NAICOM issues guidelines on policyholder protection fund and sets deadline

The National Insurance Commission (NAICOM) has released guidelines for collection, management and administration of Insured Protection Fund (IPPF).

The new guidelines, established under the Nigerian Insurance Industry Reform Act (NIIRA) 2025, introduce a rigorous system of mandatory contributions and oversight designed to ensure that the “protection of policyholders and beneficiaries covered by an insurance policy” remains a top priority.

With immediate effect, all insurance and reinsurance companies operating in Nigeria must contribute 0.25% of their annual net premiums to the Fund. The Commission has set a specific deadline for these payments, specifying that “the contributions must be paid into the designated accounts of the Fund at the custodian banks by 30 June of each year”.

To further strengthen the reserve, NAICOM will also inject 0.25% of the Security and Insurance Development Fund (SIDF) balance into the IPPF annually.

The stakes in case of non-compliance are considerably high. The regulator clarified that “failure by any insurer or reinsurer to repay the full amount of its assessed contribution to the Policyholders’ Protection Fund within the prescribed time limits shall constitute grounds for suspension or cancellation of its operating licence.”

This zero-tolerance approach extends to loan repayment, as the Fund is primarily intended to “resolve difficulties and insolvency of licensed insurers and reinsurers” and to facilitate the “payment of admitted or admitted claims against a licensed insurer or reinsurer that remains unpaid due to insolvency.”