Nigeria’s insurance industry risks losing a substantial share of its potential market by concentrating its operations in urban centres while leaving rural communities underserved by insurance products, distribution networks and pricing structures suited to their needs.
Paschal Emeka Egerue, a Lagos-based insurance consultant and law scholar, said the industry’s limited reach beyond major cities reflects a structural weakness that continues to restrict market expansion, arguing that insurers must rethink how they distribute products and engage communities if they intend to extend coverage across the country.
Egerue, who spoke in an interview with Business A.M, said the industry’s conventional operating model has left many Nigerians outside the insurance market, particularly those who cannot afford existing products or access insurance services where they live.
He argued that the geographical size of rural Nigeria presents a substantial opportunity for the industry, but insurers have yet to establish the networks, affordable products and local expertise required to serve those communities effectively.
“When you compare the urban and rural areas in Nigeria, you find that the rural areas cover a much larger geographical space. Consequently, a significant portion of the market is being missed entirely,” he said.
According to him, the problem extends beyond the physical presence of insurance companies to the availability of products that reflect the financial circumstances of potential customers.
Egerue said many rural residents remain underserved because of the limited presence of insurance practitioners, the absence of relevant products and pricing structures that make coverage accessible to people with modest incomes.
He contrasted Nigeria’s approach with that of India, where insurance products are available across different price points, allowing customers with varying financial capacities to obtain coverage.
In Nigeria, however, he argued that the market often operates on the assumption that customers must be able to afford relatively expensive products or remain uninsured.
“As a result, many Nigerians do not have any form of insurance at all,” he said, calling for insurers to develop products that accommodate different income levels rather than relying predominantly on conventional offerings.
The challenge, according to Egerue, is not simply to introduce more insurance products but to establish distribution systems capable of taking them to communities beyond the country’s major commercial centres.
He pointed to Nigeria’s 774 local government areas as a potential framework for expanding the industry’s geographical reach, questioning whether insurers and brokers have structured their operations to serve communities across the country.
“Nigeria has 774 local government areas, and we have enough people to move around the country and promote sound insurance practices in these communities,” he said.
“What insurance companies need to do is develop products that can reach people in every nook and cranny of the country and train personnel who understand and can serve the needs of these communities.”
Rather than depending entirely on professionals operating from urban offices, Egerue advocated training people within rural communities to distribute insurance products, explain their benefits and serve customers in their localities.
He said such an approach could also create income-generating opportunities for residents while helping insurers establish stronger connections with potential policyholders.
Drawing on the industry’s earlier distribution practices, he recalled a period when insurance agents visited customers in their homes to maintain contact and attend to their needs.
He argued that the underlying principle of that approach remains relevant to microinsurance, which is intended to extend affordable coverage to people who might otherwise be excluded from conventional insurance markets.
“If you are insuring the most vulnerable people in this country, you must meet them at their level. You must get to their level,” he said.
Egerue cautioned that introducing microinsurance products without changing the industry’s approach to distribution could limit their effectiveness, particularly if providers continue to operate with the same assumptions and structures used to serve wealthier urban customers.
He said insurers must build distribution models around the communities they intend to serve, including training local personnel who understand their customers’ circumstances and can explain products in accessible terms.
For brokers, he said, expanding into rural markets would require a similar shift away from an exclusively urban outlook towards arrangements that allow them to reach customers across different locations.
The opportunity, he added, lies in the economics of insurance itself, which depends on spreading risk across a sufficiently large pool of policyholders.
Egerue argued that products that appear commercially unattractive when purchased by relatively few people could become viable when insurers expand their customer base and reach more communities.
“Insurance thrives on large numbers. Some products may appear unprofitable at the moment because the number of people purchasing them is not large enough to sustain the business. However, with a sufficiently large customer base, those same products could become viable,” he said.
His argument places market expansion at the centre of the industry’s growth challenge, suggesting that insurers may need to reconsider whether their current distribution structures are preventing them from reaching the volume of customers required to build sustainable businesses.
Egerue also urged Nigerian insurers to study the development of insurance markets in India and other Asian economies, arguing that their experiences could offer lessons on expanding coverage and designing products for a broader population.
For Nigeria, he said, the priority should be to move beyond an industry concentrated around established urban markets and build the capacity to serve people across the country.
Achieving that, however, would require more than launching new products. Insurers would need to combine affordable pricing with wider distribution, community-level engagement and a workforce equipped to serve customers who have traditionally remained outside the market.
