position the country as Africa’s financial hub and one of the world’s top 20 economies.
“The bill principally seeks to provide a robust legal and regulatory framework that will ensure that the insurance sector contributes positively to the principal objective of the Financial System Strategy to make Nigeria Africa’s financial hub and one of the 20 largest economies in the world,” Abiru stated.
He further noted the necessity of evolving effective risk-based supervision, as the current rule-based system is outdated, and emphasized the need for efficient distress management and more stringent penalties for non-compliance.
The bill also aims to align Nigeria’s insurance practices with international standards, as stipulated by the International Association of Insurance Supervisors, and to equip the supervisory authority with the tools needed to address the dynamic nature of the insurance business promptly.
During the debate, several Senators, including Sani Musa (Niger East) and Victor Umeh (Anambra Central), expressed their support for the bill. In his remarks following the successful second reading,
Deputy Senate President Jibrin Barau, who presided over the session, tasked the Senate Committee on Banking, Insurance, and Other Financial Matters with making further legislative inputs and reporting back within four weeks.
The passage of this bill is seen as a critical move towards revitalizing Nigeria’s insurance sector, ensuring ethical practices, and fostering a more resilient and responsive regulatory environment.
