A new law, the Nigerian Insurance Industry Reform Act (NIIRA), has made it mandatory for all petrol stations, gas stations, and their transport vehicles to have third-party insurance. This insurance must cover losses from accidental fire or explosion.
New Penalties for Non-Compliance
According to the new law, a copy of the insurance certificate must be clearly displayed at refilling stations or included with transport documents. Anyone who fails to comply could face severe penalties.
- Petrol and Gas Stations: Owners of these facilities can be fined at least ₦1 million or face a minimum of two years in prison for operating without the required insurance.
- Public Buildings: The law also increases penalties for owners of public buildings who do not have mandatory insurance against hazards like collapse, fire, floods, and earthquakes. The new penalty is a fine of at least ₦1 million or up to 12 months in prison.
Other Major Changes in the Act
The NIIRA 2025 also introduces significant changes for insurance companies:
- Stricter Oversight: Insurance companies that receive at least five verified complaints about failing to pay claims promptly risk having their licenses canceled.
- Special Reserves: The law requires insurers to set up “Special Reserves” as directed by the National Insurance Commission (NAICOM). Failure to do so or to meet solvency requirements could also lead to license cancellation.
In response to the new law, NAICOM has created a Recapitalization Committee to oversee the implementation of new capital requirements for the insurance industry. The committee’s goal is to ensure stability and transparency in the sector, ultimately helping to contribute to Nigeria’s goal of a $1 trillion economy.
