The Senate passed the Nigeria Insurance Industry Reform Bill, 2024 (SB 393) for Second Reading on Thursday.
Sponsored by Senator Mukhail Adetokunbo Abiru, representing Lagos East, the Bill aims to establish a comprehensive legal framework for regulating and supervising all types of insurance businesses in Nigeria.
Presenting his Lead Debate, Senator Abiru, who also chairs the Senate Committee on Banking, Insurance, and other Financial Institutions, lamented the low penetration of insurance services in Nigeria.
Despite being one of the oldest industries in the nation’s financial sector, he noted its penetration rate at 0.5%, ranking 70th globally and 5th in Africa.
Abiru argued, “With its young and vibrant population and growing GDP, the potential for exponential growth is undeniable. However, for the industry to thrive in the coming decade, it must undergo reforms to capitalize on opportunities and contribute to economic growth in the country.”
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The lawmaker pointed out that current laws governing insurance practices are outdated and ineffective in addressing the industry’s recent innovations and dynamics.
“These laws, now over two decades old, lack provisions to adequately address current challenges and support growth and innovation within the industry. This legal obsolescence has led to regulatory inefficiencies.”
Abiru emphasized the specific objectives and general benefits of the bill to Nigerians and the economy.
The bill consolidates various existing legislations that regulate insurance businesses in Nigeria, such as the Insurance Act, 2003, the Marine Insurance Act, Motor Vehicles (Third Party Insurance) Act, National Insurance Corporation of Nigeria Act, and Nigeria Reinsurance Corporation Act.
Furthermore, the bill seeks to establish a robust legal and regulatory framework to ensure that the insurance sector positively contributes to Nigeria’s goal of becoming Africa’s financial hub and one of the world’s top twenty economies.
It proposes transitioning from rule-based supervision to risk-based supervision, as the current rule-based system has become obsolete. Additionally, it aims to expedite the process of managing financially weak companies, enhance penalties, and ensure they are sufficiently deterrent.