NAICOM Rolls out guidelines for Insurance Policyholders’ Protection Fund
The National Insurance Commission (NAICOM) has rolled out guidelines for the collection,management and administration of the Insurance Policyholders’ Protection Fund (IPPF)
The IPPF is the Fund into which 0.25% of the gross premium income of every insurer and reinsurer as well as 0.25% of the balance standing in the Security and Insurance Development Fund as at 31 December of the preceding year shall be paid after meeting all financial obligations stipulated for the Fund by the Act.
In a circular signed by the Deputy Director, Special Risk & Security Analysis of the Commission, John Falade, and addressed to all insurance institutions in the country, NAICOM said the guidelines were pursuant to the powers conferred on it by Section 212 of the Nigerian Insurance Industry Reform Act, 2025 (NIIRA 2025) and other extant insurance laws and regulations.
The Insurance regulator said the guidelines, which provide a comprehensive regulatory framework for the collection, management, and administration of the Fund, were to ensure regulatory clarity, guidance and ease of compliance.
The Fund serves as a statutory safety net to protect insurance policyholders against distress and insolvency of a licensed insurer or reinsurer, including guidance for the reimbursement of loans by an insurer or reinsurer.
The circular further said the IPPF Assessment Returns in respect of the year 2025 shall be submitted to the Commission not later than May 31, 2026, while subsequent submission shall be in line with Section 4.3 of the Guideline on Insurance Policyholders Protection Fund.
He enjoined all insurers, reinsurers and relevant insurance institutions to ensure strict compliance with the guidelines to avoid regulatory sanctions.
The guidelines stipulate that the Fund shall be used for the purpose of resolving distress and insolvencies of licensed insurers or reinsurer and payment of claims admitted by or allowed against a licensed insurer or reinsurer which remains unpaid by reason of insolvency or cancellation of the licence of the insurer or reinsurer.
The objectives of the guidelines, the Commission said, include the protection of policyholders and beneficiaries covered under an insurance policy; ensure timely and accurate collection of contributions to the Fund; establish sound management and investment practices for the Fund; provide procedures for disbursement and recovery of loans from the Fund, and promote transparency, accountability, and governance in the administration of the Fund.
The guidelines apply to all insurance and reinsurance companies in Nigeria; Insurance Policyholders’ Protection Fund Committee, and the Fund Manager appointed by the Commission to independently administer the fund under the oversight of the Committee.
The collection and payment of contributions into the Fund commenced on July 31, 2025 when the NIIRA 2025 was signed into law by the President.
In line with the provisions of the law, an insurer/reinsurer is expected to contribute 0.25% of its net premium income annually to the Fund.
Net premium income is the gross written premium less brokerage commission based on the IPPF Assessment Returns submitted by an insurer or reinsurer to the Commission on or before March 31 of each year.
The Commission shall contribute 0.25% of the balance in the Security and Insurance Development Fund as at 31 December of the preceding year to the Fund.
Notwithstanding the 0.25% contribution from SIDF, the Commission may provide additional contribution to the Fund as loan, where necessary, to achieve the objective of the Fund.
The additional contribution shall be recouped from future contributions that may be due from the SIDF.
Contributions shall be paid into the Fund’s designated accounts with deposit money banks not later than 30th June of each year based on the Audited or Management financial statement as at 31st December of the year preceding the assessment.
An assessment carried out using Management Financial Statements and the payments made based on such assessments shall be considered provisional and subject to confirmation of the final amount due from Audited Financial Statements
Where there is a shortfall, the outstanding balance shall be paid within 10 working days of receiving the final assessment.
Where there is an overpayment, a Credit Note shall be issued for the overpayment, and the excess amount shall be deducted from the contribution due in the subsequent year.
