Insurers Without Government Bond Business May Lose Public Sector Contracts, Insurers’ Committee Warns

By LOVETH AZODO, Lagos

Insurance companies seeking to underwrite government risks may now be required to demonstrate active participation in government bond business, as industry stakeholders move to deepen the sector’s role in supporting public sector projects.

This position emerged at the 20th meeting of the Insurers’ Committee held in Lagos, where operators were urged to strengthen their involvement in issuing government bonds,  a key financial guarantee used to secure public contracts.

Industry leaders noted that insurers without evidence of participating in bond business may no longer be eligible to secure insurance contracts from government institutions.

Briefing journalists after the meeting, Ebelechukwu Nwachukwu, Chairperson of the Communication and Stakeholders Engagement Sub-Committee of the Insurers’ Committee, said the policy is part of a broader effort to encourage insurers to take up greater responsibility in supporting government-backed infrastructure and development projects.

She explained that government bond instruments, which serve as financial guarantees for contractors executing public projects, are critical to ensuring accountability and protecting public funds.

According to her, the industry has now confirmed that insurers will need to provide proof that they actively underwrite government bond business before they can participate in public sector insurance contracts. The move, she noted, is designed to deepen market capacity in the bond segment while ensuring insurers contribute more directly to national economic development through risk guarantees for infrastructure and commercial activities.

Beyond the bond policy, the meeting also reviewed the progress of three working groups established under the Nigerian Insurance Industry Reform Act implementation committee, namely the compulsory insurance, digitalisation and financial inclusion working groups. The groups presented recommendations aimed at strengthening the industry’s operational framework and expanding insurance penetration.

Nwachukwu said the digitalisation working group recommended broader regulatory technology reforms, including the automation of compliance and penalty monitoring systems. The proposal would allow insurers to track regulatory obligations on digital platforms, enabling companies to identify potential compliance breaches early and improve reporting efficiency.

The financial inclusion working group also presented findings from a mapping exercise focused on expanding insurance access across underserved segments of the economy. Among its recommendations were reforms to strengthen inclusive insurance models such as Takaful, enhanced partnerships across sectors, improved data infrastructure and the creation of an industry-wide data centre to support analytics and product development.

Other proposals discussed at the meeting included the introduction of stronger environmental, social and governance reporting requirements for operators and strategies to improve customer experience across the industry. Participants stressed the need for insurers to simplify policy documents and reduce complex clauses that often become points of dispute during claims settlement.

The committee also highlighted opportunities within health insurance as a potential growth area for the sector, noting that expanding insurance participation in healthcare financing beyond the traditional health maintenance organisation model could significantly deepen insurance penetration in the country.

Industry leaders said the recommendations from the various working groups will be translated into specific implementation activities in collaboration with insurance companies and regulators as part of broader reforms aimed at transforming insurance from a theoretical concept into a widely adopted financial protection tool for Nigerians.