I’m thrilled to sit down with Simon Glairy, a renowned expert in insurance and Insurtech, whose deep insights into risk management and AI-driven risk assessment have made him a go-to voice in the industry. Today, we’re diving into the transformative changes happening in Nigeria’s insurance sector, sparked by a groundbreaking new law signed by President Bola Tinubu. This conversation will explore the massive surge in insurance stocks, the push for mandatory coverage, efforts to boost low penetration rates, and how this reform fits into Nigeria’s broader economic ambitions. Let’s get started.
Can you walk us through the key aspects of the new Nigerian insurance law signed by President Tinubu?
Absolutely, Abigail. This new law is a game-changer for Nigeria’s insurance industry. At its core, it mandates insurance coverage for property and other key assets, which is a huge step toward embedding risk protection into everyday life. It also sets stricter capital requirements for insurance companies, meaning they need to raise fresh funds to operate. Beyond that, it pushes for digitization to modernize how insurance is accessed and managed, and it establishes policyholder protection funds to safeguard consumers. These elements combined aim to rebuild trust and expand the industry’s reach in a country where insurance has historically been an afterthought.
What’s behind the staggering 41% jump in Nigerian insurance stocks this week?
The surge is largely tied to the signing of this law. Investors see it as a signal that the sector is poised for growth, especially with mandatory insurance driving demand. The 41% spike reflects a rush of confidence that wasn’t fully priced in before the president’s signature. But it’s not just the law—market sentiment has been building since the Senate’s initial approval last December, and broader economic reforms under Tinubu’s administration are creating a sense of optimism. Still, I’d caution that external economic pressures or implementation hiccups could temper this enthusiasm if not managed well.
With insurance penetration at just 0.4% in Nigeria, far below peers like South Africa or Kenya, what do you think has held coverage back for so long?
It’s a mix of cultural and economic factors. Many Nigerians simply don’t see insurance as a priority—there’s a lack of awareness about its benefits, and trust in financial institutions has often been shaky. Add to that the reality of low disposable income for a large chunk of the population, and insurance feels like a luxury rather than a necessity. Structural issues, like limited access to insurance products in rural areas and a historically underregulated market, have also played a role. Breaking these barriers will take more than a law—it’ll require education and outreach on a massive scale.
How do you see the law’s focus on digitization and policyholder protection funds benefiting everyday Nigerians?
Digitization is a big win because it can make insurance more accessible and user-friendly. Imagine being able to buy a policy or file a claim through a mobile app—especially in a country with high smartphone penetration. It cuts through bureaucratic red tape and reaches people in remote areas. As for the protection funds, they act as a safety net. If an insurer goes under, these funds ensure policyholders aren’t left high and dry. It’s about building confidence that your investment in insurance won’t vanish overnight, which is crucial in a market where trust has been an issue.
There’s talk of foreign and strategic investors entering the sector due to new capital requirements. Can you explain how these requirements might attract outside interest?
The new capital rules essentially force insurance companies to beef up their financial reserves, which often means seeking external funding. For foreign investors, this is an opportunity to enter a market with huge untapped potential—Nigeria’s population alone is a massive draw. These investors bring not just money but also expertise, technology, and global best practices, which can elevate the industry. The flip side is ensuring local players aren’t squeezed out, but overall, it’s a signal that Nigeria is open for business in a sector ripe for growth.
Insurance stocks have soared 156% since the law’s initial Senate approval in December. How do you think this rapid growth is shaping the market’s future?
This kind of growth shows the market was hungry for reform. Investors anticipated that mandatory insurance and stricter regulations would translate to bigger profits, and they’ve been proven right so far. But it also raises the stakes—stocks are at record highs, and any misstep in implementing the law could trigger a correction. I think we’ll see continued interest for the rest of the year, especially in stronger companies, but sustainability depends on how well the government and insurers execute these changes.
President Tinubu has rolled out several reforms since 2023, from fuel subsidy cuts to tax overhauls. How does this insurance law fit into his broader vision for Nigeria’s economy?
This law is a piece of a much larger puzzle. Tinubu’s reforms are all about structural change—removing subsidies, freeing up the naira, and now boosting insurance are steps toward a more resilient, market-driven economy. Insurance reform specifically supports economic stability by reducing financial vulnerability for businesses and individuals. It’s a building block for his $1 trillion economy goal because a stronger insurance sector means more risk-taking capacity for entrepreneurs and investors, which fuels growth. Whether it all comes together depends on execution across these reforms, but the ambition is clear.
What’s your forecast for the Nigerian insurance sector over the next few years given these developments?
I’m cautiously optimistic. If the law is implemented effectively—with real progress on digitization, education, and enforcement of mandatory coverage—I think we could see penetration rates double or triple in the next five years, though still lagging behind regional peers. Investor interest, especially from abroad, will likely grow, but it’ll hinge on political stability and consistent policy follow-through. The biggest wildcard is public adoption; without trust and affordability, growth could stall. Still, the foundation being laid now has the potential to make insurance a cornerstone of Nigeria’s economic future.
