Follow Us on Google
•Experts list solutions
From Adanna Nnamani, Abuja and Henry Uche
A worrisome paradox has played out in Nigeria for decades. There has been a spike in natural and man-made disasters without a corresponding increase in the number of insurance subscribers.
Most Nigerians are weathering the storm on their own, totally subbing insurance to shoulder their worries.
Today, floods, fires, building collapses, road crashes and other disasters are destroying lives and assets across the country, yet more than 95 per cent of Nigerians and their properties remain uninsured, leaving millions to bear huge financial losses whenever tragedy strikes.
With Nigeria’s insurance penetration still below one per cent of Gross Domestic Product (GDP), among the lowest in Africa, the industry is grappling with poor public awareness, low disposable income, mistrust, weak enforcement of compulsory insurance laws and a preference for informal risk-sharing arrangements.
Industry data show that insurance contributes less than one per cent to Nigeria’s GDP, compared with South Africa’s penetration of over 10 per cent, highlighting the vast protection gap in Africa’s largest economy. Experts estimate that fewer than five million Nigerians hold any form of insurance policy in a country with a population exceeding 230 million, while millions of homes, vehicles, farms and small businesses remain exposed to financial shocks.
The consequences have become more severe as climate-related flooding, urban fires and other disasters increase in frequency and intensity.
Every year, billions of naira worth of homes, businesses and public infrastructure are lost, yet only a fraction of the damages is covered by insurance. Industry stakeholders warn that unless insurance adoption improves through stronger enforcement, innovation and public education, Nigerians will continue to rebuild their lives from personal savings, donations or debt after every disaster.
In Abuja, many SMEs, transporters and even corporate workers, many of them are outside the insurance cover.
Martha Maxwell, an interior decorator in Abuja told Daily Sun that she has run her business for over 15 years without insurance and sees no reason to change her anti-insurance stance.
“What do I need insurance for? Isn’t it just to give insurance companies my money and when it’s time for compensation, they will ask for all ridiculous conditions before I’m compensated. I can’t deal”, she said.
Another Abuja-based businesswoman, Obianujunwa Ejiofor, also corroborated Mrs Maxwell’s stance.
“Insurance in Nigeria is a gamble. You may or may not be paid when you need them.
“That’s how many of us see it. You see insurance companies walking around selling us various policies, many people aren’t interested. They see it as a waste of money. It’s a terrible product to sell to people because of many factors”, she said.
Unfortunately, the growing insurance apathy comes amid growing efforts by the National Insurance Commission (NAICOM) and operators to deepen penetration.
Major factors blocking insurance penetration
Industry experts say low public awareness, poverty, distrust and weak enforcement of compulsory insurance laws remain the biggest obstacles to insurance adoption in Nigeria.
However, some analysts argue that awareness campaigns have improved significantly and that the challenge now lies less with insurers and more with the country’s harsh economic realities.
Public affairs analyst, Arinze Chibueze, believes insurance companies have made appreciable progress in educating the public.
According to him, the emergence of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 and reforms introduced by the current leadership of the regulator have gradually begun to change the negative perception of the industry, particularly among educated Nigerians.
“Widespread poverty in the country has made insurance appear unaffordable. But it’s not. People are just troubled about their daily bread, and you can’t blame them. They have to survive first before talking about insurance. A large number of Nigerians are also in the informal economy, where millions of workers lack formal financial protection,” he said.
He, however, noted that poor enforcement of compulsory insurance has also contributed to public distrust.
“People have accused the regulator of weak enforcement of compulsory insurance laws such as motor third-party insurance, builders’ liability, public buildings and group life insurance. All these have created the perception that insurers are fraudsters. But educated Nigerians know they are not all in the same basket,” he added.
An insurance consumer, Benjamin Ike, attributed the country’s low insurance penetration to poor financial literacy and the struggle for daily survival.
“Insurers are trying, but many Nigerians still misunderstand how insurance works. It is simply not their top priority. People are living in fear and worrying about basic survival. Religious and cultural beliefs also play a role. Many Nigerians see insurance as unnecessary because they believe it contradicts their faith. Most people would rather rely on family and community support than buy insurance cover,” he said.
He urged insurers to expand their presence in rural communities by communicating in local languages and developing affordable products for low-income earners and workers in the informal sector.
“Insurance companies should expand their distribution channels, especially in rural areas, using language the people can easily understand. This requires innovative products tailored to low-income earners and informal workers. The current economic hardship has drastically reduced Nigerians’ disposable income. We, therefore, need to rebuild confidence not only in insurance institutions but across the economy,” Ike said.
He commended insurance companies taking awareness campaigns to schools, markets, churches and other public places, urging them to sustain the momentum.
“The government must also provide incentives such as tax relief on insurance purchases. There should be stronger collaboration among insurers, government, employers and community organisations to drive nationwide insurance inclusion,” he added.
For Mrs. Olufunke Adenusi, an insurance broker and Deputy President of the Nigerian Council of Registered Insurance Brokers (NCRIB), the poor compliance with compulsory motor third-party insurance reflects the wider challenge confronting the industry.
“If Nigerians still violate compulsory third-party motor insurance, how many other forms of insurance that are voluntary?” she asked.
Adenusi, who is also the Managing Director of Colximate Insurance Brokers Ltd, said awareness campaigns must be intensified at every level of society.
“Micro-insurance should also be encouraged to make insurance more affordable. We should publicise settled claims so that Nigerians can see first-hand that insurance truly indemnifies policyholders,” she said.
Also speaking, Dr. Olugbenga Adedayo Falade, Deputy Executive Secretary of NCRIB, described Nigeria’s low insurance penetration as a dangerous paradox.
Other News
According to him, while disasters such as floods, fires, building collapses, road crashes, industrial accidents, insecurity and business failures continue to rise, the overwhelming majority of Nigerians remain financially exposed because they lack insurance protection.
He attributed the situation to a combination of poor awareness, affordability concerns, distrust, weak enforcement of compulsory insurance, limited access to insurance products, poor claims experience and the dominance of the informal economy.
“Insurance is fundamentally a mechanism for transferring financial risks, yet many Nigerians still see it as an unnecessary expense rather than an essential tool for financial protection and economic security. Ironically, many people only think about insurance after disaster strikes. Unfortunately, insurance cannot be purchased to cover a loss that has already happened,” he said.
On the way forward, Falade identified technology as the industry’s biggest opportunity.
“Technology offers perhaps the greatest opportunity to expand insurance coverage in Nigeria. With the widespread use of mobile phones and digital payment platforms, insurers can reach millions of Nigerians who have never visited an insurance office. Policies can be purchased, premiums paid and claims initiated through digital channels.”
He added that data analytics and artificial intelligence would improve underwriting, fraud detection, customer service and claims management.
Falade also called for stricter enforcement of compulsory insurance.
“The NIIRA has expanded the scope of compulsory insurance in Nigeria, but compliance remains a major challenge.
The existence of a law does not automatically guarantee compliance. There must be effective enforcement, monitoring and sanctions for non-compliance.
“Regulatory agencies, state governments, local governments, law enforcement agencies and other relevant institutions must collaborate to enforce compulsory insurance requirements while protecting the public from fake insurance certificates and unscrupulous operators.”
He stressed that the government must create an enabling environment for insurance growth by ensuring clear regulations and insuring public assets.
“The government must lead by example by ensuring that public assets and projects are adequately insured. Credit must be given to the drafters of the NIIRA for introducing provisions that protect both government assets and the workforce.”
Falade further advocated stronger public-private partnerships to tackle emerging risks such as climate change, flooding, agricultural losses and infrastructure failure, insisting that insurance should become an integral part of Nigeria’s economic development strategy.
“The industry must embrace professionalism, innovation, ethical conduct and customer-centricity. Insurers should invest in their people, technology and distribution channels.
Brokers and agents must go beyond selling policies to educating clients and recommending appropriate protection.”
He also assigned a critical role to the media.
“The media can become a powerful partner in transforming insurance awareness. Insurance stories should not only appear during regulatory controversies or major disasters. Television, radio, newspapers, social media and digital platforms should regularly educate Nigerians on risk management and insurance using real-life stories of families and businesses that recovered from devastating losses.
“The conversation must shift from ‘Why should I buy insurance?’ to ‘Can I afford to remain uninsured?’ That is the question every Nigerian should be encouraged to ask.”
To achieve lasting progress, he proposed a National Insurance Inclusion Strategy that would bring together government, regulators, insurers, brokers, agents, banks, telecommunications companies, fintechs, technology firms, consumer groups, professional bodies and the media to accelerate insurance penetration across the country.
Such synergy would aim to push forward massive insurance education and public awareness campaigns, affordable and innovative insurance products for low-income Nigerians, aggressive deployment of digital insurance solutions and effective enforcement of compulsory insurance laws.
Quick settlement as an attraction
Experts also identified faster, fairer and more transparent claims settlement, stronger regulation and consumer protection, wider insurance distribution beyond traditional offices, deeper public-private sector collaboration, integration of insurance into financial inclusion and economic development programmes, and greater accountability and professionalism across the insurance value chain as critical to improving insurance penetration.
According to Dr. Olugbenga Adedayo Falade, Deputy Executive Secretary of the Nigerian Council of Registered Insurance Brokers (NCRIB), the increasing frequency of disasters makes insurance no longer optional but a necessity.
“The reality is that disasters will not wait for Nigerians to become ready. Floods will come. Fires will occur. Accidents will happen. Businesses will fail. People will die. Properties will be destroyed. The real question is whether individuals, families, businesses and government will have the financial capacity to recover when these events occur,” he said.
“Insurance cannot prevent every disaster, but it can prevent a disaster from becoming a permanent financial catastrophe. Nigeria, therefore, needs to move from a culture of risk reaction to a culture of risk preparedness.”
He stressed that rebuilding public confidence would require concerted efforts from regulators, operators, the media and the public.
“The insurance industry must become more visible, accessible, innovative and trustworthy. The government must provide effective regulation and enforcement. The media must intensify public education. Nigerians themselves must begin to recognise insurance not as a luxury for the wealthy, but as an essential tool for protecting lives, livelihoods, businesses and national economic development.
“The challenge of having about 95 per cent of Nigerians uninsured is enormous, but it is not insurmountable. I can assure you that with NAICOM and other stakeholders in the insurance industry, especially with the ‘One Insurance Industry’ mantra of the current President of the NCRIB, which brings all players together, the future of the insurance industry in Nigeria is bright.”
Echoing similar concerns, economist and public policy analyst, Muda Yusuf, attributed the country’s low insurance penetration largely to a lingering credibility challenge facing the industry.
Yusuf, who is the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), said public perception of insurance has been shaped by the unpleasant experiences of a few policyholders.
“These bad experiences have weakened trust and negatively impacted public perception, making many people reluctant to take up insurance, whether life or property insurance. There is therefore an urgent need to correct that perception,” he said.
The former Director-General of the Lagos Chamber of Commerce and Industry (LCCI) noted that many Nigerians still believe insurers are quick to collect premiums but reluctant to honour claims, a perception he said continues to discourage insurance uptake.
“Insurance companies need to address this by showcasing customers who have had positive claims experiences. At the same time, poverty remains a major challenge as people are struggling with daily survival. Low literacy levels also make many Nigerians undervalue insurance,” he said.
Yusuf further urged insurance companies to strengthen customer service, describing it as a critical factor in building trust.
“Not all insurance companies have very good customer service. But when a product is difficult to sell, customer service must be top-notch. Weak customer service affects uptake. Delayed claims settlement is another challenge. The informal economy is also constrained because most operators have low literacy levels. That is why sustained sensitisation is essential,” he added.
