ONOME AMUGE & JOY AGWUNOBI IN LAGOS
Concern is growing over the emerging gap between regulatory actions and actual market growth in the insurance industry in Nigeria. Successive laws, tighter oversight and public awareness campaigns have yet to produce widespread coverage, prompting industry experts to question whether an increasingly complex regulatory environment is adding to the barriers confronting insurers and intermediaries.
Among experts raising the concern is Paschal Emeka Egerue, a Lagos-based insurance consultant, law scholar and former managing director and chief executive officer of Afribank Insurance Brokers Limited, who argues that excessive controls could be undermining the very innovation needed to expand the market, improve affordability and bring underserved individuals and businesses into the insurance system.
In an exclusive interview with Business A.M., Egerue argued that excessive regulatory control, limited market intelligence and barriers to establishing insurance businesses are preventing the industry from realising its potential. He called for a fundamental rethink of regulation, distribution and market development, warning that an industry preoccupied with compliance risks losing sight of its primary objective of expanding insurance coverage.
“The way I see it, and this is why I keep talking about regulation, is that regulation should not stifle innovation,” he said.
His concerns come as the industry enters a new regulatory phase under the Nigeria Insurance Industry Reform Act (NIIRA), which is expected to address longstanding weaknesses and provide a framework for sectoral transformation. But Egerue cautioned that the breadth of the new legislation could introduce significant implementation challenges, making effective execution as important as the law itself.
“In that regard, I consider NIIRA very significant. It is an omnibus law, and its scope has brought considerable regulatory challenges, given the volume of its provisions, even though they have all been integrated into one document. I therefore expect that there will be many regulatory challenges in its implementation,” he said.
According to Egerue, Nigeria’s insurance industry has experienced more than 10 critical laws over the years, with each successive legislative intervention seeking to address shortcomings in the existing framework. NIIRA, he noted, represents an expanded attempt to tackle problems that have continued to impede the industry’s growth.
However, he said the ultimate test would be whether the new framework could move the market beyond its current position.
“However, whether it will expand the industry beyond its current position is something only time will tell,” he said.
Regulation without market expansion
Egerue believes the success of insurance regulation must ultimately be reflected in a larger market, wider coverage and stronger premium income. Legislative activity, in his view, has limited value if it does not produce tangible improvements in these areas.
He put insurance penetration at about 1.5 percent at best, while pointing to the industry’s negligible share of global premium generation as evidence of the considerable growth opportunities that remain untapped.
“When we look at the regulators, with all due respect to the vibrancy created so far, I am inclined to believe that our regulation is not very much in the direction of opening the market. Why is this so? Several laws have been passed, yet we remain where we are. Why are we not moving from one stage to another? Why are regulators not setting targets for market growth?” he queried.
He attributed part of the problem to the assumption that the market is inherently undisciplined and must therefore be subjected to extensive controls. While acknowledging the importance of regulation, he argued that the tendency to govern nearly every aspect of insurance activity is discouraging initiative and restricting the emergence of new business models.
In his view, regulatory effectiveness should be measured not only by compliance, enforcement and market discipline but also by the extent to which the framework enables the industry to grow.
“Any regulator who leaves office without moving the market forward has failed, in my view. If market penetration is one percent when a commissioner takes office and remains at one percent when the person leaves, then nothing has changed,” he said.
Egerue expressed confidence that Segun Omosehin, the current Commissioner for Insurance, could contribute significantly to market expansion, adding that more was already being done to advance the industry.
Rural markets, affordability remain untapped
Beyond regulation, Egerue identified the geographical concentration of insurance businesses and the lack of products as major obstacles to wider coverage.
He argued that Nigeria’s insurance market remains disproportionately concentrated in urban centres, leaving rural communities underserved despite their extensive geographical spread. In these areas, the absence of insurance practitioners, limited product availability and pricing structures that make coverage unaffordable combine to exclude large sections of the population.
The result, he said, is a market in which insurance is often accessible only to those who can afford relatively expensive premiums, while lower-income households and small businesses remain outside the system.
“This is unlike what happens in India, where there is insurance for practically everything, with products available at different price points. In Nigeria, however, it is either you can afford a high-premium product or you are excluded from the market altogether. As a result, many Nigerians do not have any form of insurance at all, which is a shame,” he said.
He called on regulators to give insurers, brokers and other practitioners greater latitude to develop products suited to different income groups and geographical markets.
According to him, the industry must move beyond conventional products and distribution models if it hopes to expand its customer base. Microinsurance and other affordable, targeted offerings could help bridge the gap between the protection people need and what they can pay for.
Egerue also rejected the argument that Nigeria’s difficult economic conditions alone explain the industry’s weak performance. While acknowledging the broader economic challenges, he said the industry must take greater responsibility for its limited reach.
For years, he noted, low awareness had been cited as a major explanation for poor insurance uptake. But with information now more widely available, he argued that awareness alone could no longer account for the market’s inability to expand.
“The insurance industry must wake up to the need to expand the market very well. The fact that the economy is in the doldrums may not be a sufficient reason why insurance is not thriving. It may not be the reason. We used to blame the problem on a lack of awareness. However, so much awareness has been created, and in this era of mass information, awareness is no longer the main issue,”he said.
He added that many segments of the population remain poorly served, arguing that the industry needs to examine whether its products, pricing and distribution channels reflect the realities of the wider economy.
Comparing the industry’s performance with that of more developed markets, Egerue criticised what he described as a mismatch between the effort expended and the results achieved.
“In a well-structured market such as the UK, the system is organised in a way that allows people to think and reason. Here, however, we are busy engaging in what I would describe as locomotion without movement. We make much more effort than people in the UK, yet we make less money than they do,” he said.
Igbiti sees opportunity to exceed 1% penetration by 2028
Echoing the concerns about structural and operational constraints, Edwin Igbiti, an insurance professional and former managing director/chief executive officer of AIICO Insurance Plc, identified several factors limiting the industry’s growth.
These include the difficulty of competing with returns from alternative investments, regulatory and compliance challenges, inadequate infrastructure, slow technology adoption, high fraud rates and weak prevention mechanisms. He also pointed to limited product diversity and innovation, as well as intense competition and product commoditisation.
Despite these constraints, Igbiti expressed confidence that Nigeria’s insurance market could record improved penetration in the coming years.
“There are abundant opportunities that will make the penetration to be above 1% by year 2028,” he said.
He argued that achieving this would depend on reducing the obstacles preventing the industry from expanding and taking advantage of the opportunities presented by the new regulatory framework.
“To start with, going by the various provisions of NIIRA, a lot of catch ups will be achieved and taken advantage of,” he said.
According to Igbiti, the stronger capital base envisaged under NIIRA could enable insurers to develop more relevant products, enter emerging risk markets and strengthen their capacity to serve customers.
He identified cyber risks, renewable energy and microinsurance among the areas where product development could help the industry respond to changing economic needs and emerging customer demands.
He also called for insurance distribution to extend beyond traditional channels, stressing that a stronger capital base would need to be accompanied by wider product availability and more effective delivery systems.
Igbiti further argued that insurance companies must build public trust by positioning insurance as a financial safety net rather than a regulatory obligation. This, he said, requires insurers to make their products relevant, accessible and valuable to a significantly larger number of individuals and businesses.
The challenge is particularly important in a market where affordability, product suitability and distribution gaps continue to limit access. Even where regulations require certain forms of insurance, sustainable market development will depend on customers recognising the benefits of protection and having confidence in the institutions providing it.
“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,” Igbiti said.
He maintained that Nigeria has considerable growth potential, particularly as economic conditions improve and financial literacy increases. However, he stressed that the industry must be prepared to adapt its business models and remove the constraints that have historically limited expansion.
“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 results,” he asserted.
