Trust Remains Nigeria’s Biggest Insurance Challenge Despite ₦700bn Recapitalisation

Insurance sector seeks to rebuild consumer trust

Nigeria’s insurance industry has strengthened its financial capacity through a recently concluded recapitalisation exercise that raised about ₦700 billion across operators, but rebuilding consumer trust remains a major challenge to the sector’s growth, according to Mary Adeyanju, Managing Director and Chief Executive Officer of Consolidated Hallmark Insurance (C.H.I).

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Adeyanju said the industry’s challenges extend beyond capital requirements, with weak consumer confidence, limited technology adoption, inadequate product-market fit and shortages of skilled personnel continuing to restrict insurance penetration.

The comments come as the insurance sector remains a relatively small contributor to Nigeria’s economy despite the country’s large population and substantial business and household assets requiring protection.

According to data analysed by Nairametrics from the National Bureau of Statistics, the finance and insurance sector contributed 3.37% to real GDP in the second quarter of 2026, while the insurance subsector accounted for less than 1%. Within the broader finance and insurance sector, banking accounted for 87.22% of output compared with 12.78% for insurance.

₦700bn Recapitalisation Strengthens Industry Capacity

The recapitalisation exercise has nevertheless provided insurers with a stronger financial foundation.

Adeyanju said increased capital should allow insurance companies to retain more risks domestically, expand their businesses and invest in technology and human resources.

For the industry, stronger balance sheets could also create room for insurers to underwrite larger risks associated with major infrastructure, construction, commercial and industrial projects.

However, Adeyanju stressed that the availability of capital does not automatically create demand for insurance.

The industry still needs to convince households, small businesses and other potential customers that insurance provides meaningful financial protection rather than simply representing another compulsory expense.

Consumer Trust Remains a Major Barrier

Adeyanju identified consumer trust as the industry's most significant unresolved challenge.

She said negative experiences with claims and perceptions about insurers have contributed to an environment in which many Nigerians remain reluctant to purchase insurance products.

This creates a difficult cycle for the sector. Low consumer confidence limits premium growth, while limited market participation reduces the industry's ability to expand insurance coverage across households and smaller businesses.

Adeyanju said insurers need to focus more closely on the products consumers actually require rather than simply offering products based on what companies want to sell.

She also pointed to partnerships, bancassurance, agents and technology-enabled distribution as potential channels for reaching a wider customer base.

Technology Could Improve Claims and Customer Experience

Technology is another area where the sector has significant room for improvement.

Adeyanju said insurance has lagged other parts of Nigeria's financial services industry in technology adoption and argued that insurers must increasingly operate as technology-driven businesses.

She cited C.H.I's use of Curacel for motor claims as an example of how digital tools can shorten processes.

Through the platform, customers can complete vehicle inspections digitally and submit photographs when making claims. The system can then process repair estimates using updated market prices, helping the insurer assess and settle claims more efficiently.

Greater digital adoption could therefore address one of the areas most closely linked to consumer trust: the speed and transparency of claims settlement.

Insurance Has a Direct Role in Property and Housing

For Nigeria's property market, the development of the insurance sector has wider implications.

Property owners, developers, landlords, mortgage providers and commercial investors all face risks ranging from fire and flooding to structural damage, theft and other unforeseen losses.

A stronger insurance market can provide an additional layer of protection for these assets and improve the resilience of property investments.

This is particularly relevant as construction costs rise and property values increase. Developers and property owners have more capital exposed to individual projects, making effective risk management increasingly important.

Insurance can also support lenders by protecting financed assets against specified risks. As Nigeria seeks to deepen mortgage lending and attract greater institutional investment into real estate, a more trusted and efficient insurance industry could become an important part of the wider property-finance ecosystem.

C.H.I Reports Strong Profit Growth

Adeyanju also discussed Consolidated Hallmark Holdings' financial performance.

The group reported a profit before tax of ₦27.10 billion for the six months ended June 30, 2026, compared with ₦1.76 billion in the corresponding period of 2025, representing a 1,436% increase.

She explained that about 80% of the growth came from fair-value gains on investments in the capital market, although the company also remained operationally profitable.

She said the company's operations had experienced some stagnation during the recapitalisation period as clients reduced or delayed transactions while assessing which insurers would meet the new capital requirements.

The company is now focused on rebuilding operational momentum.

Recapitalisation Could Drive Consolidation and Expansion

The stronger capital environment is also creating opportunities for restructuring within the industry.

Adeyanju cited the transfer of NSIA Insurance's life insurance portfolio to C.H.I's sister company as an example of how recapitalisation can reshape the market.

She said some insurers may choose to focus their capital on areas where they have stronger capabilities, while others may seek opportunities to expand through acquisitions or portfolio transfers.

For newer or smaller insurance companies, access to additional capital can provide the financial capacity to acquire portfolios, expand distribution and build market share.

The Next Phase Must Focus on Market Penetration

The completion of recapitalisation marks an important step for Nigeria's insurance industry, but the next challenge is converting stronger balance sheets into wider coverage and better customer experiences.

Capital can improve underwriting capacity, technology investment and operational efficiency. It cannot, on its own, persuade households and businesses to buy insurance or resolve concerns over claims and service delivery.

For Nigeria's property and wider investment markets, the distinction is important. A deeper insurance industry can help protect housing, commercial buildings, infrastructure and business assets, but its impact will depend on whether insurers can build sufficient consumer confidence to make coverage more widely used.

Adeyanju's assessment suggests that the sector's next phase will therefore be defined less by how much capital insurers hold and more by how effectively they use it to improve products, technology, people and customer trust.

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