Microinsurance is the protection of low-income people against specific perils in exchange for regular
premium payments proportionate to the likelihood and cost of the risk involved1
. It typically refers to
insurance services offered primarily to clients with low income and limited access to mainstream
insurance services and other means of effectively coping with risk.
Microinsurance in Nigeria is at a very early but growing phase. The EFInA Access to Financial Services
(A2F) in Nigeria 2016 survey highlighted that – of 96.4 million adults, only 0.3 million use Microinsurance
products. A further review of the survey findings suggested that while uptake is currently low, 32.1
million adults will be interested in using Microinsurance. This presents a significant opportunity for
Microinsurance operators to develop products that meet the needs of adult Nigerians.
The Insurance industry regulator, the National Insurance Commission (NAICOM) has released the
guidelines for Microinsurance operation in Nigeria, which establishes a uniform set of rules, regulations
and standards for the conduct of Microinsurance business in Nigeria with effect from January 1st 2018.
These are signs that the Nigerian Microinsurance sector is awakening and considering low-income
insurance distribution. The guidelines defined Microinsurance as insurance developed for low income
populations, with low valued policies provided by licensed institutions, run in accordance with generally
accepted insurance principles and funded by premiums. It explained that Microinsurance products are
insurance products that are designed to be appropriate for the low income market in relation to cost,
terms, coverage, and delivery mechanism. It also clarifies the scope of Microinsurance for the operators,
stating that the sum insured under a Microinsurance policy(ies) shall not be more than N2,000,000 per
person per insurer.
EFInA has commissioned this study to highlight the different Microinsurance players in Nigeria with an
aim to understanding the current Microinsurance network in Nigeria and opportunities to deepen the
uptake and usage of Microinsurance. The study also analyses the different distribution models for
Microinsurance in Nigeria and other landscapes, with a focus on the opportunities available in
leveraging the agent networks for the distribution of Microinsurance.
2.0 The Microinsurance Ecosystem – Focus on Nigeria
The key drivers of Microinsurance to reduce the vulnerability of low-income earners include appropriate
cover, simple and easily understood products, manageable premiums, suitable delivery channels and
convenient premium collection methods.
Microinsurance is very broad and it is pertinent that the Nigerian Microinsurance industry players have
full understanding of all the elements available in the sector to explore the different opportunities
available for Nigeria. These can be clarified in terms of:
Microinsurance Stakeholders: In different countries around the world, Microinsurance products
are generally developed and offered by commercial insurers, mutual funds, microfinance
institutions, NGOs, governments or semi-public bodies. Microinsurance ventures are often joint
efforts among several of these stakeholders, who can play roles ranging from market research and
product design to selling, delivering, and servicing claims.
Microinsurance Products: Microinsurance products can cover any insurable risk, including death,
illness, accident, property damage, unemployment, crop failure, or loss of livestock. The
Microinsurance Guidelines for Nigeria further clarifies that the products/services risk, procedures
and coverage must be unambiguous and easily understood. Microinsurance products must be
affordable and accessible to the target market in terms of purchase, premium payments and
claims. The products or services shall be designed to meet the needs of clients, be beneficial, fair
in price and coverage.
Microinsurance Portfolio size: Microinsurance can operate at any scale (from small to large), as a
microinsurer may cover dozens of policyholders or millions.
2.1 Microinsurance Stakeholders
Nigeria currently has 17 organisations with Microinsurance windows; however, they are required to
apply for a commercial licence to operate fully as Microinsurance providers in Nigeria. The scope of this
document is limited to Microinsurance stakeholders and their different roles which are highlighted in
the table below