Insurance sector on edge as Reps probe 25 firms

The House of Representatives committee’s probe of over 25 insurance firms has unsettled Nigeria’s insurance sector, with stakeholders raising concerns about the legitimacy of the probe and the damage it could do to the reputation of an industry already battling poor public perception.

Last Monday, the House of Representatives’ Subcommittee on Capital Market and Other Institutions launched an investigation into allegations of non-remittance of revenue payable to the Federal Government by 25 insurance companies operating across the country, many of which are listed on the Nigerian Exchange Limited (NGX).

Chairman of the subcommittee, Hon. Kwamoti Laori, during a meeting with the management of the insurance firms at the National Assembly Complex in Abuja, revealed that preliminary investigations had uncovered various infractions. These include issues relating to financial reporting, claims settlement, premium remittance, and policy issuance.

He explained that the investigation was initiated following a formal petition that outlined significant violations by the companies. According to Laori, the firms were summoned to confirm or refute the allegations.

“This committee is saddled with the responsibility of treating a petition based on infractions from these insurance companies in respect of their operations and non-compliance with certain statutory provisions,” Laori said.

“Of course, those infractions have resulted in the Federal Government losing hundreds of billions in revenue from these insurance companies. That is why they are invited, and each of them has been served and given the extent of their liability. We want them to agree or debunk those liabilities. That is the essence of all these things we are doing here—to ensure that what is due to the Federal Government comes to it through the operations of these private entities.”

In response to moves by some of the companies to challenge the probe in court, Laori accused them of attempting to obstruct the work of the National Assembly, insisting that the committee would forge ahead with its oversight mandate. He also emphasized that the chief executive officers (CEOs) of the companies must appear in person before the committee.

The subcommittee chairman also criticized the sector’s regulator, the National Insurance Commission (NAICOM), for failing in its supervisory role. “NAICOM is responsible for supervising these firms. I am not speaking for the Commission, but clearly, if they had been more diligent, we might not be here today. It’s time for them to sit up,” Laori added.

Laori also expressed his dissatisfaction over the absence of the CEOs of the 25 insurance companies who were invited to the hearing. “We insist that the CEOs appear in person to answer these allegations. As you’ve seen, some companies sent representatives who were unable to respond to any of the issues raised. That is unacceptable,” he stated.

In reaction to the ongoing probe, the Nigerian Insurers Association (NIA), in a statement signed by its Director-General, Mrs. Bola Odukale, defended the decision of its member companies to seek legal redress. According to the NIA, this action was taken based on legal advice from its solicitors.

“The Association wishes to state unequivocally that all actions taken by the NIA and the affected member companies in response to the Committee’s invitations and pronouncements were based entirely on legal advice by its solicitors. It was on the firm instruction of legal counsel that recourse was made to the courts,” the statement read.

“The objective of approaching the court is to seek judicial guidance on the legality, propriety, and constitutional limits of the Committee’s intervention in order to safeguard institutional integrity, uphold regulatory independence, and ensure that legislative oversight remains within the bounds of law.

“The court action seeks to determine whether the current posture of the committee reflects an exercise of legislative judgement, which, by constitutional design, is the exclusive province of statutory regulators, such as the National Insurance Commission, Securities and Exchange Commission, Nigerian Exchange, Financial Reporting Council, Nigeria Data Protection Commission, and the National Information Technology Development Agency.

“This raises serious questions about legislative overreach and an erosion of the doctrine of separation of powers, a cornerstone of Nigeria’s constitutional democracy,” the NIA argued.

The Association reiterated its commitment to lawful and constructive engagement with all arms of government, provided that such engagement respects the autonomy of statutory regulators and the boundaries established by the Constitution.

Meanwhile, some stakeholders have decried what they perceive as a “media trial” of an industry striving to rebuild trust. Despite Nigeria’s population of over 200 million, insurance penetration remains below one percent. Experts argue that this low level of penetration stems from widespread mistrust, lack of awareness, and a belief that insurers do not fulfill their obligations. According to them, the current probe and public accusations risk further eroding public confidence.

Industry players also pointed to the economic implications of the development, citing the insurance sector as a critical pillar of economic growth through its role in risk protection for businesses and individuals.

“A thriving insurance industry means resilience for small businesses, deeper financial inclusion, and confidence for investors. When an entire industry is publicly questioned, without clear, transparent, and evidence-based communication, the ripple effects are far-reaching, undermining investor confidence, discouraging policyholders, and weakening an already small market.

“This is not to suggest that regulatory scrutiny is unwelcome. Far from it. But oversight must be fair, well-informed, and constructive. The insurance sector must be regulated by those equipped to understand its complexities, namely, the statutory bodies like NAICOM, SEC, FRC, etc. Overlapping and politicised investigations may play well for optics, but they disrupt operations, demoralise professionals, and ultimately slow down the journey toward a more inclusive and trusted insurance ecosystem,” one stakeholder told The PUNCH anonymously.

Another contentious issue is that most of the accused firms are publicly listed. Critics argue that these companies are already subject to rigorous scrutiny from regulators, shareholders, and the Nigerian Exchange, and public allegations without clear basis could damage investor sentiment and undermine corporate governance.

Former President and Chairman of the Council of the Chartered Insurance Institute of Nigeria, Edwin Igbiti, told The PUNCH in an exclusive interview that it would have been more appropriate for the House to direct its concerns to NAICOM.

“For me, if they have any questions to ask, they know our regulator. They should have directed the petition to our regulator and asked any questions they may have, because the regulator sees the books,” Igbiti said.

“As it has been pointed out, this is a distraction to the companies, and the insurance sector itself is trying to gain back the trust and confidence of the public. If they have specific issues with any company, they can ask the regulator, and it will explain.

“How do you summon 25 companies and probe them? That is an indictment of the whole sector. The route that the NIA has taken is the best. Let the law prove their legitimacy. If they had done this to banks, they would not have gotten the confidence (of investors) that they have during this recapitalisation process at the stock exchange. You know, when you say you are probing someone, people have already judged them before knowing what the probe is about. These things affect the economy. What they are doing now is a public show, and it will affect the sector.”

Igbiti expressed support for the NIA’s stance. “I support the NIA in its stand with the industry. It is high time that we came together, strengthened internal good governance, and self-regulation.”

Also weighing in, public affairs analyst and industry expert, Ade Adesokan, stressed that a foundational principle of democratic governance is that legislative oversight must respect constitutional boundaries and institutional mandates.

“While the legislature has an undeniable role in probing matters of national interest, it is imperative that such enquiries do not undermine Nigeria’s rule of law or erode the independence of statutory regulators such as the National Insurance Commission, the Securities and Exchange Commission, and the Financial Reporting Council,” he said.

“The Insurance Act 2004, particularly Sections 6, 49, and 86, clearly vests exclusive regulatory, supervisory, and investigative powers in NAICOM. No parliamentary committee, however well-meaning, should circumvent this framework to conduct direct interventions in private-sector regulatory matters.”

Adesokan commended the NIA’s legal action, describing it as a show of commitment to lawful redress and institutional accountability.

“As a nation striving toward transparency and reform, we must reinforce institutions rather than politicise them,” he added. “The insurance industry is already undergoing reforms through the Nigeria Insurance Industry Reform Bill (2024). Adding undue pressure through legislative intrusion risks destabilising a vital economic sector that protects livelihoods and national assets. This is not merely a regulatory issue but a test of Nigeria’s fidelity to democratic norms, legal propriety, and the sanctity of due process. Stakeholders in the Nigerian insurance ecosystem deserve clarity, fairness, and institutional respect.”

He also proposed constructive solutions that could both preserve legislative oversight and strengthen regulatory effectiveness.

“The legislature can fulfil its oversight mandate while respecting institutional boundaries through collaborative engagement rather than direct intervention,” Adesokan said.

“Instead of conducting parallel investigations that undermine NAICOM’s authority, the National Assembly should focus on policy-level oversight by reviewing the adequacy of existing regulatory frameworks and ensuring that statutory bodies have sufficient resources and legal backing to execute their mandates effectively.

“The House Committee should engage NAICOM through formal briefings and progress reports on ongoing investigations, allowing the regulator to maintain its independence while keeping lawmakers informed. This approach respects the separation of powers while fulfilling legislative oversight responsibilities.”

He further advised that lawmakers fast-track the passage of the Nigeria Insurance Industry Reform Bill (2024) to strengthen the regulatory environment, rather than fueling uncertainty through ad hoc probes.

Meanwhile, he urged insurance companies to take proactive steps in improving governance.

“The insurance sector must embrace proactive transparency and stakeholder engagement to rebuild public confidence and demonstrate its commitment to best practices,” he added. “Industry players should strengthen their internal governance mechanisms, enhance compliance systems, and voluntarily adopt international best practices that exceed minimum regulatory requirements. This includes implementing robust risk management frameworks, improving customer complaint resolution mechanisms, and ensuring timely and accurate financial reporting.”

In the midst of the controversy, NAICOM has reaffirmed its commitment to maintaining stability and compliance within the sector.