Can compulsory building insurance curb Lagos’ recurring building collapses?
With Lagos State introducing compulsory building insurance, attention is now turning to whether the measure can help reduce recurring building collapses and strengthen public safety.
The Lagos State Government has launched the Lagos State Building Insurance Scheme, marking the first comprehensive state-level implementation of the compulsory building insurance provisions under the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
The initiative represents a major shift from the weak enforcement of compulsory building insurance under the repealed Insurance Act 2003. Although the previous law required insurance for certain buildings, compliance remained limited despite repeated cases of building collapse across Nigeria.
The Lagos scheme is built around a digital compliance platform and is expected to extend compulsory insurance coverage to about 500,000 buildings across the state’s 20 local government areas.
Its first phase will focus on public buildings, commercial properties, hotels, schools and structures exceeding two floors. Compliance and enforcement will be coordinated by the Lagos State Building Control Agency (LASBCA), using satellite mapping, electronic permits and other geospatial technologies.
The scheme follows the enactment of NIIRA 2025, which repealed the Insurance Act 2003 and consolidated Nigeria’s insurance laws into a single regulatory framework.
Sections 75 and 76 of the new legislation make builders’ liability insurance and insurance for public buildings compulsory. The law also introduces stronger consumer protection measures, reinforces the capital requirements of insurance companies and gives the National Insurance Commission (NAICOM) wider enforcement powers.
For the insurance industry, the Lagos initiative is the first major attempt to translate the provisions of NIIRA 2025 into an operational state-level framework.
Although Ogun State previously introduced a similar scheme under the old insurance law, Lagos is the first state to implement compulsory building insurance under the new regime. Industry stakeholders hope the initiative will eventually serve as a model for other states.
Speaking at the launch, the Commissioner for Insurance and Chief Executive Officer of NAICOM, Olusegun Ayo Omosehin, described insurance as an important instrument of social protection rather than simply a financial product.
He said insurance could help families and businesses recover from disasters such as building collapses, fires and floods, reducing economic disruption and preventing victims from falling into financial hardship.
Omosehin explained that compulsory building insurance was primarily designed as a public safety measure. Under the new law, public buildings and certain buildings under construction must have insurance that protects owners, occupants, visitors, workers and members of the public who may suffer injuries or property losses resulting from structural failures or construction-related accidents.
He said Lagos had effectively transformed a federal legal requirement into an enforceable state policy capable of providing practical protection for residents.
The Nigerian insurance industry has also welcomed the initiative.
The President of the Nigerian Insurers Association, Ebelechukwu Nwachukwu, said compulsory building insurance should be seen as a safeguard for lives and investments rather than an additional burden on property owners.
She noted that although compulsory insurance had existed in Nigerian law for years, poor enforcement had significantly limited its effectiveness.
According to her, Lagos is seeking to close the compliance gap through digital technology, electronic Geographic Information Systems and coordinated enforcement involving regulators, government agencies and insurance companies.
She described the scheme as a proactive approach that seeks to put insurance protection in place before disasters occur rather than waiting until lives and property have been lost.
The renewed focus on enforcement comes against the backdrop of persistent building failures across Nigeria.
On June 25, 2026, a three-storey shopping complex near Alakija Bus Stop along Old Ojo Road in Lagos collapsed, reportedly killing nine people and injuring 26 others. Another building collapse was also reported in Port Harcourt, Rivers State, on the same day.
The incidents have renewed calls for stronger enforcement of compulsory building insurance as part of wider efforts to improve construction standards and protect lives.
Industry analysts argue that compulsory insurance could have benefits beyond providing compensation after an accident.
They contend that insurers, having assumed financial liability for insured structures, would have greater incentives to scrutinise construction quality, demand the involvement of certified professionals and monitor compliance with engineering standards before underwriting projects.
Such oversight, they argue, could improve construction practices and reduce the risk of structural failures. Increased insurance coverage could also expand the industry’s premium base and improve its capacity to manage future risks.
The legal requirements governing compulsory building insurance have also become more stringent under NIIRA 2025.
Under the repealed Insurance Act 2003, developers of buildings exceeding two floors were required to obtain builders’ liability insurance during construction, while public buildings were required to be insured against risks including collapse, fire, storm, flood and earthquake.
However, enforcement was largely ineffective, with investigations into several collapsed buildings revealing little evidence of valid insurance coverage.
NIIRA 2025 retains these requirements while increasing the obligations and penalties for non-compliance.
Section 75 requires builders to obtain liability insurance before construction begins on buildings exceeding two floors. The policy covers liabilities arising from negligence that results in death, bodily injury or property damage involving workers or members of the public.
Violators face penalties of up to N5 million, 12 months’ imprisonment, or both.
Section 76 extends compulsory insurance to public buildings, including schools, hospitals, shopping malls, hotels, hostels, tenement buildings and other facilities accessible to members of the public.
The objective is to ensure that victims of structural failures and other insured risks can access financial compensation without relying solely on government intervention or lengthy legal proceedings.
Despite the stronger legal framework, implementation remains the biggest challenge.
Insurance penetration in Nigeria remains relatively low, while public awareness of compulsory insurance requirements is limited. Many developers still regard insurance as an avoidable expense rather than an essential part of risk management.
This leaves workers, occupants, visitors and neighbouring properties vulnerable when construction standards fail.
NAICOM has repeatedly stated that it will pursue the enforcement of NIIRA 2025, describing the law as a key part of reforms aimed at modernising Nigeria’s insurance sector through stronger regulation, digital innovation, financial inclusion and improved consumer protection.
For Lagos, the success of the new scheme will depend not only on digital monitoring and regulatory enforcement but also on sustained cooperation among government agencies, insurers, developers and the public.
Ultimately, the effectiveness of the Lagos model could determine how quickly other states adopt compulsory building insurance.
If properly enforced, the scheme could reduce the financial impact of building failures, encourage better construction practices and improve public confidence in insurance as an important part of urban development rather than merely another regulatory requirement.
