A financial analyst, Johnson Chukwu, has called for insurance policies in Nigeria to be simplified and made more transparent, saying this would significantly boost public confidence and uptake.
Chukwu stated this on Channels Television’s breakfast programme, The Morning Brief, following President Bola Tinubu’s assent to the Nigerian Insurance Industry Reform Bill 2025.
“What is most important is that insurance contracts are simplified in such a way that a layman can understand the terms.
“One of the major challenges we face with insurance in Nigeria is the abundance of exclusion clauses embedded in policy documents, clauses that the average holder may not even notice or understand,” Chukwu said on Wednesday.
The Founder of Cowry Asset Management Limited emphasised the need for clearer, more digestible documents while illustrating a typical scenario involving car insurance.
“Policies should be driven by bullet points and presented in a one-page document that anyone can read and understand; the dos and don’ts must be obvious.
“Take, for instance, you have a car insurance policy, and you’re unaware that it excludes coverage if a minor drives the vehicle. You give the car to your 17-year-old son to fetch groceries, and he gets into an accident.
“You inform the insurer, only to be told the policy is void because your son is underage. If that exclusion clause had been clearly presented, you would never have handed the vehicle to him in the first place,” he explained.
President Tinubu, on Tuesday, signed the Nigerian Insurance Industry Reform Act (NIIRA) 2025 into law, aiming to modernise the insurance sector and drive economic growth.
Speaking on the Nigerian Insurance Industry Reform Act (NIIRA) 2025, Chukwu stated the new law could reduce public hesitancy and strengthen confidence in the insurance sector.
“This new Act will go a long way in improving policyholders’ confidence. One of the biggest limiting factors to growth in the industry is the issue of claims payment.
“Many people who purchase policies struggle to get their claims paid. The new Act addresses this by providing for more robust capitalisation of insurance companies,” he said.
The financial analyst further noted that the reforms could strengthen the financial base of insurance firms and position them as key players in Nigeria’s capital market.
“If this Act leads to the growth of insurance firms’ retained earnings and reserves, then over time, they will become major investors in the financial market. That, in turn, will further build their capacity,” he said.
According to presidential spokesman Bayo Onanuga, the new Insurance Act repeals outdated laws and consolidates them into a modern legal framework to ensure better regulation and supervision of all insurance and reinsurance operations in Nigeria.
The legislation supports the Federal Government’s target of building a $1 trillion economy and is expected to bring greater transparency, innovation, and global competitiveness to the industry.
Key provisions include stricter capital requirements, compulsory insurance enforcement, market digitisation, faster claims settlement, and the creation of policyholder protection funds. It also supports Nigeria’s participation in regional insurance schemes like the ECOWAS Brown Card System.
The National Insurance Commission (NAICOM) has been tasked with enforcing the Act, to unlock the sector’s full potential and boost insurance coverage nationwide.
The reform is projected to attract investments, rebuild trust, and position Nigeria as a major insurance hub in Africa.
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