An insurance expert has offered a fresh explanation for the contradiction between soaring insurance revenues and Nigeria’s persistently low insurance penetration, arguing that the disconnect stems less from public attitudes than from structural weaknesses within the country’s insurance market.
Paschal Emeka Egerue, a Lagos-based insurance consultant and law scholar, said the industry must shift its attention from long-held assumptions about low insurance uptake to a critical examination of how Nigeria’s insurance market is structured if it hopes to expand coverage.
Business a.m. recently reported that although Nigeria’s insurance industry recorded a historic N2.301 trillion in gross premium written (GPW) in 2025, insurance penetration remains at about 0.4 percent, one of the lowest levels in Africa. Responding to the report, Egerue argued that the industry’s market structure, rather than the traditional explanations of poverty, illiteracy, lack of awareness and distrust, now deserves closer scrutiny.
According to him, the insurance industry can no longer rely on conventional explanations for its slow expansion, particularly after successive recapitalisation exercises, stronger regulation and improvements in claims settlement.
“The Nigerian insurance industry cannot be stuck in the traditional reasons often adduced for its abysmally slow growth rate,” Egerue said, arguing that “the excuses ought to have expired by the series of recapitalisation done in the industry which should have empowered the insurance companies to grow the market size phenomenally. It also ought to have expired by virtue of the more robust regulation the industry has these days, including the propulsion by the new Nigerian Insurance Industry Regulation Act (NIIRA).”
Instead, he said, the industry should interrogate why premium income has continued to rise while insurance penetration has remained largely stagnant.
Egerue described the situation as a disconnect between financial performance and market depth, noting that Nigeria’s vast informal sector remains largely excluded from insurance coverage despite accounting for the overwhelming majority of employment and a significant share of the country’s economic output.
“The near total absence of the informal sector in Nigeria’s insurance penetration statistics makes whatever growth there is to be an illusion without depth,” he said.
He added that insurance coverage remains concentrated in urban centres among corporate organisations and high-net-worth individuals, leaving rural communities and millions of workers in the informal economy outside the insurance net.
“It would be perilous for the insurance industry to ignore this huge informal sector and still claim or pretend to be growing,” he warned.
Egerue said record premium income should not be mistaken for broad-based market development.
“Though the Nigerian insurance industry has generated N2.301 trillion in gross premium written, the jubilation should be measured because, in the absence of depth in penetration, this growth is a facade that can be blown away by wind,” he said.
He also questioned whether recapitalisation had achieved its broader objective of expanding insurance access, arguing that the exercise should create insurers capable of serving different categories of risks, locations and specialised product areas rather than concentrating business among fewer operators.
“Recapitalisation should expand insurance availability and not shrink it. It will be deceitful to think that we can reach the unreached, unserved and uninsured Nigerians with the present number and location of the insurance companies in Nigeria,” Egerue said.
He further advocated aggressive product innovation, urging insurers to move beyond conventional offerings and develop affordable products tailored to the realities of the informal economy, rural communities and emerging risks.
“Product development is another area we have to tackle aggressively. Rather than the penchant to recycle old products, there must be freedom to think and create insurance products to cater at minimal cost to the existential risks in the country,” he said.
Egerue noted that technological advancements were already reshaping traditional risk patterns, making it imperative for insurers to rethink their products and identify new business opportunities arising from emerging risks.
“…Such developments also reshape risk appetites to the extent that new exposures are created, he noted while arguing that anything that reduces or eliminates risk is a disruptor as well as an activator of new thinking to the insurance industry.
While acknowledging that Nigeria’s economic challenges have affected households and businesses, he maintained that poverty should not be treated as the industry’s overriding explanation for low insurance uptake.
“A dynamic insurance market will always rise to the challenge of national fiscal crisis, declining economy and poverty by designing and adapting products to the pocket sizes of the citizens,” he said.
Drawing lessons from countries such as India, Egerue said insurers should pay greater attention to low-cost insurance solutions capable of reaching underserved populations, particularly those in the informal sector.
He also challenged the industry to adopt a more ambitious target of raising insurance penetration to at least three percent within the next two years, arguing that the sector’s long-term success should be measured not only by premium growth but also by the number of Nigerians brought into the insurance net.
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