Charles Ude, Esq

Legal Practitioner, Author and Social Critic

Email: Charlesude2014@gmail.com

A close friend of mine recently had his car involved in a serious accident. The vehicle was comprehensively insured, so naturally he expected the claim process to be straightforward. A full month has now passed, yet the insurance company is still “investigating” the cause of the accident and has made no payment. Watching him chase documents, answer endless questions, and wait in frustration brought back memories of countless similar stories I’ve handled over the years. The imbalance in how insurers and policyholders are treated in these situations shocked me all over again , and that’s exactly why I decided to write this piece.

Let me be completely candid. When I began practising insurance law in Nigeria more than a decade ago, the phrase “utmost good faith” never felt like a shared principle of trust. Too often it sounded like a convenient escape clause that insurers invoked whenever they wanted to avoid paying a claim. I have lost count of the number of honest clients , small business owners, families, ordinary working people , who ended up with nothing, not because they lied, but because they failed to mention (or simply forgot) some detail the insurer later labelled “material.”

That personal experience is why this topic still troubles me deeply. The doctrine of *uberrimae fidei* exists to protect both parties in a contract where the insured almost always knows far more about the risk than the insurer does. Yet in practice , especially in Nigeria ,it has frequently operated in a way that heavily favours the insurer.

How It Used to Work (and Still Applies to Many Existing Policies)

Under the legal framework that governed us for decades , principally the Marine Insurance Act 1961 and the Insurance Act 2003, any failure to disclose a material fact, even if completely innocent, allowed the insurer to avoid the entire policy from the very beginning. No claim payment. Frequently no refund of premiums, especially where the non-disclosure was deemed deliberate. Nigerian courts, faithfully following English common-law tradition, upheld this strict position time and again.

A handful of judgments still make me wince when I revisit them:

– *Leadway Assurance Co Ltd v Zeco Nigeria Ltd (2004) 11 NWLR (Pt 884) 316 (SC)*

The insured omitted mention of previous losses. The Supreme Court held the policy voidable ,and that was that.

– National Insurance Corporation of Nigeria (NICON) v Power & Industrial Engineering Co Ltd (1986) 1 NWLR (Pt 20) 1 (SC)

Non-disclosure of material risks relating to a vessel. Avoidance granted.

– *Joseph Irukwu v Trinity Mills Insurance Broker (Unreported, CA/L/145/90, Court of Appeal, Lagos Division, 1992)*

A life policy was set aside because of an undisclosed medical history.

These rulings were legally sound at the time. But the human cost was heartbreaking: honest people left devastated by an omission rather than any real deceit.

The United Kingdom Changed Course and ,We Are Beginning to Follow

While we remained tied to the old strict rules, the United Kingdom recognised the unfairness and acted. In 2012 Parliament passed the *Consumer Insurance (Disclosure and Representations) Act*, followed by the landmark *Insurance Act 2015*.

The 2015 Act fundamentally changed the landscape. It replaced the rigid duty of “utmost good faith” with a more realistic “duty of fair presentation” for non-consumer insurance. Crucially:

– The insured must present the risk fairly , but not disclose every conceivable detail.

– Remedies are now proportionate to the breach:

– Deliberate or reckless non-disclosure ,the insurer can still avoid the policy.

– Innocent or careless non-disclosure , the insurer applies a proportionate adjustment (higher premium, reduced claim payment, etc.) rather than walking away entirely.

Key English cases that illustrate both the old thinking and the need for reform include:

– Carter v Boehm (1766) 3 Burr 1905, Lord Mansfield’s classic judgment that gave birth to the doctrine in marine insurance.

– *Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 (HL)*,the broad materiality test that made avoidance easier for insurers.

– Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (The Star Sea) [2001] UKHL 1; [2003] 1 AC 469, which limited the scope of any continuing duty of good faith after the contract was in place.

Thanks to these reforms the UK market has become noticeably fairer, more transparent, and ,importantly,more trusted. Insurance penetration has improved, and the number of “technical” repudiations has fallen sharply.

Nigeria in 2025–2026: Finally Turning the Corner

The game-changer arrived on 5 August 2025 when President Bola Ahmed Tinubu signed the *Nigerian Insurance Industry Reform Act 2025 (NIIRA 2025)* into law.

For the first time, the legislation directly confronts some of the old harshness. Among the most significant changes:

– It abolishes the remedy of avoidance of the contract *solely* on the ground that utmost good faith was not observed in certain circumstances.

– It strengthens the concept of fair presentation of the risk.

– It imposes clearer disclosure obligations on insurers as well.

– It establishes a Customer Protection Fund, tightens market conduct standards, and promotes faster, more transparent claims settlement.

The Act is not an exact replica of the UK’s 2015 legislation, but it clearly moves in the same direction: protecting ordinary policyholders without undermining the fundamental integrity of insurance.

Where We Stand Today

We are living through an important ,but still fragile , transition.

Judgments such as *Leadway* and *NICON* remain binding authority for policies issued before the new Act came into force. However, policies written under NIIRA 2025 should operate under a noticeably different regime. Insurers can no longer rely so easily on minor or innocent non-disclosures to deny valid claims. That, at least, is the promise.

Whether that promise becomes reality will depend on three critical factors:

1. The willingness and consistency with which NAICOM enforces the new provisions.

2. Whether our judges interpret the reforms in the progressive spirit in which they were enacted, or fall back on old habits.

3. Whether insurers rewrite their policy wordings to reflect the change , or attempt to draft around it.

I am cautiously hopeful. For the first time in my professional life, I feel I can look a worried client , a shop owner, a family breadwinner, someone like my friend with the damaged car , in the eye and say with genuine conviction: “Insurance can actually work for you now.”

But hope alone will not be enough. We need sustained training for practitioners, widespread public education, a robust and fearless regulator, and judges prepared to give full effect to the new law.

Because in the end, “utmost good faith” should mean precisely what the words suggest: both parties acting honestly and fairly toward one another , not one side perpetually holding all the power.

Charles Ude, Esq

CU

March 2026