The National Insurance Commission (NAICOM) has unveiled the Insurance Policyholders’ Protection Fund (IPPF), mandating all insurance and reinsurance companies to contribute to the scheme as part of efforts to safeguard policyholders and enhance the stability of the insurance sector.
Under the new directive, insurers are required to remit 0.25% of their net premium income annually into the Fund. NAICOM warned that failure to comply within the stipulated timelines could attract sanctions, including suspension or cancellation of operating licences.
The IPPF is designed to support the resolution of distressed or insolvent licensed insurers and reinsurers and to ensure payment of claims due in cases of insolvency or licence cancellation.
In a circular titled “Guidelines for the Collection, Management, and Administration of the Insurance Policyholders’ Protection Fund,” NAICOM stated that the collection of contributions commenced following the signing of the Nigeria Insurance Industry Recapitalisation Act (NIIRA), 2025, into law on July 31, 2025.
The circular outlines that net premium income is defined as gross written premium less brokerage commission, and insurers must submit an IPPF Assessment Return annually by March 31, indicating their gross premium and commission details. The Commission will also contribute 0.25% of the balance in the Security and Insurance Development Fund (SIDF) from the previous year to the IPPF and may provide additional loans to meet Fund objectives.
The Fund’s objectives, according to NAICOM, are to:
Protect policyholders and beneficiaries,
Ensure timely and accurate collection of contributions,
Establish sound management and investment practices,
Provide procedures for disbursement and recovery of loans,
Promote transparency, accountability, and governance in Fund administration.
The launch of the IPPF represents a significant step in strengthening regulatory oversight, ensuring industry stability, and enhancing confidence among policyholders in Nigeria’s insurance sector.
