The functions of the Commission include:

• Establish standards for the conduct of insurance business in Nigeria.
• Approve rates of insurance premiums to be paid in respect of all classes of insurance business.
• Approve rates of commissions to be paid in respect of all classes of insurance business.
• Ensure adequate protection of strategic Government assets and other properties.
• Regulate transactions between insurers and reinsurers in Nigeria and outside Nigeria.
• Act as adviser to the Federal Government on all insurance related matters.
• Approve standards, conditions, and warranties applicable to all classes of insurance business.
• Protect insurance policyholders and beneficiaries and third parties to insurance contracts.
• Contribute to the educational programmes of the Chartered Insurance Institute of Nigeria and the West African Insurance Institute.
• Register and grant licences to insurance companies, insurance agents, insurance brokers, and loss adjusters.

The inspectorate department of the Commission carries out routine and special investigations of operators to ensure that they operate according to the provisions of Insurance Act 2003. 

In serious cases of breach of the provisions of the law and insolvency, the Commission has powers to suspend an operator from carrying on business, withdraw licence, take over the management, or liquidate the company or firm.