By LOVETH AZODO, Lagos
The Nigeria Police Force’s renewed enforcement of mandatory third-party motor insurance, which began on February 1, 2025, is reshaping the country’s motor insurance landscape.
The stricter enforcement is driving a dramatic surge in policy uptake, presenting significant opportunities and challenges for insurers and vehicle owners alike.
According to the Chairman of the Nigerian Insurers’ Association (NIA), Kunle Ahmed the ongoing collaboration with the Nigeria Police Force and the Federal Road Safety Commission is aimed at ensuring that enforcement is seamless and fair.
The improved data from NIID, now populated with more genuine policies, is also expected to aid risk assessment and help insurers make better underwriting decisions.
Insurance companies nationwide are reporting a substantial increase in third-party policy sales, thanks to intensified roadside checks by police officers and the use of the Nigeria Insurance Industry Database (NIID) for real-time insurance verification.
As a result, premium income has surged since the enforcement began, with expectations for sustained growth throughout the year.
Data from the Nigerian Insurers Association and the Federal Road Safety Corps reveals that, out of 12 million vehicles on Nigerian roads, only 3.6 million were insured before the crackdown.
The remaining 9.5 million uninsured vehicles now represent a potential revenue of over N142 billion for the insurance industry, assuming each vehicle owner pays the standard N15,000 premium for third-party coverage.
However, while the surge in policy uptake presents significant growth opportunities, it also raises concerns about the potential increase in claims, leading to greater liability exposure for insurers.
Insurance companies are under increasing pressure to enhance claims processing efficiency and customer service to handle the growing volume and maintain customer trust.
The enforcement initiative has also reduced the use of fake insurance certificates. With the integration of the NIID, law enforcement officers can now verify the authenticity of insurance documents in real-time, making it more difficult for motorists to present counterfeit certificates.
“This enforcement drive is a game-changer,” said one industry expert. “But the ability of insurers to manage rising claims volumes and deliver timely service will be critical to maintaining momentum.”
The intensified enforcement also provides an opportunity to improve public awareness about the benefits of third-party insurance.
Under Nigerian law, the policy offers up to N3 million in compensation for property damage, bodily injury, or death caused by the insured vehicle. It also includes coverage under the ECOWAS Brown Card scheme, which provides protection when driving in other West African countries.
For policyholders, valid coverage ensures peace of mind and shields them from hefty penalties, including fines up to N250,000, vehicle impoundment, or even imprisonment.
However, for some previously uninsured motorists, the mandatory policy represents a new expense, which may be challenging given the current economic climate.
Regulators, however, stress that the benefits far outweigh the cost. The National Insurance Commission (NAICOM) has urged Nigerians to verify their insurance policies through the NAICOM website to avoid purchasing from unauthorized sources.
NAICOM maintains that genuine third-party insurance is not only a legal requirement but also a vital financial protection tool.
NAICOM and the Nigerian Insurers Association (NIA) continue to advocate for better public education to ensure that Nigerians understand the importance of compliance and avoid the legal and financial risks associated with fake policies.
The focus is also on transparency, timely claims processing, and superior customer service as key factors for long-term success in the sector.
With improved enforcement, greater public awareness, and continued collaboration within the industry, stakeholders are optimistic that this initiative will rebuild public trust in insurance, benefiting both the sector and motorists in the long run.
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