If you are reading this, there is a very high chance you do not have any form of insurance. Not health insurance, life insurance, or even the motor insurance that Nigerian law technically requires every driver to carry.
Fewer than 3% of Nigerian adults carry any form of insurance coverage. Our insurance penetration hovers between 0.3% and 0.5% of GDP, one of the lowest rates on earth. For context, South Africa is at 11.5%. Kenya sits at 2.1%. Even among African countries, we sit near the bottom despite having the continent’s largest economy and most people.
The industry itself knows this. Nigerian insurers crossed one trillion naira in gross premiums for the first time in 2023, and the number grew to 1.56 trillion naira in 2024. Those are impressive growth figures until you realize what they actually cover.
The bulk of that money comes from corporate lines: oil and gas insurance, property, employer-mandated group life. The average Nigerian consumer is barely in the picture. Insurance density in Nigeria is roughly $7 per person. In South Africa, it is closer to $700.
We write about why that gap exists and whether open finance, the natural next step after open banking, can help close it. In all honesty, open finance alone will not solve the insurance problem. But it addresses a specific and critical piece of the puzzle that almost nothing else can.
Why Nigerians do not buy insurance
The reasons are layered, and they reinforce each other in ways that make the problem harder than any single intervention can address.
The most commonly cited barrier is trust. The Nigerian insurance industry has a decades-long reputation for not paying claims. A VIISAUS study in Lagos found that 38% of respondents said they simply do not see the need for insurance, while 19% cited trust issues and another 21% pointed to cost.
When people have heard enough stories of insurers collecting premiums and then dragging their feet or outright refusing to pay when something goes wrong, the rational response is to self-insure through savings, family, or community contributions. That is exactly what most Nigerians do.
Then there is affordability. When 60% of the population lives below the poverty line and the average monthly income is 35,000 naira, insurance premiums compete with food, rent, and school fees. Even small amounts are hard to justify when the immediate benefits are invisible and the payout is uncertain.
The informal economy makes it structurally worse. Over 92% of Nigerian workers are in the informal sector. They have no pay stubs, no employment contracts, no documentation that traditional insurance underwriting can work with.
As far as the insurance industry is concerned, these people are invisible. And invisible people cannot be priced, assessed, or covered.
Finally, enforcement of compulsory insurance is almost nonexistent. Six types of insurance are legally required in Nigeria, including motor third-party liability. But of 12 million vehicles on Nigerian roads, only about 3.4 million are insured. That is a 72% non-compliance rate for something the law already mandates.
When you put trust, affordability, informality, and weak enforcement together, you almost understand why most Nigerians have zero insurance coverage.
The data problem underneath all of it
There is a thread running through every barrier listed above, and it is data.
Insurers cannot design affordable products for people they cannot see. If you do not know someone’s income, spending patterns, risk exposure, or even their basic financial identity, you cannot price a policy for them, cannot assess their risk, and cannot collect premiums reliably. And when claims come in, you cannot verify them efficiently.
This is the same information asymmetry problem that has plagued Nigerian lending for years. In credit, open banking offered a way forward: let lenders access consented transaction data so they can see borrowers clearly and price risk accordingly.
Insurance faces an almost identical challenge, except the data it needs goes beyond banking. Insurers need to understand health spending patterns, vehicle usage, agricultural cycles, existing coverage, pension contributions. That is an open finance problem.
What is open finance, and how is it different from open banking?
Open banking, as Nigeria has been building it through the CBN’s framework since 2021, allows customers to share their banking data with regulated third parties through secure APIs. The scope is limited to banking and payments.
Open finance extends that same principle to the broader financial system, including insurance, pensions, investments, and potentially beyond. It means a customer could consent to share not just their bank transactions, but their insurance policy details, pension contributions, and investment holdings with any authorized provider.
This distinction matters because the most impactful applications for insurance require data that lives outside the banking system.
A customer shopping for health insurance should be able to share their existing coverage details with a new provider so they can get a competitive quote without starting from scratch.
An agricultural insurer should be able to see a farmer’s transaction history (from open banking) alongside satellite crop data and weather patterns (from other sources) to design a parametric product that actually pays out when it should.
A ride-hailing company embedding motor insurance into its platform should be able to assess a driver’s risk profile using both financial data and driving behaviour.
Brazil has already built this. In 2022, as Phase IV of their open finance rollout, Brazil launched open insurance with mandatory participation from the largest insurers. Within the first year, the system processed over 16 million insurance data transactions.
India’s Account Aggregator framework explicitly includes insurance companies and insurance repositories as data providers, meaning consumers can share insurance data alongside banking data through a single consent process.
Singapore’s SGFinDex lets citizens view bank accounts, insurance policies, and pensions in one dashboard.
Nigeria is not there yet. And that is worth being honest about.
Where Nigeria actually stands
The CBN’s open banking framework does not cover insurance. It is limited to banking and related financial services.
NAICOM, the insurance regulator, operates under entirely separate jurisdiction and has not issued anything resembling an open data or API standard for insurers. There is no cross-regulatory framework connecting banking data with insurance data.
What NAICOM has done is create enabling regulation for digital insurance: guidelines for insurance web aggregators, a regulatory sandbox for insurtechs, and comprehensive insurtech operations guidelines issued in August 2025.
The new Nigerian Insurance Industry Reform Act (NIIRA), signed into law in 2025, mandates a digitized insurance value chain and strengthens enforcement. These are meaningful steps, but they address the digitization of insurance operations, not the cross-sector data sharing that open finance requires.
Nigeria is not yet ready for open finance. Before it can work, we need a functioning open banking system first, followed by cross-regulatory coordination and data standards that cover insurance, pensions, and investments.
So we are not claiming that open finance is around the corner. Rather, we are arguing that when Nigeria does move in that direction, insurance is one of the most compelling reasons to do so.
What open finance could actually enable
Even before full open finance arrives, there are things that open banking data alone could unlock for insurers, if the regulatory pathway permits it.
Bank transaction data reveals income patterns. For the 45% of Nigerian adults with bank accounts, consented access to their transaction history would let insurers understand actual earning capacity without pay stubs or employment letters. That is the starting point for designing products that informal sector workers can actually afford. Research has identified a viable insurance pricing corridor between ₦3,000 and ₦17,500 per person, a range that balances affordability with enough premium to make the product sustainable.
Transaction data also reveals spending behaviour that signals risk. How often someone spends on healthcare, transport costs, agricultural inputs, recurring obligations. These patterns help insurers understand which risks matter most to which customers, and design coverage accordingly rather than offering one-size-fits-all products that fit nobody.
Premium collection is another practical win. One of the biggest problems in microinsurance is policy lapse. People sign up, miss a payment because their card expired or they forgot, and the policy dies. Open banking payment initiation APIs could allow direct debit from a customer’s bank account, reducing the friction that kills microinsurance retention.
Full open finance would add another layer entirely. Customers could share their existing insurance policies with new providers to get better quotes, the way energy switching works in the UK.
Agricultural lenders could automatically bundle crop insurance with input loans, using a combination of financial data and satellite imagery to trigger payouts when conditions are met.
Embedded insurance could be woven into financial apps: health coverage sold inside a banking app, motor insurance activated at vehicle purchase, credit life insurance attached automatically to a loan.
Nigerian insurtechs are already building toward this future.
Curacel has processed over $100 million in insurance claims across Africa and built an embedded insurance platform that works through banking and fintech partners.
Casava, Nigeria’s first licensed digital microinsurance underwriter, offers income protection starting at roughly $1 per month.
ETAP is pioneering usage-based motor insurance using telematics to assess individual driving behaviour. MyCover.ai operates as an open insurance API connecting insurers with distribution platforms.
These companies have built the technology layer. What they lack is the data highway.
What open finance cannot do
This is the part that matters as much as the opportunity. Open finance is just an added infrastructure.
It does not fix the reasons most Nigerians do not trust insurance companies. It does not put money in people’s pockets when they are choosing between food and premiums. It does not enforce the compulsory insurance laws that already exist and are widely ignored.
If 38% of Nigerians say they do not see the need for insurance, the problem is clearly not data. It is education, awareness, and maybe even product design.
If claims are still not being paid fairly and promptly, no amount of data sharing will rebuild the trust that has been eroding for decades. If the laws mandating motor insurance and employer group life are not enforced, open finance will not create the demand that enforcement would.
Open finance solves the visibility problem. It gives insurers the ability to see, price, and serve customers they currently cannot reach. But visibility is only one piece. Enforcement, trust, affordability, and product relevance have to move alongside it.
Where this leaves us
Nigeria’s insurance gap is not a mystery. The reasons are well documented and they compound each other. Oopen finance offers a way to address the structural data problem at the centre of the puzzle; the fact that insurers cannot design, price, or deliver products for people they cannot see.
The sequencing is clear. Open banking has to go live and gain traction first. From there, the regulatory conversation needs to expand to include NAICOM, PenCom, and the SEC, building the cross-sector data standards and consent frameworks that open finance requires. The legal foundation exists in the Nigeria Data Protection Act, which includes a right to data portability. What does not yet exist is the sector-specific implementation that would make that right meaningful for insurance customers.
Nigeria does not have to build everything at once, but the conversation about open finance and insurance should be happening now, while the open banking architecture is still being finalized, so that the system is built to accommodate what comes next.
Fewer than 3% of Nigerians have any form of insurance. Over 92% of workers are in the informal sector and invisible to the industry. The gap between where we are and where we need to be is enormous, and no single intervention will close it.
But a financial system where people can share their data securely across institutions, where insurers can see who they are trying to protect, and where products can be priced for people who earn 35,000 naira a month instead of only for corporates, that system has a better chance of reaching the 97% who are currently uncovered than anything we have tried so far.
