LAGOS, Nigeria — The Nigerian Council of Registered Insurance Brokers (NCRIB) has identified key reasons for the persistently low insurance penetration in Nigeria, including the exclusion of pension funds, lack of technology adoption, and widespread public ignorance about the benefits of insurance products.
The council made these observations during a stakeholders’ forum held in Lagos on Monday, where industry leaders gathered to deliberate on strategies for deepening insurance uptake across the country. Despite Nigeria’s position as Africa’s largest economy, insurance penetration remains below one percent of gross domestic product (GDP), far behind South Africa’s rate of approximately 17 percent and the global average of around seven percent.
According to the NCRIB, one of the most significant barriers to insurance growth is the exclusion of pension funds from the insurance investment framework. The council argued that pension funds, which currently hold trillions of naira in assets under management, could serve as a major catalyst for insurance sector development if regulations permitted greater investment in insurance-linked instruments.
The lack of technology adoption was also cited as a critical impediment to growth. The NCRIB noted that many insurance companies in Nigeria still rely on manual processes and outdated systems, resulting in slow claims settlement, poor customer service, and low trust among potential policyholders. The council called on industry players to embrace digital transformation, including artificial intelligence, blockchain, and mobile platforms, to improve efficiency and reach underserved populations.
Public ignorance about insurance products and their benefits was identified as another major challenge. The council noted that many Nigerians, particularly in rural areas, do not understand how insurance works, viewing it as an unnecessary expense rather than a vital risk management tool. The NCRIB urged the federal government and insurance industry to invest in mass sensitisation campaigns to educate citizens about the importance of insurance in protecting lives and property.
Other factors highlighted by the council include the low disposable income of many Nigerians, which limits their ability to purchase insurance products, and the lack of trust in insurance companies stemming from historical cases of non-payment or delayed claims settlement. The council also pointed to weak enforcement of compulsory insurance policies, such as third-party motor insurance, as a contributing factor.
The NCRIB called on the National Insurance Commission (NAICOM) to intensify its supervisory role and ensure that insurance companies comply with regulatory requirements, including timely payment of claims. The council also urged the government to review the Insurance Act to address emerging challenges and align the sector with international best practices.
Industry experts who spoke at the forum noted that increasing insurance penetration would have significant economic benefits, including the mobilisation of long-term savings, improved financial inclusion, and enhanced resilience against shocks such as natural disasters, accidents, and health emergencies. They called for partnerships between the insurance sector, banks, fintech companies, and telecommunications operators to expand distribution channels and reach unserved communities.
The NCRIB also recommended the introduction of microinsurance products tailored to low-income earners and informal sector workers, who constitute a significant portion of Nigeria’s population. Such products, the council argued, would make insurance more accessible and affordable to millions of Nigerians who currently have no form of coverage.
As the insurance industry grapples with these challenges, the NCRIB has expressed optimism that with the right policies, investments in technology, and sustained public education, Nigeria can significantly improve its insurance penetration rate. For now, the council has called on all stakeholders to work collaboratively to unlock the sector’s immense potential and contribute to the nation’s economic development.
