The Senate has passed the Nigeria Insurance Industry Reform Bill 2024 after a second reading, to modernise and boost the insurance sector.
The Bill is sponsored by Senator Mukhail Adetokunbo Abiru, the chairman of the Senate Committee on Banking, Insurance and other Financial Institutions, alongside 41 other senators, reported the newspaper Punch.
Senator Abiru said that the objective of the reform Bill is to establish a comprehensive legal framework for regulating all the various types of insurance businesses in Nigeria.
He emphasised the need to address the low penetration of insurance services in the country, which stands at 0.5%, ranking Nigeria 70th globally and fifth in Africa.
Senator Abiru pointed out that existing laws, such as the Insurance Act of 2003, Marine Insurance Act, Motor Vehicles (Third Party Insurance) Act, National Insurance Corporation of Nigeria Act, and Nigeria Reinsurance Corporation Act, have become outdated and ineffective in light of recent innovations and dynamics in the insurance sector.
The proposed Bill aims to consolidate these various pieces of legislation into a single legal and regulatory framework.
Senator Abiru also said that the Bill principally seeks to:
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Provide a robust legal and regulatory framework that will ensure that the Insurance sector contributes positively to the principal objective of the Financial System Strategy to make Nigeria Africa’s financial hub and one of the 20 largest economies in the world;
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Evolve effective risk-based supervision, in the regulatory system as the existing rule-based supervision, enabled by the current laws, has become obsolete.
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Fast track the process of managing weak companies as the existing legislation is not efficient for effective distress management;
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Review penalties for errant insurance industry parties as the penalties prescribed in the existing laws are inadequate and not deterrent enough.