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•Experts explain reasons for endless disputes
From Adanna Nnamani, Abuja and Henry Uche
For decades, Nigeria’s insurance industry has operated under a cloud of suspicion.
It is seen by many citizens as a system eager to collect premiums but reluctant to honour claims when disasters strike.
The reluctance to procure insurance has left penetration at less than 1 per cent.
From road accidents and fire outbreaks to business losses and life insurance settlements, stories of delayed payments, denied claims and bureaucratic frustration have shaped public perception far more than regulatory reforms or industry achievements.
Yet, beneath this long-standing credibility challenge, a quieter transformation is underway.
A combination of regulatory overhaul, digital innovation, improved claims settlement ratios, and intensified industry advocacy is gradually reshaping Nigeria’s insurance landscape. But even as the numbers improve, a deeper challenge has cropped up.
Nigerians are not only distrustful, they are increasingly reluctant to engage with insurance at all.
Insurance experts now say the problem is no longer just trust deficit, but a mix of historical damage, cultural resistance, misinformation and behavioural inertia.
Nonetheless, one question burns in the hearts of the citizens: is Nigeria’s insurance industry finally turning a corner, or is it still trapped in a cycle where reform outpaces public confidence?
Perception gaps
Nigeria remains Africa’s largest economy and the continent’s most populous nation, yet insurance penetration has stubbornly stayed below one per cent, among the lowest globally. Analysts say this is not due to lack of products or institutions, but weak trust in claims execution and long-standing perception issues.
Investigation shows that many Nigerians who avoid insurance have never directly interacted with insurers. Instead, their perceptions are shaped by second-hand experiences, historical complaints, and widely circulated stories of rejected claims.
Over time, insurance has earned an unflattering nickname in some circles, the “weeping child of the financial sector.”
But industry stakeholders now argue that this narrative is increasingly outdated.
According to Prince Daniel, the Managing Director and Chief Executive Officer of Ogu & Sons Multi-Global Ventures, the insurance industry has made significant progress in addressing past inefficiencies, especially in claims settlement and regulatory compliance.
He insists that the bigger challenge is no longer distrust alone, but unwillingness by Nigerians to re-engage.
“Insurance players are doing well nowadays in terms of claims payments. The issue has been over-flogged,” he said.
Daniel explained that regulatory reforms, digital adoption, stronger consumer protection frameworks, and recent claims payments, particularly under the Nigeria Insurance Industry Reform Act (NIIRA 2025), have improved industry credibility.
However, he noted that Nigerians remain hesitant.
“The problem today is that Nigerians are not willing to give insurance a second chance. But you can’t blame them entirely. Once trust is broken, it is very difficult to rebuild,” he said.
He added that economic hardship has also influenced public perception, making people more cautious about long-term financial commitments.
Claims settlement remains the real battlefield of trust
Across Nigeria’s insurance ecosystem, one truth remains undisputed, which is that claims settlement is the ultimate measure of credibility.
No matter how sophisticated products become or how aggressive marketing campaigns grow, the moment of truth lies in whether insurers pay claims promptly, fairly, and transparently.
Industry data accentuates recent progress. As of the last quarter of 2025, insurance companies in Nigeria paid N724.7 billion in claims, representing about 31.5 per cent of gross written premiums of N2.3 trillion.
Settlement performance also showed improvement: Non-life insurers: 75.5% claims settlement ratio.
Life insurers: 65.5% claims settlement ratio.
These figures reflect improved underwriting discipline, stronger liquidity management, and increased regulatory oversight.
Analysts believe total annual claims could soon approach N1 trillion as enforcement and penetration deepen.
For the Commissioner for Insurance, Olusegun Omosehin, the focus is that insurers must prioritise policyholders or risk losing public confidence entirely.
NAICOM has repeatedly stressed that consumer protection is central to its mandate and has intensified enforcement against delayed or unpaid claims.
Why disputes persist
Despite improvements, claims disputes remain a central friction point in the industry.
Operators argue that many Nigerians misunderstand insurance contracts, often assuming that all losses are automatically covered once premiums are paid.
But insurers insist that claims are governed strictly by policy terms, exclusions, and documentation requirements.
According to Hanson Ufot, Head of Brand and Corporate Communications at Guinea Insurance Plc, most rejected claims stem from technical issues rather than bad faith.
He listed common causes of rejection: Non-disclosure of material facts, policy exclusions, expired policies due to non-renewal, delayed notification of claims, incomplete documentation and losses outside coverage scope.
“In many cases, disputes arise from misunderstanding of policy terms rather than outright denial,” he said.
Ufot noted that Guinea Insurance has strengthened customer engagement and communication at the point of policy issuance to reduce disputes.
He also explained that claims processing timelines vary depending on complexity.
Straightforward claims with complete documentation can be resolved within days, while complex cases involving investigation or third-party verification take longer.
At Guinea Insurance, he said, minor claims can be settled within 48 hours under its Prompt Action on Claims Execution (PACE) system.
Speed, systems and race to rebuild confidence
Across the industry, insurers are racing to improve claims turnaround times through digitisation.
Automation, online submission portals, mobile apps, and real-time verification tools are increasingly replacing manual processes that previously caused delays.
For insurers, speed is no longer just operational efficiency, it is a reputational survival tool.
Another operator, Sovereign Trust Insurance Plc, reinforced this point through its Head of Corporate Communications, Mensah Simon Peter.
He explained that claims rejection often arises from fraud, policy breaches, and misinterpretation of coverage.
Peter cited deliberate damage to insured property as an example of fraudulent claims behaviour, which insurers are legally obligated to reject.
He also highlighted complex interpretation issues in policy wording, especially in life and accident insurance, where causation and medical reports determine liability.
On claims timelines, he stated: 24 to 72 hours for straightforward claims, 60 to 90 days for complex cases, up to 30 days under NIIRA provisions in certain cases.
He stressed that insurers cannot operate outside contractual boundaries.
NIIRA 2025 as a turning point
The Nigeria Insurance Industry Reform Act 2025 is widely seen as the most ambitious overhaul of the sector in decades.
Its key provisions include: Mandatory claims settlement within 60 days, penalties and interest on delayed claims, recognition of electronic documentation, reduced bureaucratic requirements for motor claims, tronger consumer protection frameworks and faster dispute resolution systems.
Industry observers say the law could fundamentally reshape claims culture if fully enforced.
However, implementation remains the critical test.
Regulation and enforcement pressure intensify
NAICOM has adopted a more aggressive regulatory posture in recent years, including public disclosure of insurers with unpaid claims.
Industry leaders say this reputational pressure mechanism is already influencing behaviour.
The Nigerian Insurers Association (NIA) also supports stricter enforcement, noting that credibility is directly tied to claims performance.
However, analysts warn that Nigeria’s history of weak enforcement could undermine reforms if regulatory consistency is not maintained.
Technology disruption: InsurTech reshapes expectations
Digital transformation is increasingly viewed as the most powerful lever for restoring trust.
At the Insurance Sector Transformation Consultative Forum 2026, stakeholders identified InsurTech as central to future growth.
Key benefits include: faster claims processing, reduced fraud, lower operational costs, improved customer experience and wider insurance access
NAICOM’s partnership with FSD Africa under the BimaLab initiative is already supporting startups developing digital insurance solutions.
Some firms report claims being processed within 48 hours using automated systems.
Yet experts caution that technology alone cannot solve trust issues without cultural and operational reform.
Education gap: The hidden driver of disputes
Industry leaders also point to low insurance literacy as a major challenge.
Many Nigerians do not fully understand: Policy exclusions, coverage limits, documentation requirements and claim procedures
As a result, expectations often exceed contractual realities.
Experts argue that insurers must simplify policy language and intensify public education.
Compulsory insurance and enforcement gains
The enforcement of compulsory insurance, particularly third-party motor insurance, has improved policy uptake.
However, experts warn that increased coverage must be matched with efficient claims handling to sustain confidence.
Fake insurance certificates and underpriced policies remain a major concern in the market.
Fragile but evolving trust equation
Despite reforms, stakeholders agree that trust remains fragile.
For some Nigerians, past experiences continue to overshadow present improvements. For others, economic pressures reduce willingness to lock funds into insurance products. Yet the industry insists that progress is real—even if not widely acknowledged.
Claims payment volumes are rising, digital systems are expanding, and regulatory oversight is tightening.
Performance, not promises remains paramount
Consumer advocate, Adesina Ajibola, believes Nigeria’s insurance sector is at a defining moment.
He argues that reforms, digitalisation, and regulatory pressure have created an opportunity for transformation, but only consistent performance will determine success.
“Ultimately, public confidence will depend on what policyholders experience when they file claims,” he said.
He added that insurance credibility is built not on policy documents or speeches, but on real-world execution.
“Claims settlement remains the single most powerful advertisement for insurance. If insurers consistently honour genuine claims, trust can be rebuilt. If not, the sector will remain stuck in low penetration and poor perception,” he said.
Nigeria’s insurance industry is no longer where it was a decade ago. Reforms are deeper, technology is smarter, claims payment is higher, and regulation is stricter.
But trust remains the industry’s most difficult currency.
The sector is now defined by a dual reality of operational improvement on one side and public hesitation on the other
Between these two forces lies the future of Nigeria’s insurance market.
For now, the industry, according to stakeholders is not just fighting for market share, it is fighting for belief.
