Poor Credit, Poor Coverage: Why Insurance Is Still a Luxury in Nigeria
In an economy where risk is a daily reality, insurance should be booming. But in Nigeria Africa’s largest economy insurance penetration is stuck below 2%, and the reason isn’t just apathy or mistrust. It’s lack of credit access.
According to industry experts and a new BusinessDay report, millions of Nigerians remain uninsured not because they don’t want protection, but because they lack the financial access and structure to sustain it.
Welcome to the paradox: people who need insurance the most are also the least likely to afford it all thanks to the financial system’s failure to provide accessible, inclusive credit options.
The Real Economic Fallout: Insurance is an Engine Not a Spare Tire
Insurance is more than a safety net; it’s an economic multiplier.
Globally, strong insurance sectors reduce post-disaster losses, boost savings, and drive long-term investment. In developed markets like the US and UK, insurance access is tied to credit scores, employment history, and regulatory frameworks that encourage uptake.
In Nigeria, however, most citizens are locked out of formal credit systems and by extension, insurance.
Only 11% of Nigerians have access to credit from regulated institutions
Less than 2% of Nigerians use insurance products, mostly in motor and health sectors
Informal workers over 80 million Nigerians operate entirely outside the financial ecosystem
Why This Matters to the Global Market
If you’re an investor, regulator, or fintech entrepreneur, this story isn’t local it’s a global opportunity.
As inflation, climate risk, and health volatility rise worldwide, insurance will become an essential tool for economic resilience. But without credit rails, policies can’t be distributed, financed, or renewed at scale.
Financial Juggernut’s take:
“You can’t have inclusive insurance without inclusive credit. They’re two wings of the same bird.”
Fintech, Microfinance, and the Next Billion
The solution? Build digital microcredit systems that integrate insurance into everyday transactions.
Already, firms like AXA Mansard, Paga, and Curacel are experimenting with microinsurance via mobile wallets and USSD. But deeper credit penetration is needed not just loans, but credit profiles, alternative data scoring, and embedded insurance APIs.
If countries like India and Kenya could scale mobile-based financial products, Nigeria with 220+ million people can too.
Credit + Insurance = Economic Power
In the UK, insurance is bundled into mortgages and auto loans. In the US, employers and credit unions offer insurance-linked financial services. And across the EU, digital ID systems have made claims and credit profiling seamless.
Nigeria’s struggle highlights a global truth:
Without financial infrastructure, even the best insurance policies are just digital paper.
Insights: How to Fix It
If Nigeria wants to leapfrog insurance growth, the following are urgent:
Build credit-access products with embedded insurance
Use telco and utility data to score risk for the unbanked
Partner with cooperatives, not just banks
Push regulators to treat insurance like an economic pillar not an afterthought
We believe insurance is not just for the privileged it’s a tool for national resilience. If we don’t fix credit access, we’ll keep treating insurance as a luxury, instead of what it should be a right