The new insurance law has been introduced to help victims of road accidents involving uninsured vehicles. Under the Nigerian Insurance Industry Reform Act (NIIRA) 2025, anyone injured in an accident caused by a car without insurance can now receive up to N2 million in medical compensation.
This law aims to ensure that accident victims are not left without financial support for their medical treatment simply because the at-fault vehicle was uninsured. It provides a safety net to protect innocent victims and ease their burden during recovery.
According to NIIRA 2025, any person involved in a motor accident caused by an uninsured vehicle or unidentified driver will henceforth be entitled to hospital expenses that shall not exceed N2 million.
Section 99 of the Act stated that the amount may be reviewed by the National Insurance Commission (NAICOM). It said a fund known as the Road Accident Victims Compensation Fund was established, and insurers are to pay 0.5 per cent of the underwriting profit on motor business to the fund’s pool.
The Act established the Road Safety and Accident Victims Compensation Committee (RSAVCC) which would be responsible for overseeing the management of the fund, even as it stresses that, NAICOM shall pay compensation in accordance with its regulations to any person in respect of death or bodily injury following a motor vehicle accident caused by an uninsured vehicle or unidentified driver.
The Act stipulates that expenses reasonably incurred by a hospital known to have treated any person involved in any motor accident by an uninsured vehicle or unidentified driver must be settled from the fund.
The NIIRA 2025 is a transformative new law signed by President Bola Ahmed Tinubu aimed at modernising and strengthening Nigeria’s insurance sector. It consolidates several outdated insurance laws into a single, modern legal framework designed to drive financial stability, economic development, and inclusive growth in the insurance industry while supporting Nigeria’s goal of becoming a $1 trillion economy.
Key features of the NIIRA 2025 include: Higher capital requirements for insurance companies to ensure their financial soundness, with minimum capital thresholds set based on risk profiles (e.g., non-life insurance operators must have at least N25 billion); Mandatory enforcement of compulsory insurance policies, expanding coverage categories to include sectors like agriculture, public infrastructure, and cyber liability; Digitisation mandates improving access, reducing inefficiencies, and combating insurance fraud through digital value chains from underwriting to claims processing; Strict enforcement of timely claims settlements to enhance consumer protection.
Creation of policyholder protection funds to safeguard customers in cases where insurers become insolvent; More demanding licensing requirements and penalties for acting without proper authorisation in the insurance business as well as Expanded participation in regional insurance schemes, including the ECOWAS Brown Card System, to promote cross-border insurance cooperation.
The Act is designed to boost investor confidence, increase insurance penetration across Nigeria, and position Nigeria as a leading insurance hub within Africa.
Industry experts expect the NIIRA 2025 to catalyse new investments, drive innovation, and raise Nigeria’s insurance market’s contribution to the economy significantly, with projections to increase insurance penetration toward 3-5 per cent of GDP over the next decade.
Overall, the NIIRA 2025 represents a comprehensive overhaul aimed at building a more transparent, competitive, and consumer-focused insurance industry aligned with global best practices and Nigeria’s economic ambitions.
