ABUJA — The National Insurance Commission has issued Nigeria’s first operational licence to a digital insurance company. The Guardian Nigeria confirmed the development on Wednesday, describing it as a decision expected to accelerate the digital transformation of Nigeria’s insurance sector.
NAICOM Commissioner for Insurance Olusegun Omosehin confirmed the licence issuance at an industry event. He said the licence marks a turning point for Nigerian insurance, signalling that the regulator is ready to embrace technology-driven business models that can reach Nigerians who have historically been excluded from the insurance system.
The identity of the company that received the first digital insurance operational licence has not been publicly released as of Thursday morning. NAICOM said a formal announcement will be made at an appropriate time. The company is expected to offer insurance products entirely through digital channels including mobile apps and online platforms.
Nigeria’s insurance sector is one of the most underpenetrated in Africa relative to the country’s economic size. Despite a population of over 230 million and one of Africa’s largest economies, insurance penetration in Nigeria stands at below one percent of GDP. Most Nigerians have no insurance of any kind.
Why Digital Insurance Matters
Traditional insurance companies have struggled to reach Nigeria’s mass market because of high distribution costs, limited branch networks, and products that are not tailored to the needs and income levels of ordinary Nigerians. Digital insurance addresses all three barriers simultaneously.
Mobile-first insurance products can be purchased, managed, and claimed through a smartphone. They can be priced as low as a few hundred naira per month, making them accessible to low-income consumers. And they can be distributed through existing digital platforms including mobile money apps, e-commerce sites, and social media channels.
Furthermore, the RegTech framework that the Presidency has been championing is directly relevant to digital insurance. Automated Know Your Customer processes, digital identity verification, and AI-powered fraud detection make it possible to onboard millions of new insurance customers quickly and cost-effectively.
Industry Reactions
Existing insurance companies said the digital licence creates competitive pressure that will benefit consumers. Several traditional insurers said they are accelerating their own digital transformation programs in response. A more competitive, technology-driven market typically leads to better products and lower prices for customers.
Fintech platforms said the new digital insurance licence creates partnership opportunities. Several payment and banking apps said they are in discussions with the newly licensed entity about embedding insurance products into their platforms. This kind of embedded finance approach is seen as one of the most promising routes to mass market insurance penetration in Nigeria.
Consumer advocates said the true test of the digital insurance revolution will be in claims settlement. Nigerians have historically had negative experiences with insurance companies that are willing to sell policies but reluctant to pay claims. The new digital entrant will need to build a reputation for fair and fast claims payment if it is to change the public’s deeply sceptical attitude toward insurance.
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