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By Henry Uche
Experts in the financial industry have bemoaned the low penetration of insurance over long years of the country’s nationhood, saying that the sector has not yet arrived at its desired destination.
While many countries have explored insurance potential to strengthen their economies, analysts opined that for Nigeria to maximize its insurance potential, it must either start doing what others are doing in line with the nation’s peculiarities, or stop doing certain things which have stunted its growth.
Reflecting of the trajectory of the industry, an insurance professional and former Managing Director/Chief Executive Officer of AIICO Insurance Plc, Godwin Igbiti, said: “Modern insurance was introduced by British trading companies in the late 19th and early 20th centuries to protect their goods, ships, and business interests in what is now Nigeria.
“One of the earliest insurance firms to establish a presence in Nigeria was the Royal Exchange Assurance Agency in 1921. As Nigeria’s economy grew, indigenous insurance companies began to emerge. The African Insurance Company became one of the first Nigerian-owned insurance firms, paving the way for local participation in the industry.
“The Gross Written Premium (GWP) of the Nigerian insurance industry has evolved from a negligible few million pounds at independence in 1960 to a historic ₦2.3 trillion in 2025.
“This progression spans four distinct regulatory, economic, and revaluation eras: First, the Post-Independence and Nationalization Era (1960–1980s).
At independence in 1960, Nigeria had only 28 insurance companies, mostly branches of British firms. Premiums were calculated in West African Pound and were small, primarily covering colonial transit, marine, and motor risks.
“The Indigenization Decrees of the 1970s and the establishment of National Insurance Corporation of Nigeria (NICON) in 1969 enabled the government to take over dominant stakes. By the late 1980s, total market premiums hovered under a few hundred million Naira.”
The industry was deregulated in the early 1990s, leading to an influx of private, indigenous insurers. The National Insurance Commission (NAICOM) was established as the primary regulator under Decree No. 1 of 1997. By the late 1990s, GWP crossed the ₦10 billion milestone. Following the 2003 Insurance Act and subsequent recapitalization exercises, premium volumes accelerated, crossing ₦100 billion in the late 2000s.
He explained that enforcement of compulsory insurances (like third-party motor and building under construction insurance), growth in oil & gas local content laws, and corporate micro-insurance drove this period and resulted in the following GWP accomplishment: ₦200 billion (2011), ₦372.4 billion (2017), ₦426 billion (2018), ₦490 billion (2019) and:₦616 billion (2021).
He added the industry recorded hyper-growth and revaluation era from 2022 to the present which witnessed retail expansion, Oil & Gas with a growth rate of over 20 per cent, year-on-year: ₦726.2 billion (2022), ₦1.003 trillion (2023), ₦1.562 trillion (2024), ₦2.300 trillion (2025).
Despite achieving these results, he affirmed that Nigeria has “not fared too well” adding, “We can do better.”
He attributed the challenges stifling the growth of insurance to cultural and religious distrust, low penetration (less than 1 per cent) affecting the market growth and underdeveloped insurance market, high inflation squeezing client budgets as a result of the economy, which in turn produced a tiny middle class leading to personal economic restraints.
Others are continuous changing customer experience, perception issues, lack of awareness, knowledge and understanding, trust and credibility issues/insincerity of Insurance companies and claim payment avoidance, fear of failure or distress of all Nigeria financial systems, limited access and distribution channels.
Enumerating other challenges impeding insurance growth, he said: “Measuring insurance returns against other investment returns, regulatory challenges and compliance issues, inadequate infrastructure and technology adoption, high rate of fraud and lack of effective prevention measures, limited product diversity and Innovation, as well as fierce market competition and product commoditization.”
Despite the extremely low, 1 per cent penetration level, Igbiti affirmed strong belief that “there are abundant opportunities that will make the penetration to be above 1% by year 2028.”
He said that what is required is to mitigate all the challenges that are stifling growth and development.
“To start with, going by the various provisions of NIIRA, a lot of catch ups will be achieved and taken advantage of. Leveraging the stronger capital base (as provided by NIIRA), the following milestone will be achieved: develop products that will solve real customer problems – cyber risks, renewable energy, and microinsurance, among others; expand distribution beyond traditional channels, and simultaneously, efforts should focus on improving distribution channels and ensuring wider availability of insurance services.
“Other possible solutions are to: operators must deepen technology adoption and digital access, improve claims responsiveness and customer experience, retain more large-ticket risks within Nigeria, expand Compulsory Insurance Compliance and enforcement across sectors can boost penetration and public safety.”
He explained that there is a need to support infrastructure, energy, agriculture and SME growth. But most importantly, insurance Firms must build public trust in insurance as a financial safety net rather than a regulatory obligation.
They must significantly increase the number of Nigerians and Nigerian businesses that see insurance as relevant, accessible and valuable.
“NIIRA will significantly enhance NAICOM’s supervisory powers, providing the legal teeth to withdraw operating licences from erring operators and updating penalties to reflect contemporary economic realities.
“NIIRA 2025 has also expanded the compulsory insurance policies to 11 from the previous six to improve insurance uptake as the economy strives to expand to the $1 trillion mark. The continuous rise of technology and digital platforms will play a pivotal role in the progressive growth.
“As smartphones and internet access have become more widespread in Nigeria, the door to digital insurance services has been flung wide open. Insurtech companies are leveraging technology to create new products, reach underserved markets, and simplify the process of purchasing and managing insurance policies”
Igbiti noted that this digital revolution is not only helping insurers reach a broader customer base but is also increasing customer satisfaction and streamlining claims processes.
“With the right mix of regulation, innovation, and education, the next chapter could see Nigeria’s insurance industry finally deliver on its promise as a force for stability, empowerment, and inclusive growth.
“A national campaign to improve public understanding and perception is essential. In addition, companies should implement comprehensive awareness campaigns to educate the public about what insurance is and its importance.
“Nigeria holds significant potential for growth in the insurance sector, especially as economic conditions improve and financial literacy increases.
“By the time that we deal with all the limiting factors and get them out of the way, or at least reduce them, the penetration rate will increase. However, it requires determination and a change in mindset with a view to doing some things in a different way. With determination, adaptation, innovation and evolution, we can be sure of triumph and see positive result” he averred.
