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By Henry Uche
As President Bola Tinubu marks his second year in office, Nigeria’s insurance industry finds itself in a tug of war between ambition and pussyfooting.
According to experts, the incumbent administration’s bold policy shifts and regulatory recalibrations may have sparked cautious optimism across the sector, but the deep-rooted challenges of low penetration, limited public awareness and a fragile economic environment continue to blur the path to transformation.
They infer that despite the reformist rhetoric, the sector’s progress remains uneven.
While flaunting very slow and low progress, it is still weighed down by decades of underperformance and public skepticism.
They have called for harder work and multi-stakeholder approach to taking the industry, brimming with potential, to the next level.
Their position is justified by the fact that insurance penetration in Nigeria has been stuck at one per cent for decades and seems to defy all cocktails of interventions designed to make it grow.
Industry watchers insist that in the last two years, the image of insurance in the country has been battered.
Their position is buoyed by the consumers’ cries of injustice, deception and suppression, which they said have reached a crescendo.
A telling example of the turbulence in Nigeria’s insurance sector is the plight of policyholders and annuitants of African Alliance Insurance Plc. Many of them have been left anxiously clutching onto regulatory assurances, hoping to recover their trapped investments.
On October 30, 2024, the National Insurance Commission (NAICOM) took the step of dissolving the Board and Management of African Alliance, one of the country’s oldest life insurance providers, following years of financial distress and failure to meet obligations to clients.
NAICOM’s intervention came after a thorough evaluation of the company’s financial condition, governance structure and operational integrity. The findings painted a troubling picture: persistent default in claims payments, mounting liabilities to annuitants, and overall unsustainable operations. The regulatory body, citing these red flags, installed an Interim Management Board to steer the firm towards stability.
Yet for many affected customers, recovery remains uncertain, highlighting the fragile trust between insurers and the insured in a sector struggling to shake off a legacy of underperformance.
Since the intervention by the National Insurance Commission (NAICOM), annuitants of African Alliance Insurance Plc have continued to cry out for help, as they remain stuck in a cycle of broken promises and prolonged hardship. Despite repeated assurances from the regulator, thousands of retirees are still waiting for their rightful payments.
One of them, Mrs. Caroline Uwaifo, an annuitant and Secretary of the Lagos Chapter of the Company’s Annuitants Association, told Daily Sun that approximately 6,000 annuitants across Nigeria are affected. She said, “We’re truly enduring hardship. Some of us are ill, and our conditions are not improving. Some can’t even afford food. It’s unbearable. The government seems indifferent to our plight. We are already owed six months.”
Uwaifo, a retired official from the National Agency for Science and Engineering Infrastructure (NASENI), revealed that the Association had petitioned the EFCC, PenCom, and the Federal Ministry of Finance, and had also staged protests, but all efforts have been in vain. “The interim management has told us they are answerable only to NAICOM. After our protest, they paid us for just two months. Six months have passed, and we still don’t know what our fate will be,” she lamented.
When asked about her trust in Nigeria’s insurance sector, Uwaifo recounted her disappointing experiences with car insurance. “From the start, I’ve faced difficulties. Whenever I tried to renew, they’d just toss me around. Sadly, the government and policymakers are silent. If the system is broken, they should scrap it and return us to a Defined Benefits Scheme.” She added pointedly, “They misused the money they collected. This is why I don’t believe in insurance. I don’t like them!”
Another affected annuitant, Mr. Gbadebo Olatokunbo, co-founder of the Nigerian Shareholders Solidarity Association (NSSA) and a retiree of NTA Lagos, echoed similar frustrations. He noted that life has been difficult since they last received payments in September and October. “Six months without payment. NAICOM has failed us. Unlike the CBN, which wouldn’t allow a bank to fail before stepping in, NAICOM acts like it’s not a regulator. If it were, we wouldn’t be in this mess.”
Olatokunbo, who served as a principal officer at NTA, also lamented the generational disconnect, saying many annuitants have no one to rely on. “Today’s youth no longer feel the responsibility to care for aging parents, unlike my generation,” he said. He also shared his frustration, saying he once threatened to invoke ancestral spirits over the company’s failure to pay his pension. “These people know retirees don’t have the resources to take them to court, but if we could, we would sue NAICOM for negligence and African Alliance for breaching its obligations. People in Nigeria often get away with bad deeds, but they won’t escape this. Karma will catch up with them.”
The crisis at African Alliance is not an isolated incident. Other insurers have similarly struggled or collapsed due to poor financial management and weak governance structures. Niger Insurance Plc lost its license in June 2022, while Goldlink Insurance had its management taken over in 2012. Investment & Allied Assurance (IAA) was suspended in 2011 due to financial concerns, and International Energy Insurance (IEI) has also faced persistent instability.
Standard Alliance Insurance Plc is another example. Its operating license was revoked on June 21, 2022, and NAICOM appointed receiver/liquidators to manage the assets and liabilities of both Standard Alliance and Niger Insurance in an effort to protect policyholders and other stakeholders.
The plight of thousands of customers stranded by distressed insurers remains a major reason Nigeria’s insurance sector has struggled to thrive like its banking counterpart. Disillusioned policyholders often discredit the industry, perpetuating its negative reputation and eroding public trust—factors that have long undermined the sector’s credibility and growth.
However, a turning point emerged on December 17, 2024, when the Nigerian Senate passed the new Insurance Consolidated Bill. The National Insurance Commission (NAICOM) welcomed the legislation, expressing optimism that it would unlock growth and potential within the sector. Notably, this was one of the bills former President Muhammadu Buhari declined to assent to during his tenure.
NAICOM described the bill’s passage as a major milestone after nearly two decades of stalled reforms. “By consolidating existing insurance laws, the new legislation marks a new era in the ongoing efforts to strengthen Nigeria’s insurance industry,” the Commission stated. “The Bill provides a comprehensive framework for regulating all types of insurance businesses and ensuring a more robust and effective industry.”
NAICOM added: “The passage of the Bill marks a significant triumph for Nigeria’s insurance industry, tackling the long-standing challenge of low insurance penetration. The legislation addresses the industry’s need for a more robust legal and regulatory framework, enabling it to compete favorably in African and global markets.”
Key provisions in the bill include:Enhanced Capital Requirements: To ensure insurers are financially capable of underwriting risks and protecting policyholders; Risk-Based Supervision: Strengthening regulators’ capacity to monitor and manage risks; Consumer Protection: Improving transparency and fairness in insurance practices; Streamlined Regulation: Providing clarity and consistency in industry oversight.
Insurance educator, Mr. Ade Adesokan, assessed President Bola Tinubu’s performance in the sector as “moderately successful with significant potential,” giving him a rating of 6.5 out of 10.
He praised Tinubu’s administration for laying structural foundations for long-term growth. “The pending Insurance Reform Bill, with its higher capital requirements, represents a landmark achievement,” he said. He also cited the administration’s 10-year strategic roadmap (2024–2033) and the 27 per cent growth in premium generation—reaching N1.003 trillion—as evidence of sector resilience.
Tinubu’s Renewed Hope Agenda, with its focus on expanding health insurance and attracting foreign investment, has infused the sector with capital and expertise. Currency reforms, though initially disruptive, have enhanced transparency and reduced bureaucratic hurdles in international business dealings.
Yet, Adesokan pointed to affordability challenges arising from the 40.9 per cent naira depreciation and the removal of fuel subsidies. These reforms, he said, inflated insurance premiums just when many Nigerians were least able to afford them. “It’s a paradox,” he noted, “where the sector’s quality improves but access diminishes.”
He also criticized delays in pension payments, especially for retirees from defunct agencies like NICON Insurance and NITEL/MTEL, calling it a governance failure. Allegations of N350 billion in unpaid pension arrears and corruption further erode trust in the financial system.
“Tinubu’s performance reflects the classic challenge of structural reform: short-term pain for long-term gain,” he said. While foundational reforms are commendable, better balancing of policy execution and consumer welfare is needed to fully transform the sector.
As Tinubu’s administration marked its second anniversary in May 2025, the insurance sector has become a case study in both challenge and opportunity. The fuel subsidy removal, though painful, is yielding fiscal benefits, with redirected funds now boosting infrastructure and social programs. For the insurance sector, it created both hurdles and new demand.
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“Insurance companies faced mounting costs as fuel prices soared, affecting operations and claims,” Adesokan explained. “But this also triggered increased demand for comprehensive coverage, with rising property values and vehicle operating costs pushing premiums upward.”
He added that floating the naira had an even more transformative impact. “Foreign reinsurance obligations became more expensive, but the new forex regime attracted international insurers eager to invest. The increased transparency has significantly eased cross-border transactions.”
Insurers have had to adjust premium rates to survive inflationary pressures, while NAICOM has actively regulated these adjustments. “The Commission has become more nuanced,” Adesokan said, “recognizing that rigid caps or unchecked increases could either destabilize insurers or push consumers away.”
Tinubu’s economic diversification push has also opened up new insurance markets, especially in underdeveloped sectors. Adesokan highlighted the administration’s attention to pensioners under both the Defined Benefit Scheme and the Contributory Pension Scheme. Though challenges remain, improved revenues have helped reduce pension backlogs and enhance payment consistency.
The revival of the manufacturing sector, a key pillar of the Tinubu administration’s economic strategy, has positively impacted the insurance industry and created opportunities to address pension-related challenges. As local production gains competitiveness through currency adjustments and policy support, manufacturing companies have expanded operations, increasing their insurance needs and contributions to the pension scheme. Industrial insurance—covering machinery breakdown to business interruption—has grown significantly as firms modernize to capitalize on improved market conditions.
“The technology sector’s expansion under Tinubu has generated new insurance demands. Cyber insurance, once niche in Nigeria, is now mainstream as businesses digitize and face rising cyber threats. Professional indemnity insurance for tech companies has also grown as the sector matures,” a public affairs commentator noted.
However, the insurance industry faced challenges during the economic adjustment period. Cash flow pressures led some businesses to reduce coverage or opt for less comprehensive policies. Insurers balanced maintaining adequate coverage with clients’ tighter financial constraints. Despite affordability issues, the industry showed resilience through aggressive marketing and greater technology adoption in product distribution, helping sustain revenue growth amid rising costs.
Digital platforms and mobile technology became crucial for insurers to maintain market share and reduce traditional distribution costs, enabling access to underserved markets. Still, affordability remains a challenge for many consumers facing rising living costs.
Complementing these reforms is the Renewed Hope Agenda, which prioritizes expanding health insurance as a foundation for social and economic development. The government set ambitious targets to increase enrollment and improve care quality through the National Health Insurance Authority (NHIA).
“The NHIA has been revitalized under Tinubu, extending coverage to underserved populations and enhancing service delivery. This aligns with broader policies aimed at financial inclusion and expanding insurance’s role in Nigeria’s development,” the commentator said. Health insurance expansion creates new market opportunities while reducing financial burdens on families and businesses during health emergencies.
Infrastructure development initiatives have also driven demand for construction and engineering insurance. Major projects in transportation, power, and telecommunications require sophisticated coverage, often involving international syndicates, enhancing insurers’ technical capacity and global ties.
Regional economic integration under Tinubu has opened opportunities for Nigerian insurers in cross-border business, especially in trade credit and transportation insurance within West Africa.
Socially, income inequality initially widened during adjustments, increasing focus on microinsurance products for low-income populations. Though less profitable, this segment holds long-term growth potential as financial resilience improves.
Looking ahead, the insurance sector’s trajectory appears positive despite initial disruption. “Companies that navigated the reforms emerged stronger, more efficient, and with diversified products. Foreign investment has bolstered capital and introduced new technologies and management practices, enhancing overall capability,” the commentator added. Fiscal restructuring and economic stability have created a more predictable environment, benefiting insurers and clients.
Industry stakeholders are optimistic, particularly about the forthcoming Insurance Sector Reform Bill and ongoing health insurance expansions. The bill’s higher capital requirements aim to strengthen providers, reduce insolvency risks, and ensure prompt claim payments—key consumer benefits.
“The Renewed Hope Agenda’s health insurance push could transform Nigerians’ access to medical care and financial planning,” he said. Yet, broader economic policies, including subsidy removal and forex liberalization, have raised inflation and premiums, creating affordability challenges even as insurance sector stability improves.
The naira’s floating increased costs for imported insurance-related goods and services, complicating coverage affordability. This paradox—stability amid reduced consumer access—creates a complex landscape: improved product quality but diminished affordability for many families and businesses.
Despite this, experts remain hopeful that consistent policies and regulatory progress will attract more investment, yielding better service, innovation, and competitive pricing over time. These reforms promise a more consumer-friendly market balancing stability with accessibility.
The insurance sector’s experience illustrates both costs and gains of bold economic reform. While disruption was significant, structural improvements have created new opportunities and resilience, offering insights for other sectors navigating Nigeria’s transformation.
“The insurance story under Tinubu reflects Nigeria’s economic development narrative: a necessary adjustment period laying a foundation for sustainable, diversified growth,” the commentator said.
For decades, NAICOM has led regulatory modernization, strengthening oversight and corporate governance. These efforts produced a 27 per cent premium growth in 2023, surpassing N1 trillion. The non-life segment grew 35.1 per cent, life insurance 16.1 per cent, demonstrating sector resilience amid economic challenges.
Yet, widespread insurance adoption remains low. The new roadmap addresses this with seven strategic pillars: regulatory reform, risk-based capital, insurance promotion, product diversification, distribution optimization, digitalization, and talent development—tackling supply and demand constraints simultaneously.
The government plays a crucial role as policymaker and largest asset owner, influencing insurance through policy, enforcement, and incentives. The Guidance Note on Government Asset Insurance institutionalizes risk management in public operations, promoting efficiency and stability.
The roadmap faces obstacles worsened by economic transitions. Socio-cultural and religious beliefs encourage reliance on faith rather than insurance. Past claim delays foster distrust, deterring new policyholders. Economic pressures cause many to view insurance as a non-essential expense. Complex products with opaque terms further limit appeal among financially stretched consumers.
Global success stories offer lessons. Taiwan, South Korea, South Africa, Ghana, and India demonstrate that strong regulation, digital adoption, product innovation, and consumer education drive higher insurance penetration.
The roadmap embraces these lessons, emphasizing digital tools, product simplification, consumer education, and expanding microinsurance and index-based products for underserved rural populations.
Insurance’s role extends beyond protection: it mobilizes long-term savings for infrastructure, provides risk expertise to enhance business resilience, and creates employment. By enabling risk pooling and transfer, insurance supports productive ventures that fuel economic growth and innovation, complementing Nigeria’s broader reforms.
In contrast, an anonymous insurance professional expressed skepticism about Tinubu’s impact:
“I haven’t seen any real impact on the insurance sector from this administration. Which compulsory insurances have truly changed the game? How many government parastatals have insurance for personnel or property? They should provide statistics. How has this government helped insurance grow significantly, unlike South Africa, Tunisia, Kenya, and others?”
He argued the focus should be on growing sector penetration beyond the current 1 per cent, not just recapitalization.
“Investors won’t come to a country without insurance and assurance for their lives and property. We’re still where we were. Corporate offices get sealed for unpaid taxes, but how many government establishments are sealed for lacking property or professional indemnity insurance? Does the FCT ministry even have insurance?”
He criticized ministers and permanent secretaries for excluding insurance in budget planning and failing to implement it, and lawmakers for not holding agencies accountable for insurance in budgets. Finance ministries, responsible for disbursing funds, also neglect insurance. He called these deliberate acts by “enemies of insurance in Nigeria.”
“When they defend their budgets before the Senate, do they include insurance for government properties? How many ensure government assets are insured? That’s why insurance penetration remains stuck at about one percent. We are not intentional about it.”
