Insurance is kind of like a safety cushion that supports you when life surprises you with tough situations. Whether it’s a car crash, a health crisis, or a business setback, insurance helps individuals and businesses bounce back without losing everything they have. In Nigeria, a nation of over 200 million people with a growing economy, the insurance sector is becoming increasingly important as more Nigerians realize the benefits of safeguarding themselves against risks. This article will look into Nigeria’s insurance world, how it encourages conversations among those in the industry, the new Nigerian Insurance Industry Reform Act (NIIRA) of 2025, its impact on Nigerians, and whether insurance is specific to Nigeria or part of a global human instinct.
The Insurance Sector in Nigeria: A Developing Field with Issues
Nigeria’s insurance sector has been active for more than a hundred years, but it is still considered young compared to other countries. With a population exceeding 211 million, Nigeria is the biggest economy in Africa, yet only around 0.5% of its people have insurance. This low rate of insurance use means that very few people are protected compared to nations like South Africa (12.2%) or Kenya (2.9%). Recently, the industry has expanded, with total income from insurance policies reaching ₦776.5 billion in 2022 and expected to surpass ₦1 trillion in 2023. This is a significant increase, showing that more Nigerians are starting to buy insurance.
Still, the industry has several difficulties to confront. One key issue is that many people don’t understand insurance. Lots of Nigerians don’t know what it is or why it matters. Some view it as something only wealthy people can afford, especially since over half of the population lives on very little money. Another concern is a lack of trust. In the past, several insurance companies didn’t pay claims when they should have, or not at all, which led people to think that insurance is a fraud. Bad infrastructure, like poor roads, also makes it tough for insurance companies to serve customers in rural locations.
Nonetheless, the industry is making progress. The National Insurance Commission (NAICOM), which oversees insurance in Nigeria, has been striving to improve things. They have implemented guidelines to guarantee that companies are financially stable and pay claims on time. New technologies, like mobile applications and online services, are also making a difference. For instance, companies like Blue Wave in Kenya (and similar ones in Nigeria) use mobile technology to provide affordable microinsurance, making it easier for people to obtain coverage.
Insurance as a Topic for Conversation
The insurance business in Nigeria isn’t just about making sales; it’s also a chance for people to gather and share ideas on how to solve problems. Key players in this field, including insurance companies, brokers, agents, and regulators, meet often to discuss ways to improve the industry. They hold events like the BimaLab Nigeria Insurtech Accelerator, which was started by NAICOM and FSD Africa. BimaLab is a 10-week program where new companies and creative thinkers develop fresh ideas such as using mobile money for insurance payments or designing products tailored for farmers.
These discussions are very important because they help tackle major challenges. For instance, the players in the industry talk about how to make insurance cheaper for Nigerians with low incomes. They also explore how technology, like digital wallets, can connect with people who don’t have bank accounts. NAICOM, the regulatory body, proposes creating a “regulatory sandbox,” a space where new insurance products can be tested without breaking strict laws. These discussions promote collaboration among insurance firms, tech startups, banks, and even the government to improve access to insurance.
Another important topic is mandatory insurance. In Nigeria, the government mandates certain types of insurance, such as third-party liability for cars and compensation for employees. These laws help protect individuals and businesses, but many people do not follow them because they are not aware of them. Industry players are discussing ways to educate Nigerians about these laws and enforce them more effectively. For instance, they may use the Nigerian Insurance Industry Database (NIID) to verify if cars have insurance.
The Nigerian Insurance Industry Reform Act (NIIRA) 2025
In 2025, President Bola Ahmed Tinubu approved the Nigerian Insurance Industry Reform Act (NIIRA), a new law designed to improve the insurance industry and help Nigeria reach its goal of becoming a $1 trillion economy. This law is significant because it updates old rules and adds new ones to enhance the industry’s reliability and competitiveness.
Here are some important features of the NIIRA 2025 that we know so far:
1. Improved Financial Regulations: The new law insists that insurance companies keep moremoney in reserves to cover claims. This builds on NAICOM’s previous efforts, like a 2019policy that raised the minimum capital required for insurers. Stronger companies mean thatNigerians can feel confident that their claims will be honored.
2. Enhanced Consumer Protection: The NIIRA aims to safeguard customers by ensuringcompanies act fairly. For example, it may impose stricter time limits for processing claims,addressing the issue of claims that are postponed or not paid.
3. Promoting Innovation: The law encourages the use of new technologies, such as insurtech(insurance technology). It simplifies the process for startups to create digital insuranceproducts, like apps that allow users to purchase insurance through their phones.
4. Reinforcing Mandatory Insurance: The NIIRA tightens the rules for compulsory insurance,like motor vehicle and employee compensation policies. This could lead to a higher numberof people complying with the law and, in turn, increase insurance coverage overall.
5. Bringing in Foreign Investment: The law aims to make the industry better and bring inoutside companies, such as AXA Mansard or Morocco’s Saham, which have already putmoney into Nigeria. More investments lead to more job opportunities and improved services.
How the NIIRA 2025 Impacts Nigerians
The NIIRA 2025 will greatly influence both Nigerians and their businesses. Here’s what you need to know:
Increased Confidence in Insurance: With new, tougher guidelines, Nigerians can trust that insurance companies will actually pay out claims. This might lead more people to get insurance, especially for things like health, life, or property. For instance, only 3% of Nigerians currently have health insurance, but with better trust, this number could grow.
More Affordable Options: Since the law encourages new ideas, there will be cheaper choices, like microinsurance, which is less expensive and covers smaller risks. This is beneficial for Nigerians with lower incomes who can’t pay for regular insurance plans.
Job Growth: A stronger insurance field means there will be more job openings, such as for insurance agents, tech workers, and customer service staff. This helps boost Nigeria’s economy.
Improved Financial Safety: With mandatory insurance being enforced, more people in Nigeria will be protected during accidents or emergencies. For example, having motor third-party insurance means that if you’re in a car crash, the other person involved gets support, even if you can’t pay for it yourself.
Challenges to Face: The new law may lead to higher costs for some businesses since they will have to follow stricter regulations or obtain required insurance. This might be especially hard for small businesses. Additionally, many Nigerians still don’t fully understand insurance, so educating them about this new law will take some time.
Is Insurance Special to Nigeria or a Part of Human Nature?
Now, let’s discuss the important question: Is insurance something that is only found in Nigeria, or is it a natural human response to risks? The truth is that insurance is not just a Nigerian thing; it’s something that is found all around the world because it is part of human nature.
People have always dealt with risks such as disasters, sickness, or losing their possessions. Many years ago, people banded together to share those risks. For example, in ancient China, traders would spread their goods over different ships. If one ship sank, they wouldn’t lose everything. This was an early type of insurance! In Nigeria, traditional communities used to help each other, like when someone’s house burned down, and the village would come together to help rebuild it. Today’s insurance just organizes this concept by allowing you to pay a little bit (a premium) to protect yourself against big losses.
Worldwide, insurance is a massive industry. In 2018, Nigeria’s insurance market was ranked 62nd in the world, bringing in $1.64 billion in premiums, which was just 0.2% of the global amounts. Countries like the United States, Japan, and South Africa have much bigger insurance markets because their people know more about it and trust the system. But the need for insurance is universal; it stems from our basic wish to feel secure and plan for what’s ahead.
What sets Nigeria apart is the specific problems it faces, such as a lack of awareness and trust. In many other places, insurance is considered a regular part of life, similar to purchasing groceries or covering housing costs. However, in Nigeria, certain cultural ideas may lead people to believe that insurance is not important, or they depend on their relatives for support instead. The NIIRA 2025 plan seeks to improve this situation by making insurance more reliable and easier to access, helping Nigeria meet global expectations.
Conclusion
The insurance sector in Nigeria is on the verge of big changes. With more people and a growing economy, there is a great opportunity for insurance to help Nigerians deal with life’s unknowns. The new Nigerian Insurance Industry Reform Act of 2025 is a major development, promising more powerful companies, better protection for customers, and new ideas. This law will encourage Nigerians to have more faith in insurance and view it as a way to secure their financial future. Although there are still issues like low awareness and trust, conversations among industry leaders and new technologies are helping to create a positive path forward.
Insurance isn’t just something found in Nigeria; wanting to be safe from risks is a part of being human. From traders in the past to people living in Nigeria today, we all want to feel secure. The NIIRA 2025 is a move toward making that safety net stronger for everyone, helping Nigeria create a brighter and safer future.
