WHY MOST NIGERIANS HATE INSURANCE — AND WHAT THE INDUSTRY MUST DO TO WIN BACK PUBLIC TRUST
By Omoboye Sunday
There is a difficult conversation Nigeria’s insurance industry must have with itself.
Many Nigerians do not trust insurance.
Not because Nigerians are incapable of understanding risk. Not because they do not know that accidents happen, businesses burn, people die, vehicles are stolen, or families can suddenly lose their means of livelihood.
Nigerians understand risk very well.
The problem is that too many Nigerians remain unconvinced that insurance will stand by them when that risk becomes reality.
That is the trust crisis.
And until the industry confronts it honestly, no amount of advertising, compulsory insurance enforcement, digital platforms, new products,s or ambitious penetration targets will fully solve Nigeria’s insurance problem.
The irony is striking.
Insurance is supposed to provide certainty in an uncertain world. Yet, for many Nigerians, buying an insurance policy introduces another uncertainty:
“When the unexpected happens, will the insurance company actually pay me?”
That question is more important than any marketing campaign.
NIGERIA DOES NOT HAVE A RISK PROBLEM. IT HAS A TRUST PROBLEM.
Nigeria is a country overflowing with insurable risks.
We have millions of vehicles on dangerous roads. Businesses face fire, theft, flooding, ng and operational disruptions. Farmers face climate and weather-related risks. Families face premature death and financial insecurity. Property owners face enormous exposure to disasters. Businesses increasingly face cyber and technology risks.
The need for insurance is therefore not in doubt.
What remains in doubt is whether the average Nigerian sees insurance as a reliable financial safety net.
That explains one of the great contradictions of our economy.
Nigeria’s insurance industry is growing. Gross written premiums reached about ₦2.3 trillion in 2025, representing substantial year-on-year growth. Yet insurance penetration remains extremely low relative to the size and risk profile of the Nigerian economy.
The question, therefore, is not simply:
“Why aren’t Nigerians buying insurance?”
It should be:
“What has the industry done—or failed to do—to make Nigerians want to buy insurance?”
That is a more uncomfortable question.
But it is the right one.
CLAIMS ARE THE MOMENT OF TRUTH
Insurance is not truly tested when a policy is sold.
It is tested when something goes wrong.
The salesman may have been persuasive.
The brochure may have been beautiful.
The policy document may have been professionally printed.
The company’s website may look impressive.
But when a customer’s vehicle is damaged, when fire destroys a business, when a breadwinner d,ies or when a major insured loss occurs, everything comes down to one thing:
What happens to the claim?
This is why claims management is not merely an administrative function.
It is the heart of insurance.
NAICOM’s own strategic plan places effective claims management and consumer protection at the centre of its objective to improve public confidence in the industry.
The Nigerian Insurance Industry Reform Act 2025 has also placed renewed emphasis on policyholder protection, digitisation and reducing delays in claims settlement.
These reforms are important.
But legislation can create the framework.
Only the industry’s behaviour can create trust.
THE INDUSTRY IS PAYING CLAIMS — BUT THE PUBLIC DOES NOT ALWAYS SEE THE STORY
It is important to be fair.
The claim that insurance companies simply “do not pay claims” is an oversimplification.
The industry paid substantial claims in 2025. Recent industry reporting based on NAICOM data put gross claims at about ₦724.7 billion, with an overall settlement rate of approximately 88.5 percent.
Those figures matter.
They demonstrate that insurance companies do pay claims.
But there is an important distinction between paying claims and being perceived as trustworthy.
A company can settle thousands of legitimate claims and still have an unhappy customer base if the claims process is slow, complicated, poorly explained, or perceived as hostile.
For the individual customer, one claim can define the reputation of an entire company.
A customer who receives fair compensation after a devastating loss may become an ambassador.
Another customer whose legitimate claim is delayed for months, poorly communicated, or subjected to endless documentation may tell twenty people never to buy insurance.
In the age of WhatsApp, Facebook, X, TikTok, and online reviews, that negative experience can travel further than the company’s advertising budget.
Trust is contagious—but so is distrust.
SOMETIMES THE PROBLEM IS NOT NON-PAYMENT. IT IS POOR COMMUNICATION.
This is an area the industry needs to examine carefully.
Not every rejected claim is an unfair claim.
Insurance contracts have conditions, exclusions, deductibles, warranties,s and documentation requirements for legitimate reasons.
Fraudulent claims exist.
Underinsurance exists.
Non-disclosure exists.
Policy exclusions exist.
Customers must also take responsibility for understanding the contracts they enter into.
But the industry must accept another responsibility:
Customers cannot be expected to understand what was never properly explained to them.
Insurance language can be intimidating.
“Indemnity.”
“Subrogation.”
“Excess.”
“Utmost good faith.”
“Consequential loss.”
“Exclusions.”
“Underinsurance.”
These terms may be perfectly normal to insurance professionals.
They are not necessarily normal to a trader in a market, an artisan, a young entrepreneur, ur or a first-time policyholder.
The solution is not to abandon technical accuracy.
The solution is to explain technical matters in language ordinary people can understand.
A customer should be able to answer three basic questions immediately after purchasing a policy:
What am I covered for?
What am I not covered for?
What exactly must I do if I need to make a claim?
If the customer cannot answer those questions, the sale is incomplete.
STOP SELLING POLICIES. START SELLING PROTECTION.
Perhaps the biggest philosophical change the industry needs is a language change.
Nigerians do not wake up every morning saying:
“I need an insurance policy.”
They say:
“I need to protect my family.”
“I need to protect my business.”
“I need to protect my house.”
“I cannot afford to lose this vehicle.”
“What happens to my children if something happens to me?”
“How will I rebuild if my shop burns down?”
That is the real insurance conversation.
Insurance professionals must therefore stop thinking only in terms of products and begin thinking in terms of problems.
Don’t merely sell “motor comprehensive.”
Explain what financial exposure the customer faces if the vehicle is stolen or badly damaged.
Don’t merely sell “life assurance.”
Explain how the family may survive financially if the breadwinner dies prematurely.
Don’t merely sell “fire insurance.”
Explain what happens when ten years of business investment disappears overnight.
People do not buy insurance because they love insurance. They buy protection because they fear losing what matters to them.
THE INDUSTRY MUST STOP BLAMING NIGERIANS
For years, one explanation has been repeated:
“Nigerians are not insurance-conscious.”
Perhaps.
But that explanation is incomplete.
When millions of potential customers do not understand a product, the producer must also examine the product, the communication, and the distribution system.
If customers complain repeatedly about claims, investigate the claims process.
If people say premiums are unaffordable, develop more flexible products.
If young people do not understand traditional insurance, communicate through the platforms and language they understand.
If informal-sector workers are largely uninsured, take insurance to them rather than waiting for them to walk into corporate offices.
Customer resistance is market intelligence.
The wise industry listens to it.
PRICE IS A REAL BARRIER
Trust is not the only problem.
Nigeria is facing severe economic pressure.
For millions of households, income is already being consumed by food, rent, transportation, school fees, healthcare,e and other necessities.
Insurance can easily be perceived as an additional expense—especially when its benefit is invisible until a loss occurs.
This means the industry must become more innovative about affordability.
Microinsurance must become more meaningful.
Premium payment should be flexible.
Products should be designed around the realities of informal workers.
There should be simple insurance solutions for traders, artisans, farmers, transport operators, small-business owners and young professionals.
Technology should make it possible to purchase and manage affordable coverage without unnecessary bureaucracy.
The future customer may not want a 30-page product brochure.
He may want a simple explanation on his phone:
“Pay this amount. You are covered for these risks. If this happens, do this. This is what you can expect.”
That is not dumbing down insurance.
That is democratising insurance.
DIGITAL INSURANCE MUST BE ABOUT CONVENIENCE AND TRANSPARENCY
Nigeria’s insurance industry has an enormous opportunity in technology.
The regulator has already moved toward digital transformation, while formal guidelines for insurtech operations took effect in 2025.
But digitalisation should not merely mean putting a complicated insurance form on a website.
True digital transformation should make the customer’s life easier.
A customer should increasingly be able to:
- obtain a quotation;
- understand the coverage;
- purchase a policy;
- receive documentation;
- report a claim;
- upload supporting documents;
- monitor claim progress;
- receive updates;
- and ultimately receive payment—
without unnecessary physical movement.
But there is an important warning.
Technology cannot compensate for bad customer service.
A frustrating digital experience is still a frustrating experience.
If a customer receives an automated message saying “claim rejected” without a clear explanation, technology has not solved the trust problem.
It has simply automated the frustration.
WHY NOT PUBLISH CLAIMS PERFORMANCE?
Here is one idea that deserves serious consideration.
Insurance companies should become much more transparent about their claims performance.
Imagine a market where customers could easily compare insurers based not only on premium but also on:
Claims received.
Claims paid.
Claims outstanding.
Average claims turnaround time.
Claims rejected and the broad reasons.
Customer complaints received.
Complaints resolved.
Customer satisfaction.
This would change the market.
Companies that serve customers well would have something valuable to market.
Poor performers would have nowhere to hide.
Transparency would create competition around something much more important than price:
service quality.
AGENTS AND BROKERS MUST PROTECT THE INDUSTRY’S REPUTATION
The insurance intermediary is often the human face of the industry.
This makes agents and brokers enormously important.
An intermediary who exaggerates benefits to close a sale may earn a commission today but create a complaint tomorrow.
A customer who was promised something that was never covered may not blame the agent alone.
He may blame the entire insurance industry.
That is why professional ethics cannot be treated as a theoretical subject.
The principle should be simple:
Never promise what the policy does not cover.
Never hide an important exclusion simply to close a sale.
Never sell a product merely because it pays the highest commission.
A policy sold through deception is not a successful sale.
It is a future reputational liability.
THE REGULATOR HAS A CRITICAL ROLE
The industry cannot rebuild trust alone.
The regulator must continue to enforce standards firmly and fairly.
NAICOM’s reform agenda explicitly identifies restoring public confidence, strengthening market discipline and protecting policyholders as priorities.
That direction should be sustained.
Where insurers fail to honour legitimate obligations, there must be consequences.
Where policyholders commit fraud, there must also be consequences.
Where intermediaries mis-sell products, they must be held accountable.
Trust requires accountability on both sides.
Regulation should therefore create an environment where:
good insurers are rewarded, bad practices are punished, innovative products are encouraged, and policyholders have effective avenues for redress.
INSURANCE EDUCATION MUST LEAVE THE BOARDROOM
The industry cannot build an insurance culture through annual conferences alone.
Insurance education must go where Nigerians live and work.
Markets.
Churches.
Mosques.
Schools.
Universities.
Professional associations.
Cooperatives.
Trade groups.
Small businesses.
Community organisations.
Social media.
Radio.
Television.
And local-language platforms.
Imagine an insurance education campaign explaining life assurance to families in simple Yoruba, Hausa, Igbo, Pidgin, and other Nigerian languages.
Imagine market associations being taught how business interruption insurance works.
Imagine young entrepreneurs learning risk management before they launch their businesses.
Imagine churches and community organisations hosting financial-protection seminars.
That is how culture changes.
You do not create an insurance culture merely by selling policies. You create it by creating understanding.
THE INDUSTRY MUST TELL ITS SUCCESS STORIES
There is another opportunity the industry has largely underused.
Tell the stories of legitimate claims that were paid.
Not as propaganda.
As evidence.
Tell the story of the family whose financial future was protected after the death of a breadwinner.
Tell the story of the entrepreneur whose business recovered after a fire.
Tell the story of the farmer who received compensation after an insured loss.
Tell the story of the motorist whose vehicle was restored.
Tell the story of the company whose operations survived a catastrophic event because it transferred its risk.
The public needs to see insurance working.
The industry cannot spend most of its communication budget saying:
“Trust us.”
It should increasingly be saying:
“Here is what we did.”
Evidence is more powerful than slogans.
WHAT MUST CHANGE?
If Nigeria’s insurance industry genuinely wants to win back public trust, I would suggest ten urgent priorities:
- Make legitimate claims settlement faster, simpler and more predictable.
- Explain insurance policies in plain language without sacrificing legal accuracy.
- Publish meaningful claims and customer-service performance data.
- Design genuinely affordable products for low- and middle-income Nigerians.
- Expand microinsurance and responsible digital distribution.
- Hold agents and brokers accountable for mis-selling.
- Treat customers with dignity, particularly when they are making claims.
- Make insurance education continuous rather than occasional.
- Use technology to improve transparency and convenience—not merely to cut costs.
- Make trust and customer satisfaction central measures of industry success.
A NEW SOCIAL CONTRACT FOR INSURANCE
Nigeria’s insurance industry stands at an important crossroads.
The regulatory environment is changing.
The Nigerian Insurance Industry Reform Act 2025 has created a new framework for the sector, including stronger capital requirements, compulsory insurance enforcement, digitalisation and greater emphasis on policyholder protection.
But laws alone cannot transform public perception.
Capital alone cannot create trust.
Technology alone cannot create trust.
Advertising alone cannot create trust.
Trust is earned transaction by transaction.
It is earned when an insurer keeps its word.
It is earned when an agent tells the truth.
It is earned when a claim is handled professionally.
It is earned when a rejection is properly explained.
It is earned when a customer complaint is taken seriously.
It is earned when an insurer treats a small policyholder with the same dignity it gives a large corporate client.
And it is earned when the industry accepts that the customer is not a nuisance standing between the company and its profit.
The customer is the reason the industry exists.
THE REAL QUESTION
Nigeria does not lack risks.
It does not lack people.
It does not lack businesses.
It does not lack assets that need protection.
It does not lack insurance companies.
What it lacks is a sufficiently deep culture of confidence in insurance.
That confidence will not come from telling Nigerians that they are ignorant.
It will come from giving them reasons to believe.
The industry must move:
from selling policies to solving problems;
from complexity to simplicity;
from transactions to relationships;
from promises to evidence;
from product-centred thinking to customer-centred thinking;
from “trust us” to “here is the proof.”
The Nigerian public does not need another advertisement telling it that insurance is important.
It needs an industry that demonstrates—consistently, transparently and professionally—that when disaster comes, the promise will be honoured.
Because insurance is ultimately not about a policy document.
It is about a promise.
A promise that when uncertainty strikes, you will not have to face the financial consequences alone.
And when that promise becomes credible again, Nigerians will not need to be forced to buy insurance.
They will want it.
That is how Nigeria’s insurance industry will move from being tolerated to being trusted—and from being trusted to becoming indispensable to the Nigerian economy.
ABOUT THE AUTHOR
Omoboye Sunday is an insurance professional, writer, trainer,r and governance advocate with over two decades of experience across insurance brokerage, composite insurance,ce and Health Maintenance Organisation (HMO) operations. He holds a B.Sc. in Insurance from the University of Lagos, an MBA from Obafemi Awolowo University, and theological degrees from L.I.F.E. Theological Seminary. He writes on insurance, governance, leadership, public policy, society, and nation-building.
