At the just-concluded 40th Anniversary Celebration of the Risk Management Society of Nigeria (RIMSON), the Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission (NAICOM), Mr. Olusegun Ayo Omosehin, delivered a stirring goodwill message that underscored the critical role of risk management in Nigeria’s journey towards sustainable national development.

Addressing a distinguished gathering of risk professionals, industry leaders, and policymakers, Omosehin applauded the timeliness of the event’s theme—“Risk Management in Nigeria: Evaluating the Impact and Relevance to National Development.” According to him, this theme speaks to the very core of Nigeria’s development struggle in the face of evolving economic, social, and environmental threats.

“Risk management,” Omosehin noted, “is no longer a luxury or a back-office function—it is a national imperative.” He reflected on how lapses in structured risk mitigation have repeatedly undermined Nigeria’s progress, citing examples ranging from cyber threats and climate-induced disasters to public health crises and systemic business disruptions.

He emphasized that the insurance sector—regulated by NAICOM—serves as a backbone for advancing a culture of sound risk management through effective risk transfer mechanisms. “Insurance,” he said, “provides more than just financial protection. It fosters confidence, fuels investment, and nurtures innovation.” He added that NAICOM continues to strengthen the regulatory landscape to ensure insurance companies are equipped to underwrite risks effectively while safeguarding the interests of policyholders.

The Commissioner reaffirmed the Commission’s commitment to broadening insurance access across Nigeria, especially in underserved communities. He stressed that inclusive risk mitigation must become a pillar of national policy, one that is data-driven, proactive, and integrated across all sectors—from infrastructure and enterprise to governance and public health.

Omosehin called on all stakeholders to commit to a collective future where risk management is deeply embedded in national planning. “We must move from reactive to strategic thinking. That is how we will build a resilient, secure, and prosperous Nigeria,” he urged.

In conclusion, he commended RIMSON for four decades of unwavering contribution to Nigeria’s risk management ecosystem and expressed optimism that the deliberations from the anniversary celebration would fuel more impactful solutions in the years ahead.

With these words, the Commissioner not only marked a milestone for RIMSON but also laid down a roadmap for embedding risk management into the very fabric of Nigeria’s national development strategy.

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Industry analysts attribute this alarming trend to liquidity constraints, poor financial management, and weak regulatory enforcement. Despite the National Insurance Commission (NAICOM) mandating timely claims settlement, many insurers continue to delay or outrightly default on payments, citing technicalities and financial instability.

For policyholders, the impact is severe. Families who rely on life insurance payouts, businesses seeking compensation for losses, and individuals expecting settlements for accidents or health coverage are left stranded. Many affected customers have resorted to legal action, further burdening an already slow judicial process.

One of the key factors exacerbating the crisis is insurers’ penchant for underpricing policies to attract more customers, only to struggle with payouts when claims arise. Additionally, some firms have been accused of diverting premium revenues into non-core investments, creating liquidity shortfalls.

NAICOM, in response to growing public outcry, has intensified efforts to enforce compliance. The Commission recently introduced stricter monitoring measures, compelling insurers to publish their claims payment records. The Nigerian Insurers Association (NIA) has also suggested naming and shaming defaulters to restore trust in the system.

Insurance experts warn that if the N34 billion backlog is not addressed swiftly, confidence in the industry will continue to erode. With Nigeria’s insurance penetration already one of the lowest in Africa, failure to enforce claims payment could push more individuals and businesses away from seeking coverage, stifling growth in the sector.

To restore credibility, stakeholders are calling for stronger regulatory interventions, capital adequacy reviews, and digital innovations to enhance claims processing efficiency. The fate of the insurance sector now hinges on its ability to rebuild trust through transparency and timely payment of claims.

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In the ever-evolving landscape of the insurance industry, trust has remained the bedrock of brand competitiveness. A company may boast cutting-edge technology, vast capital reserves, or a strong distribution network, but without trust, its foundation is fragile. The Nigerian insurance sector, like its global counterparts, has witnessed companies rise and fall—not solely based on financial strength, but on their ability to foster and maintain trust with policyholders, investors, and regulators.

The Story of Trust in Insurance

Decades ago, Nigeria’s insurance industry faced an uphill battle due to skepticism and a lack of confidence from the public. Many policyholders shared stories of delayed claims, complicated payout processes, and policies filled with ambiguous clauses. This mistrust which serve as a Carry over effect till today was compounded by the collapse of several insurance firms, leaving customers stranded without compensation.

However, certain operators understood early on that restoring public confidence required more than just regulatory compliance; it demanded a shift towards transparency, customer-centric policies, and ethical leadership. Companies such as Leadway Assurance, AIICO Insurance, and Sovereign Trust Insurance began to rebuild credibility by prioritizing swift claims settlement, clear policy communication, and robust financial management.

One notable example was during the 2002 Ikeja military cantonment explosion in Lagos. While many insurers hesitated, a few companies, driven by a commitment to trust, stepped forward to settle claims promptly. This act of corporate responsibility reshaped public perception and set a new benchmark for trustworthiness in the industry.

The Race for Brand Competitiveness Today

Fast forward to today, the global insurance industry is fiercely competitive, with customers having an abundance of choices. With the rise of digital insurance platforms, fintech disruptors, and AI-driven underwriting models, trust remains the ultimate differentiator. Consumers no longer evaluate insurers solely based on premium rates but on their reliability in fulfilling promises.

For an insurance operator to stay ahead, trust must be embedded in every aspect of its operations:

1. Claims Settlement Efficiency – Nothing builds credibility like Honouring claims promptly. A study shows that 75% of customers who experience smooth claims processing are more likely to renew their policies.
2. Transparency in Policy Communication – Ambiguous policies breed distrust. Forward-thinking insurers simplify contract terms and leverage digital platforms to educate policyholders.
3. Regulatory Compliance and Governance – Insurance firms that proactively align with the National Insurance Commission (NAICOM) guidelines demonstrate commitment to ethical business practices.
4. Customer-Centric Innovation – Insurtech is revolutionizing the industry, and firms that integrate user-friendly digital claims processing, AI-driven fraud detection, and personalized coverage options will earn deeper trust.

In this high-stakes race, where competition is fierce, trust remains the most valuable currency. While marketing strategies, pricing models, and technological advancements play critical roles, trust is what ultimately retains customers, attracts investors, and ensures an insurer’s longevity.

As the industry looks ahead, one lesson remains clear: in the race for brand competitiveness, trust isn’t just an advantage—it is the very foundation upon which lasting success is built. Trust isn’t a strategy—it’s the business itself. The most successful insurance companies aren’t the ones with the lowest premiums; they’re the ones with the highest credibility. If you want to sell more insurance, focus on selling what matters most: trust.

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The bill, originally proposed in 2010, languished in legislative limbo for years. Under former President Muhammadu Buhari’s administration, the Consolidated Insurance Bill was not signed, leaving insurers and regulators grappling with outdated policies that stifled growth. Now, there is cautious optimism that the Tinubu-led government will take a decisive step toward reform.

A Call for Urgency

A stakeholder, has urged industry players to maintain pressure to ensure swift presidential approval.

“We cannot afford another delay. Insurers and regulators must push harder to ensure the president signs this bill into law,” he emphasized.

Similarly, Commissioner for Insurance and CEO of the National Insurance Commission (NAICOM), Olusegun Omosehin, recently described the bill’s passage through the legislative process as a “landmark achievement”, underscoring its potential to transform the sector.

Key Provisions of the Reform Bill

The proposed legislation introduces significantly higher capital requirements aimed at strengthening the financial capacity of insurance firms:

• Non-life insurance firms: N25 billion
• Life insurance firms: N15 billion
• Reinsurance firms: N35 billion

These new thresholds are expected to bolster the industry’s resilience and credibility, positioning Nigerian insurers to compete more effectively on a global scale.

Challenges Beyond Assent

Despite the optimism surrounding the bill’s potential signing, experts warn that implementation will be the real test. An investor and analyst in the capital market, raised concerns about compliance and the government’s commitment to supporting local insurers.

“The real challenge isn’t just passing the bill but ensuring compliance. Will the government even insure its own assets with local firms?” he questioned.

With heightened expectations from industry players, investors, and regulators, calls for strategic lobbying have intensified. The insurance community remains on edge, with many asking: How much longer must we wait for this long-overdue reform to take effect?

As the bill’s fate now rests in the hands of President Tinubu, stakeholders hope his administration will break the cycle of delays and usher in a new era for Nigeria’s insurance industry. Until then, the industry remains in suspense, caught between hope and uncertainty.

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In 2015, the Nigerian government introduced tax rebates for health insurance premiums, a move designed to encourage more individuals and businesses to embrace insurance as a tool for financial protection. The result was an unprecedented surge in the adoption of health insurance, particularly among small and medium-sized enterprises (SMEs). Companies like Hygeia HMO recorded a 35% increase in enrollees within the first year, proving that strategic tax incentives could reshape public perception and participation in the insurance sector.

However, the broader insurance industry has not seen similar incentives, leading to a stagnation in penetration rates, which remain below 2% of GDP. In contrast, Kenya’s aggressive implementation of tax breaks for agricultural insurance premiums saw coverage increase by over 50%, protecting millions of farmers from climate-related losses.

Case Studies on the Potential Impact of Tax Incentives

Case Study 1: India’s Income Tax Deduction for Life Insurance

India’s government allows individuals to claim deductions on life insurance premiums under Section 80C of the Income Tax Act. This incentive has fueled a robust insurance market, with penetration rates reaching 4.2% of GDP in 2022. Major insurers like LIC and ICICI Prudential have credited these incentives for their exponential growth.

Case Study 2: South Africa’s Tax Deduction on Employer-Provided Insurance

South Africa provides tax deductions for employers offering group life and disability insurance. This policy has significantly increased workplace coverage, ensuring that 60% of the employed population is insured. It has also eased the government’s burden in providing social welfare, illustrating the power of targeted tax incentives.

Reflection on the Nigerian Context

In Nigeria, the insurance sector remains largely underdeveloped despite its potential. The absence of fiscal incentives is a critical barrier. Tax benefits for life, health, and agricultural insurance could drive mass adoption, particularly among the middle class and SMEs. Such incentives would not only secure the financial future of individuals but also enhance economic stability by reducing the government’s responsibility for disaster recovery and social welfare.

Call to Action

Policymakers must reflect on successful models like those of India and South Africa to design a framework that supports both insurers and policyholders. With effective tax benefits, Nigeria could unlock the immense potential of its insurance market, contributing significantly to the $1 trillion economy goal and ensuring a safety net for its citizens.

This is the time for action. Government incentives in the form of tax benefits can be the catalyst for transforming Nigeria’s insurance landscape, just as it has done in other nations.

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The Nigerian insurance industry demonstrated resilience and innovation in 2024 despite facing significant economic and regulatory challenges. With increased awareness of the sector’s importance in driving economic stability, several achievements were recorded, while structural and operational bottlenecks continued to test its growth trajectory.

Gains in 2024

1. Market Expansion: The industry saw a rise in insurance penetration, albeit modestly, with innovative products targeting underinsured sectors like agriculture, health, and SMEs. Key players such as AIICO Insurance, Sovereign Insurance, and NSIA Insurance introduced tailored policies to meet emerging demands.

2. Regulatory Improvements: The National Insurance Commission (NAICOM), under Commissioner Olusegun Ayo Omosehin, implemented reforms aimed at improving transparency and compliance. This included stricter enforcement of mandatory insurance policies and incentives for digital transformation.

3. Technology Integration: Digital platforms and InsurTech solutions revolutionized premium collection, claims processing, and customer engagement. Companies leveraged artificial intelligence (AI) and data analytics to offer personalized services, enhancing customer satisfaction and retention.

4. International Partnerships: Collaborations with global insurance firms bolstered capacity-building initiatives. Partnerships with institutions like Lloyd’s of London brought advanced risk management practices into the local market.

5. Support for Aviation: Significant progress was made in aircraft insurance policies to support local operators. Discussions between NAICOM and the Ministry of Aviation highlighted the need for competitive policies enabling Nigerian operators to thrive internationally.

Challenges in 2024

1. Low Penetration: Despite growth, insurance penetration in Nigeria remained below 1% of GDP, indicating vast untapped potential. Limited public trust and awareness continued to hinder adoption.

2. Macroeconomic Instability: Inflation and currency volatility posed risks to investment portfolios and eroded the real value of collected premiums. This impacted the financial performance of several insurers.

3. Claims Management: Delayed settlements and disputes over claims dented the industry’s reputation. Efforts to improve claims processing through technology showed promise but were yet to achieve full-scale implementation.

4. Talent Deficit: The industry faced a shortage of skilled professionals, particularly in areas like actuarial science, risk assessment, and digital transformation. This gap constrained innovation and growth.

The Road Ahead in 2025

Enhancing Penetration: Expanding insurance literacy campaigns and leveraging technology to reach underserved regions will be critical in 2025. Microinsurance and mobile-based solutions are expected to play pivotal roles.

Strengthening Regulation: NAICOM’s continued push for compliance and the introduction of risk-based supervision frameworks will ensure a more robust industry. Collaboration with other financial regulators will enhance systemic stability.

Focus on Innovation: Insurers must prioritize digital transformation to remain competitive. Investments in blockchain, AI, and big data analytics can enhance operational efficiency and customer experiences.

Boosting Confidence: Transparent claims settlement processes and improved customer service will rebuild trust. Industry players must also engage in advocacy to demonstrate the value of insurance in mitigating risks.

International Growth: With Nigeria’s ambitious goal of contributing to a $1 trillion economy, the insurance sector can play a significant role by attracting foreign direct investment (FDI) and offering risk management solutions to large-scale infrastructure projects.

The Nigerian insurance industry stands at a critical juncture as it transitions into 2025. With a proactive approach to addressing challenges and capitalizing on opportunities, it can solidify its role as a key driver of economic growth and resilience.

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