Joy Agwunobi
In a country teeming with youthful energy, a growing population, and one of Africa’s most entrepreneurial ecosystems, Nigeria’s insurance sector continues to operate in the shadows of more mainstream financial services.
With penetration still below one per cent, industry experts have highlighted several ongoing challenges hindering growth and market penetration within Nigeria’s insurance sector, attributing the issues to a combination of behavioral, structural, and regulatory obstacles and policies that do not reflect the everyday realities of most Nigerians.
Speaking at a recent insurance conference, Rashidat Adebisi, the chief client officer at AXA Mansard Insurance Plc, provided insights on the complex issues hindering insurance adoption in Nigeria, particularly among younger people and those working in the informal sector.
Adebisi highlighted that the root causes of low insurance penetration in the country are not solely due to a lack of awareness but also to deep-seated behavioural and systemic challenges. These challenges, she noted, involve both the attitudes of potential clients and the practices within insurance institutions themselves.
One of the primary obstacles Adebisi identified is the behavioral barrier, where individuals are hesitant to pay for a service that addresses a risk which may never manifest. “You are asking people to pay today for an uncertain risk that might arise tomorrow. “It’s akin to asking whether the reward will come on earth or in heaven—it’s too uncertain,” she explained.
She described how this psychological barrier—rooted in a “YOLO” (You Only Live Once) mindset—has become increasingly common, leading young people to favour speculative ventures like betting or short-term investments over long-term financial safety nets like insurance. The perception, she said, is that insurance offers little to no immediate value.
However, Adebisi argued that this perception is not entirely accurate. She noted that many insurance products provide tangible benefits beyond traditional risk coverage. The real problem, according to Adebisi, lies in how poorly these benefits are communicated. “Insurers must rethink their value proposition and ask: What can customers start gaining from insurance?” she said.
Another crucial aspect Adebisi highlighted is the lack of comprehensive financial literacy in influencing insurance adoption. She lamented that young Nigerians are not adequately educated on financial risk management, particularly when it comes to understanding insurance as a key tool for wealth protection.
While saving and investing are common topics in financial discussions, insurance is rarely seen as part of the broader financial planning conversation. “If we improve our engagement in the broader financial advisory ecosystem, we will start to see better inclusion,” she said.
For Nigerians in the informal sector, trust and accessibility remain major challenges. Adebisi pointed out that traditional savings systems, such as “ajo”, are still preferred because of their communal and tangible nature. She highlighted that insurers still use models tailored for large corporate clients and international organisations that can pay large premiums upfront.
“This approach doesn’t work for informal workers who prefer personal interactions and need physical touchpoints,” she said, acknowledging that the lack of accessible branches and in-person engagement further exacerbates the coverage gap.
Additionally, Adebisi noted that many insurance companies are failing to adapt quickly enough to meet the needs of its potential clients. Many insurers, she stated, have not simplified their services or adjusted their offerings to address the real-life challenges faced by people.”We are not making ourselves simple, accessible, or attractive. If we are offering what we have instead of what they want, we won’t make the progress we need, she added.
Another pressing issue Adebisi raised was the failure of the insurance industry to accurately reprice assets in line with current economic conditions. She provided an example of how a car worth 20 million naira a few years ago is now valued at 80 million due to inflation and devaluation. Yet insurers continue to apply depreciation rates of 5–10 per cent annually. “When an accident happens, the client might only receive ₦10 million in compensation, which is far from enough to replace the car in today’s market,” she explained, adding “this failure to adequately adjust asset values shows that the industry is not effectively putting clients back in the position they were in before the loss.”
“Our lack of courage to help our customers properly reprice their assets means we are not truly serving them,” she said.
Adebisi argued that until these structural and behavioral barriers are addressed, significant progress in insurance adoption in Nigeria will remain elusive.
While behavioral change is crucial, structural issues within the insurance ecosystem also demand urgent attention, Abimbola Omowunmi Tiamiyu, the registrar and CEO of the Chartered Insurance Institute of Nigeria (CIIN), stressed the importance of enhancing actuarial capacity in the country to sustain the growth of the insurance sector.
She stressed that while Nigeria currently has a substantial number of insurance professionals, there is a significant shortfall in actuarial expertise, which poses a long-term threat to the industry’s integrity and sustainability.
“In terms of core insurance practice, we have enough professionals. The gap lies in actuarial development, which is essential for product pricing, risk assessment, and long-term financial sustainability,” she said.
Tiamiyu further explained that CIIN’s role is focused on training, examinations, and capacity-building for industry practitioners rather than directly overseeing insurance operations. Through partnerships with insurers, brokers, and other stakeholders, CIIN facilitates professional development across the sector.
She revealed that while the Nigerian Actuarial Society (NAS) had previously benefited from regulatory support to facilitate actuarial exams, a change in exam formats has prompted efforts to collaborate with global actuarial bodies like the Society of Actuaries to standardise certification pathways in Nigeria.
To address the actuarial talent gap, CIIN and NAS have launched an internship programme that places undergraduate and postgraduate actuarial science students in insurance firms for hands-on training.
“The idea is simple: if students are exposed early to the industry and see real career prospects, they are more likely to stay and contribute. Otherwise, we risk losing them after graduation,” she noted.
Tiamiyu also mentioned that NAS has placed certified actuaries as adjunct lecturers at universities, enhancing the credibility and practical relevance of actuarial programmes.
Tiamiyu further revealed that the College of Insurance and Financial Management is also working to bridge global knowledge gaps by partnering with international organisations. The goal, she added, is to embed international best practices into local training, thereby uplifting the overall quality and competitiveness of Nigeria’s insurance professionals.
On his part, Dunny Semwayo, the executive director, technical at Stanbic IBTC Insurance Plc, emphasised the significant role banks can play in advancing insurance penetration across Nigeria—particularly among low-income and retail segments.
Speaking on the intersection of banking and insurance, Semwayo pointed out that the retail insurance sector in Nigeria continues to lag far behind the corporate sector in terms of penetration and uptake.
He noted that one of the key advantages banks have is their expansive distribution networks, which range from physical branches to digital platforms. According to him, the frequency and depth of customer interaction with banks far outweigh that of insurance companies.
“Customers typically interact with their bank much more often than with insurance providers. In fact, ideally, people hope they never have to call their insurer at all,” he stated.
This regular engagement, Semwayo argued, positions banks as a powerful last-mile channel to reach customers, especially when it comes to embedding insurance services into banking platforms, noting that such integration could not only simplify insurance access but also make it more affordable for low-income earners.
He further emphasised that banks can help insurers tap into a wider and more consistent customer base, leveraging their trusted platforms to simplify the insurance experience.
However, he pointed out that several regulatory challenges hinder the success of bancassurance in Nigeria. Drawing comparisons with other markets where bank-led insurance distribution models have been more successful, Semwayo identified regulation as a key differentiating factor.
According to him, in other countries, regulatory frameworks are more supportive and allow banks to derive greater value from bancassurance partnerships.
“In Nigeria, current regulations jointly set by the Central Bank of Nigeria (CBN) and the National Insurance Commission (NAICOM) do not make bancassurance particularly attractive to banks. Unlike in other regions where banks earn the majority of the profits in these models—since they essentially provide the customer interface—local rules limit the bank’s benefit,” he explained.
Semwayo highlighted that under existing Nigerian regulation, banks can only receive a maximum of 40 per cent of the commission that would ordinarily go to an insurance broker. This, Semwayo explained, leaves banks with limited financial motivation to promote insurance products,especially when they are not part of the same holding company as the insurer.
He further advocated for a thorough overhaul of the current regulatory framework, stressing that a more supportive and flexible policy environment is essential for the effective growth of bancassurance in Nigeria.
According to him, adopting an incentive-driven regulatory model could significantly enhance collaboration between banks and insurance firms. Such synergy, he noted, would not only encourage innovation within the financial services sector but also enable the expansion of insurance coverage to underserved and low-income populations. This would, in turn, deepen financial inclusion across the country.
“For collaboration between banks and insurers to truly thrive and deliver meaningful impact,the regulatory environment should be reviewed and restructured to support this evolving partnership,”Semwayo added.
