Insurance industry professionals have voiced concerns over the country’s worsening economic conditions, highlighting how high inflation, currency devaluation, and shrinking disposable income have negatively affected insurance operations, claims administration, and consumer uptake over the past two years.
Speaking with Daily Independent, industry experts pointed to Nigeria’s economic instability as a major factor hindering insurance growth and penetration. Many Nigerians, they noted, are now prioritizing essential needs such as food, transportation, and education over insurance.
Mr. Idongesit Mbat, Chief Risk Officer at Rex Insurance Limited, expressed frustration with the sector’s stagnation. He blamed rising inflation and the naira’s devaluation for eroding consumers’ spending power, leaving little room for discretionary purchases like insurance.
“In the last two years, key challenges affecting the insurance sector include high inflation, the naira’s depreciation, and increasing insecurity across the country,” Mbat said. “These factors have wiped out disposable income, forcing people to focus on immediate needs. As a result, insurance is seen as non-essential.”
He also noted that insurers are struggling to manage escalating claims costs without raising premiums. This has led to rising operational and underwriting expenses, reducing profits and investor returns.
“If this trend persists,” Mbat warned, “insurance firms may struggle to attract new investors—especially if the proposed increase in minimum regulatory capital is implemented.”
He further highlighted the difficulties insurers face in settling dollar-denominated claims for energy and special risks due to forex shortages, which strain reserves. He also pointed to increasing road insecurity and theft, which have driven up claims under motor and goods-in-transit policies.
“These issues have a compounding negative effect on both the insurance sector and the broader economy. Resolving them could unlock significant growth,” he added.
Dr. Obinna Chilekezie, an insurance expert and lecturer at the University of The Gambia, acknowledged recent regulatory improvements, including the federal government’s group life policy for top officials. However, he stressed that sluggish economic activity remains a major obstacle.
“While regulatory changes are commendable, economic stagnation continues to limit sector development,” Chilekezie said.
Ms. Prisca Soares, former Secretary General of the African Insurance Organisation (AIO), emphasized the potential of the Consolidated Insurance Bill currently awaiting presidential assent. She said its implementation, along with risk-based supervision and proposed capital increases, could help transform the industry.
“The government’s interest in the insurance sector and the move to update the legal framework are positive signals,” Soares noted. “A stronger regulatory environment, capital growth, and effective use of local content policies will enable the industry to grow and benefit from infrastructure development initiatives.”
While acknowledging the present challenges, including the naira’s devaluation and limited consumer purchasing power, Soares remained optimistic about the industry’s long-term prospects.
“As the economy improves, the insurance sector will follow suit. I believe the new bill will soon be signed into law, helping regulators push risk-based capital strategies forward,” she concluded.
