The Federal High Court in Abuja has declared unconstitutional the requirement compelling Nigerians to submit their Bank Verification Numbers to insurance companies as a precondition for obtaining, renewing or continuing insurance contracts.
Justice J.K. Omotosho delivered the judgment in a suit filed by former Nigerian Bar Association President, Joseph Bodunrin Daudu, SAN, who sued in his capacity as a legal practitioner carrying on business under the name and style of J.B. Daudu & Co.
The suit, marked FHC/ABJ/CS/2672/2025, had the National Insurance Commission, the Attorney-General of the Federation, the Central Bank of Nigeria and Multi-Trade Insurance Brokers Ltd as defendants.
Daudu approached the court after receiving a letter from Multi-Trade Insurance Brokers Ltd titled “Circular on Compulsory Update for All Insurance Contracts.”
The letter, relying on a NAICOM circular dated October 22, 2025, requested policyholders to provide their Bank Verification Number, National Identification Number and, in the case of corporate entities, Corporate Affairs Commission documents as mandatory requirements for the formation, continuation or renewal of insurance contracts.
The plaintiff told the court that his insurance broker informed him that unless he complied with the directive, it would stop processing insurance claims on behalf of him, his staff and family members from December 31, 2025.
He argued that insurance companies are not banks and have no statutory authority to demand or process BVN data, which he described as sensitive banking-related personal information.
Daudu further contended that the BVN framework was created for banking and financial transparency purposes and not for insurance transactions.
He maintained that the National Identification Number was sufficient for identity verification and that compelling Nigerians to disclose their BVN to insurers exposed them to the risk of data breach, fraud and misuse of sensitive personal information.
The plaintiff also challenged Section 64(4) of the Nigeria Insurance Industry Reform Act, 2025, to the extent that it included BVN as part of material information required from insured persons.
He asked the court to declare the provision unconstitutional, unlawful and inconsistent with the right to privacy guaranteed under Section 37 of the 1999 Constitution.
He also challenged NAICOM’s later circular dated November 21, 2025, which removed the BVN requirement from its earlier circular, arguing that the circular was inadequate because an administrative circular could not amend or override the express provision of an Act of the National Assembly.
NAICOM, in its preliminary objection, argued that the suit was incompetent because Daudu failed to serve the mandatory pre-action notice required before suing the Commission.
The court agreed with NAICOM on that point and struck out the Commission from the suit for non-service of pre-action notice.
However, the court proceeded to determine the substantive issues against the remaining defendants.
On locus standi, the court held that Daudu had sufficient interest to maintain the action because the directive personally affected him, his law firm, staff and family, especially as renewal of his insurance contracts was due in December 2025.
Justice Omotosho held that the BVN regulatory framework does not include insurance companies as participants.
The court noted that participants in BVN operations and watch-list framework include the Central Bank of Nigeria, Nigeria Inter-Bank Settlement System Plc, banks, other financial institutions and customers, but not insurance companies.
The court further held that insurance companies do not carry on banking business and are not listed as other financial institutions under the Banks and Other Financial Institutions Act.
Justice Omotosho said BVN is a unique identifier linked to a person’s bank accounts and financial records, and that allowing insurers to demand it without proper legal and data protection safeguards would undermine the purpose of the BVN framework.
The court held that although Section 64(4) of the Nigeria Insurance Industry Reform Act, 2025, required BVN and NIN as part of material information for insurance applications, the BVN requirement was unnecessary and excessive.
According to the court, the NIN is sufficient to identify insurance policyholders, while BVN is irrelevant to insurance transactions and exposes Nigerians to avoidable privacy and financial risks.
The court also relied on the Nigeria Data Protection Act, 2023, holding that personal data must be adequate, relevant and limited to what is necessary for the purpose for which it is collected.
Justice Omotosho held that compelling insured persons to submit BVN to insurance companies amounted to a breach of the right to privacy under Section 37 of the Constitution.
The court also ruled that NAICOM’s November 21, 2025 circular, which purportedly removed the BVN requirement, could not cure the defect because a circular has no statutory force and cannot amend an Act of the National Assembly.
The court therefore ordered the deletion of the words “Bank Verification Number” from Section 64(4) of the Nigeria Insurance Industry Reform Act, 2025.
It declared that the inclusion of BVN as part of material information required from insured persons is unwarranted, risky, unlawful and a breach of the plaintiff’s fundamental right to privacy.
The court also declared that empowering insurers to demand, process and retain BVN data from Nigerians as a precondition for validating insurance contracts is unconstitutional, ultra vires, null and void.
Justice Omotosho further declared that in the absence of any existing law or regulation for the processing, control, management and protection of BVN data by insurers, the requirement exposed Nigerians to the risk of unprotected and unregulated use of their BVN data.
The court granted a perpetual injunction restraining the defendants from implementing NAICOM’s October 22, 2025 circular to the extent that it requires Nigerians to submit BVN to insurers as a mandatory precondition for entering into or renewing insurance contracts.
