People vs Profits: The Insurance Reclamation Decree

In the wake of President Bola Ahmed Tinubu signing the Nigerian Insurance Industry Reform Act 2025 into law this August, Nigeria’s property and construction sectors stand at a crossroads.

This sweeping legislation, which repeals outdated laws like the Insurance Act 2003, mandates comprehensive insurance for public buildings, structures under construction, and high-risk properties such as petrol stations and commercial complexes. For property owners, builders, landlords, tenants, and business owners, the implications are profound, embedding insurance as a core requirement from planning to occupancy.

It introduces penalties including fines of at least one million naira or up to 12 months in prison for non-compliance, with authorities empowered to seal off uninsured buildings. Builders must secure liability coverage, while landlords face stricter enforcement on fire, flood, storm, and collapse risks. Business owners in public spaces gain better protection but may see operational costs rise as insurance becomes non-negotiable.

From an editorial standpoint, this reform is a bold step toward a more resilient economy, yet it arrives in a nation grappling with structural imbalances. On the positive side, it promises faster claim payouts within strict timelines, dedicated policyholder protection funds, and digitized operations for transparency. For ordinary Nigerians, this could mean quicker recovery from disasters, shielding families from total ruin. Consider the frequent market fires that have ravaged livelihoods: in 2023 alone, Lagos recorded 34 such incidents, leaving traders destitute without coverage. The 2020 Balogun Market inferno consumed seven buildings, with two collapsing, underscoring how uninsured losses force victims back to square one or into crippling loans.

Collapsed buildings have been equally devastating; a 2024 study highlights cases like the 1974 Ibadan multi-storey failure, often tied to poor materials and oversight, pushing survivors into debt cycles. The reform’s emphasis on compulsory coverage could mitigate these, fostering financial stability and attracting investments to the insurance sector, projected to boom with higher capital requirements, life insurers at 10 billion naira, non-life at 15 billion, driving job creation and economic growth.

However, the negatives loom large for the average citizen in our shattered economy. With inflation biting and incomes stagnant, mandatory insurance will inflate costs for property owners, likely passed on through surging rents. Tenants, already stretched, may face evictions, exacerbating homelessness amid rising poverty. Business owners could see premiums erode profits, while builders grapple with added compliance burdens in an unstructured market. In a country where many live hand-to-mouth, this could widen inequality, forcing more into informal settlements or loan traps to rebuild after losses.

A stark flashback illustrates the urgency: the tragic collapse of the 21-storey building at 44 Gerrard Road, Ikoyi, Lagos, on November 1, 2021, claimed 42 lives, including developer Femi Osibona of Fourscore Heights Limited. Originally approved for six floors, it was illegally extended to 21, with investigations revealing structural abnormalities, substandard materials, and regulatory lapses. A Lagos State panel, led by Toyin Ayinde, found the developer violated building codes, recommending prosecutions. Engineers involved faced suspensions from bodies like the Council for the Regulation of Engineering in Nigeria, while court orders halted similar projects.

By 2025, the case remains in litigation, with victims’ families securing interim compensation through suits against the state and firm remnants, though full judgments are pending amid appeals. Osibona’s estate is under probate, engineers like those from Prowess Engineering have been deregistered, and survivors report ongoing trauma, with some receiving state aid but many still pursuing claims for lost wages and medical bills.

In response, Lagos Governor Babajide Sanwo-Olu ordered an immediate probe, suspending the Lagos State Building Control Agency General Manager, Gbolahan Oki, for oversight failures. Spokesperson Gbenga Omotoso stated, “This tragedy must not repeat; we’re tightening regulations to prevent such recklessness.” Prior to NIIRA 2025, Lagos enforced the Urban and Regional Planning and Development Law 2010, requiring insurance for buildings over two floors under construction via the Lagos State Safety Commission. Yet enforcement was lax; as Omotoso noted in 2021, “We have sealed non-compliant sites, but developers bypass approvals,” highlighting gaps the new federal act addresses.

Notable figures have weighed in. Senator Tokunbo Abiru, bill sponsor, hailed it as “a strategic move for a $1 trillion economy, promoting investment and inclusion.” NAICOM Commissioner Olusegun Omosehin praised its transparency, saying, “It aligns with global standards, boosting competitiveness.” On the flip side, activist Reactor19 tweeted, “More protection but expect landlords to push costs into rent—I cry,” echoing fears of affordability. Insurance expert Ekerete Ola Gam-Ikon urged engagement, noting, “NIIRA2025 brings hope and opportunities, changing lives positively.”

For the insurance industry, this is a boon: stocks surged 54 percent post-enactment, with firms like AIICO and NEM leading gains, positioning Nigeria as an African hub. Yet for businesses and citizens, balancing protection with costs is key in our fragile economy. We urge stakeholders to advocate for subsidies or phased implementation to cushion the ordinary Nigerian, ensuring reform builds rather than burdens.