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By Henry Uche
Despite its immense potential to serve as a financial safety net and economic stabiliser, Nigeria’s insurance industry continues to lag behind, weighed down by a lingering confidence crisis.
From policyholders doubting claims settlements to a general lack of awareness and trust, the sector faces a deep-rooted perception problem that hinders its growth.
Experts argue that for insurance to play its rightful role in deepening financial inclusion and protecting livelihoods, particularly in a volatile economy like Nigeria’s, deliberate steps must be taken to bridge the trust gap.
This includes improving claims responsiveness, simplifying policy terms, strengthening regulatory oversight, and intensifying public education on the benefits of insurance.
Initiatives such as microinsurance, digital policy access and strategic partnerships with grassroots institutions are gaining traction, but without a cultural shift toward transparency and accountability, uptake will remain sluggish.
The question, then, is no longer about the need for insurance, but whether the industry can earn the confidence needed to drive mass adoption and sustainable growth.
While it has been reported that some customers staged fake accidents scenarios and fraudulent claims, on the other hand, some insurers have been accused of misusing funds, making misleading financial statements, making lofty promises without fulfillment, all leading to skepticism about their reliability.
Among all, claims denials and deliberate delays- a common complaint among policyholders and other forms of unfair treatments have led to dissatisfaction and a belief that insurers prioritise profits over policyholders happiness.
NAICOM recently published names of 46 Insurance companies in its website who were fingered by hundreds of policyholders in Nigeria, who allegedly failed to pay claims running in millions of naira.
While some operators have frowned over the Regulator’s hastened publication; industry watchers, analysts and observers have given NAICOM thumbs up. Whether the regulator’s hammer would descend on the defaulting insurers or not, is a decision NAICOM would take sooner or later.
Despite ambitious reforms and the introduction of digital innovations, Nigeria’s insurance industry remains burdened by a fundamental challenge, a pervasive lack of trust.
For many Nigerians, insurance still feels like a gamble rather than a guarantee.
Investigations by Daily Sun reveal deep-seated frustration among policyholders, who say the industry often fails to live up to its promises. Hidden clauses, complicated legal jargon, and unclear terms continue to plague the system, making it difficult for customers to understand the true value, or limitations, of their coverage.
“I bought a policy because the advert sounded reassuring,” one Lagos-based policyholder said. “But when it was time to claim, the story changed. There were so many exclusions I wasn’t told about. It felt like a trap.”
Rising premium costs have only added fuel to the fire. When the National Insurance Commission (NAICOM) revised the third-party motor insurance policy from N5,000 to N15,000 in January 2023, it was framed as a benefit: N3 million coverage for accident victims. But for many policyholders, it simply reinforced a sense of exploitation.
“Frequent hikes without clear justification make us question whether we’re being served, or squeezed,” another policyholder lamented.
Meanwhile, in an increasingly digital economy, data privacy and cybersecurity have become critical concerns. Many Nigerians fear that their personal and financial data may not be adequately protected by insurers. “We don’t just want coverage,” said one respondent. “We want assurance that our information is safe.”
These anxieties are worsened by high-profile regulatory interventions. One such case was the Federal Government’s takeover of African Alliance Insurance Plc in October 2024. To many observers, this sent a troubling signal about governance and sustainability in the sector. “It shows that not all is well,” remarked an industry analyst. “If a company needs rescuing, how do customers trust that their claims will be paid?”
The resulting erosion of public confidence has real consequences. As trust declines, so too does patronage. Policy sales shrink. Claims go unfiled. And Nigerians — already facing economic uncertainty — turn to alternatives such as peer-to-peer insurance, cooperative societies, and self-insurance models.
At a recent industry forum, insurance professionals dissected this growing crisis and its broader implications. They agreed that restoring trust must begin with transparency.
“Insurers must speak clearly, not in fine print,” one expert said. “Every exclusion must be spelt out. Every benefit must be easy to understand. It’s not just good ethics — it’s good business.”
Participants outlined key steps to reestablish public confidence:Transparent communication and simplified policy terms; Financial integrity, including published solvency ratios; Ethical sales practices, free of coercion or misrepresentation; Responsive claims processing, without endless delays; Digital innovation, enabling real-time access and accountability; Community outreach, especially in underserved rural regions
For Mr. Obinna Chilekezi, an insurance researcher and consultant, the issue runs even deeper. “We’re not just dealing with trust. We’re dealing with poverty, religious perceptions, and a lack of awareness,” he said. “Operators must redesign products that reflect the lives people actually live — and communicate those products in ways they understand.”
His views were reinforced in interviews with residents across Lagos, Imo, and Kogi states, who urged NAICOM and insurance companies to speak the language of the people, literally.
Biodu Constance, a resident of Kogi State, said insurance is often misunderstood in rural communities. “I’m not against insurance,” she said. “But how can people trust something they don’t even understand? NAICOM and these companies must come down to our level. Use our languages. Make it real.”
Emmanuel Diala, another respondent, called for greater physical presence. “How can rural Nigerians access insurance when offices are only in major cities? Not everyone uses smartphones. Just as banks are expanding branches into remote areas, insurers must do the same,” he argued.
According to him, insurance is still viewed as “abstract” and far removed from daily life. “To gain people’s trust, insurers must not only be seen, they must be felt. Let us see your impact.”
While some efforts are underway, including public campaigns by the Nigerian Insurers Association (NIA) using local languages and community radio, stakeholders believe much more is needed. The campaigns must be strategic, sustained, and tailored to specific regions and cultural beliefs.
Until then, trust, that most essential currency in insurance, remains elusive.
In a country grappling with economic hardship, widespread misinformation, and institutional distrust, the burden rests squarely on the shoulders of the industry to rebuild the confidence it once took for granted.
Only then can insurance reclaim its rightful place, not just as a business, but as a safety net for every Nigerian.
