Insurance cover now mandatory for petrol, gas stations

The Nigerian Insurance Industry Reform Act (NIIRA) assented to by President Bola Ahmed Tinubu last week, has made it mandatory for all petroleum and gas refilling stations and vehicles transporting these products to be insured against third-party losses due to accidental fire or explosion.

According to the document officially released to the public by the National Insurance Commission (NAICOM), offenders are liable to a two year jail term on owners of petroleum and gas refilling stations without Third party Insurance.

Specifically, Section 75 of the NIIRA Act, states that petroleum and gas stations must have insurance against third-party losses from fire or explosion, in addition, a copy of the insurance certificate must be displayed prominently at refitting stations, or included in transport documents, stating that “non-compliance with these insurance requirements can result in fines of at least N1million, or imprisonment for a minimum of two years.”

In the same vein, the law has  raised penalties on noncompliance of insurance on owners and occupiers of public buildings from a fine of N100,000, or one-year imprisonment or both to a fine of at least N1million, or imprisonment for up to 12 months.

Section 76 states that: Furthermore, the Act states that, “all public buildings must be insured against various hazards to ensure safety and liability coverage. Insurance is mandatory for public buildings against collapse, fire, earthquake, storm, flood and other hazards as determined by the Commission.“The insurance policy must cover legal liabilities for loss or damage to property, bodily injury, or death suffered by users and third parties.”

According to the new Insurance law, direct insurers are to pay 0.25 per cent of net premiums received quarterly into a Fire Services Maintenance Fund, adding that “insurers failing to comply with payment requirements, face penalties of up to 10 times the amount due.”

Also, “owners, or occupiers who do not comply with insurance provisions face fines of at least N1million, or imprisonment for up to 12 months.”

On nonpayment of claims by any erring insurer, the law states: “Any  insurance company that has not less than five complaints of failure to pay claims promptly made against it which the National  Insurance Commission (NAICOM) has received and verified, risks cancellation of its licence, the Nigerian Insurance Industry Reform Act (NIIRA) 2025 has provided. This is contained in Section 8 sub-section 1(m) under the cancellation of licence.The NIIRA Act also states that the licence of an insurer would also be cancelled if the insurer has failed to set up the Special Reserves as prescribed by the Commission. NAICOM warned that failure to maintain reserves as required and failure to satisfy the capital or solvency required as prescribed by the Commission, are legal grounds to cancel an insurer licence.

Simultaneously, the commission has inaugurated the 2025 Recapitalisation Committee.

A statement by the commission reads: “NAICOM) has constituted a 2025 Recapitalization Committee, following President Bola Ahmed Tinubu’s assent to the Nigeria Insurance Industry Reform Act (NIIRA) 2025. Chaired by Mrs. Oluwatoyin Charles, Director of Supervision, the Committee’s primary responsibility is to oversee the implementation of the recapitalisation program. “This includes ensuring compliance with revised capital requirements and promoting transparency and integrity in sourcing and verifying capital inflows”.

The Commissioner for Insurance,  Olusegun Ayo Omosehin, emphasised the critical role of the recapitalisation in stabilising the industry and contributing to Nigeria’s $1 trillion economy vision during the Committee’s inauguration in Abuja, yesterday.

He urged the 11-member Committee to approach their task with professionalism, diligence and commitment to the common interest, assuring them of necessary support. Some of the Key Terms of Reference for the Committee: Develop a Recapitalisation Roadmap*: Create a detailed plan for the Commission and the insurance industry.

Others are to Develop guidelines and circulars on recapitalization, issues around Minimum Capital Requirements;  Recommend the composition of Minimum Capital Requirements. as well as  Identify incentives and concessions that may be obtained from other regulatory authorities.

The Committee is expected to submit monthly progress reports to Management and provide quarterly updates to the Governing Board and stakeholders.

NAICOM expressed confidence that the Committee will successfully deliver on its mandate, required in shaping the future of Nigeria’s insurance sector.

Omosehin said the Committee’s success is vital to the industry’s stability and growth, saying  NAICOM looks forward to collaborating with all stakeholders to achieve this objective.