Less than 1% insured: Nigeria’s informal workers navigate life without protection

Nigeria’s expanding gig and informal workforce, including dispatch riders, ride-hailing drivers, market vendors, artisans, and street traders, struggle daily to make a living, yet remain highly vulnerable to even the smallest economic disruptions, writes JOSEPHINE OGUNDEJI

“I didn’t want to remember this,” Blessing Mesiere said, her voice trembling as she sat in the visitors’ room of her small office in Ikoyi, Lagos State. “I tried to forget, but everything keeps coming back: the debts, the bills, the way we were left alone.

“Since my father died in 2023, my siblings and I have been paying the bills ourselves, month after month,” she added. “Even now, it feels like the weight will never lift.”

Her family’s situation took a drastic turn following the death of the primary earner, compelling them to relocate from a modest two-bedroom apartment in Onipanu to a single-room self-contained unit in Ikorodu.

“My father worked for over 20 years in a private manufacturing company,” Mesiere said. “There was no pension, no post-employment support. What he earned was just enough to cover rent, school fees, food and electricity. We were living from bill to bill.”

According to her, long-term financial planning was never part of the conversation.

“He didn’t think about life insurance,” she said. “Not because he didn’t care, but because everyday responsibilities were already overwhelming. His focus was survival: paying rent, keeping us in school, and making sure we ate. Life insurance felt far removed from our reality.”

After leaving paid employment, her father turned to petty trading to sustain the household, but the income was inconsistent.

“Business was unstable,” she said. “You take loans, pay shop rent, settle electricity bills and still try to send your children to school. There was never enough left to save.”

When he fell ill and later died, the consequences of that absence of planning became stark.

“There was no life insurance, no pension, nothing to fall back on,” Mesiere said. “What he left behind were debts: hospital bills, rent, school fees. Since 2023, everything we earn has gone into paying what was left unpaid.”

With her mother now ill, the pressure has intensified.

“If my father had life insurance, it would have helped us breathe,” she said. “We could have paid my mum’s medical bills, settled school fees and rent, and then tried to stabilise. But we never had that conversation, and now we are living with the consequences.”

Mesiere’s experience reflects the reality of many Nigerian families, where private-sector workers, overwhelmed by immediate responsibilities and lacking employer-backed safeguards, fail to plan for contingencies, leaving dependents to confront debt and hardship after death.

Sadly, her story is not an isolated case, as many families face the same crushing reality, caught between grief and the daily struggle to survive across the country.

The consequences of Nigeria’s weak life and personal accident insurance coverage are not limited to death alone. For many households, permanent injuries and the loss of body parts are just as financially devastating, often stripping breadwinners of their ability to work and plunging families into long-term hardship.

For instance, following construction site accidents in 2024 that killed more than 150 workers and left many others with severe injuries and permanent disabilities, life has become particularly harsh for affected families. While some households mourned the loss of loved ones, others were forced to adjust to a new reality in which injured workers could no longer earn a living. Widows and families of disabled workers now rely heavily on government support and donations from well-meaning individuals to feed their families, pay rent and keep children in school, costs that could have been mitigated through life or disability insurance coverage.

A similar reality confronts workers in Nigeria’s gig economy. In October 2025, tragedy struck at the PWD Railway Level Crossing in Ikeja, Lagos State, when a dispatch rider was killed while attempting to cross the tracks. The incident heightened fears among riders, many of whom say the risk of death, injury or permanent impairment is a daily part of their work.

Daniel Thompson, 27, a dispatch rider and close friend of the deceased, told The PUNCH that the incident forced him to confront not just the possibility of death, but the danger of being injured and unable to work.

“Navigating Lagos roads has always been exhausting,” Thompson said. “But seeing my friend die that way made me realise how exposed we are. One accident can either kill you or leave you injured for life, and once that happens, your income is gone.”

He said the fear now follows him on every ride.

“Every time I go out, I know it could be me next. If I lose a limb or can’t ride again, there is no backup plan, no insurance, nothing.”

For Thompson and millions of others in Nigeria’s informal and gig economy, dispatch riders, ride-hailing drivers, market vendors, construction labourers and artisans, each workday is a gamble. Accidents do not always end in death. Many result in permanent disability, cutting off income while medical bills continue to rise.

“Once you can’t work, everything collapses,” Thompson said. “There is no salary, no compensation, no support system. Your family just has to survive however it can.”

In rural communities, the situation is often compounded by traditional practices that deny injured workers or widows’ access to family property or assets. Even in urban centres like Lagos, families struggle due to Nigeria’s extremely low insurance penetration.

Data from the National Insurance Commission show that insurance penetration in Nigeria remains below one per cent, far below the African average of three per cent. This gap highlights how exposed households are to both death and disability risks.

Despite its role in cushioning families against loss of income from death or permanent injury, life and personal accident insurance remain underutilised. While some salaried workers benefit from employer-backed policies, most Nigerians, particularly those in the informal sector, remain uninsured due to low awareness, mistrust, cultural misconceptions and the perception that insurance is only for the wealthy.

The informal sector accounts for over 90 per cent of Nigeria’s workforce, encompassing petty traders, artisans, construction workers, dispatch riders and small-scale farmers. According to the National Bureau of Statistics, workers with no formal education make up 99 per cent of informal employment. Yet insurance coverage within this group remains below five per cent, leaving families vulnerable not only to death but also to the lifelong consequences of injury and disability.

Industry figures from the Nigerian Insurers Association further underscore this gap. In 2024, life insurance accounted for just 31 per cent of total gross premiums written, compared with 69 per cent for non-life insurance. This imbalance signals that protection against death and permanent incapacity remains largely inaccessible to those who need it most.

Insurance ignorance costs

A 65-year-old former cow-skin seller, Mr Shuabi Lawal, recounted his harrowing story to our correspondent through the voice of his interpreter, 30-year-old yam seller Mukhtar Rabiu, who sat beside him, listening intently.

“I sold cow skin, travelling from Okoolowo in Ilorin, Kwara State, to buy and resell,” Lawal said. “In those days, I earned over N1.5m every month. My three wives and eighteen children never lacked food, never begged, and never feared tomorrow. I believed that as long as I could move, work and trade, their future was safe. I had never even heard of insurance. Nobody ever explained it to me. If I had known, maybe I would have taken it, if only to protect the people who depend on me.

“Everything changed the night armed robbers stopped me on my way home from Ilorin. In a few minutes, the work of my years scattered. They took everything, and they took the life I knew. After that day, my business collapsed, my strength collapsed, and my ability to provide collapsed. I went from a man who stood tall to a man who had to start again with nothing.

“If someone had told me earlier that there was something called insurance that could protect me, maybe my children would not be struggling today. Maybe my wives would not be waiting for whatever small thing I can send. But ignorance is expensive, and I am paying the price every single day.

“Today, I sit on the streets of Ketu, asking strangers for amounts as small as N10. Everything I get, no matter how little, I send straight home to Sokoto. My family cannot work because, in our tradition, women are not allowed to do so. So, the burden remains on me, even in this condition. Some days, the shame burns my chest more than hunger, but I cannot stop. My family is waiting. Their survival depends on what my hands can gather here.

“If I knew about insurance before the disaster, perhaps my story would be different. But this is my life now: one man, one leg, one street, and a family far away leaning on whatever I can give.”

Mrs Nneka Paul, a mother of four, spoke candidly about her daily struggle to provide for her children and her limited understanding of insurance.

“Right now, what I am doing is just living to feed my children, my family,” she said. When asked if she knew about insurance policies, she admitted, “No, I do not really know much about insurance. I just try to save small money to help my children.”

She spends her days hawking soursop alongside her friend, who sells mangoes, trying to make ends meet.

“From the beginning of the year to the end, I have saved about N200,000,” she said. “It helps pay my children’s school fees. They eat; they feed. Every little bit helps.”

Reflecting on her routine, she added, “Every day, I save this money from Monday to Saturday. It helps keep my family going.”

Her words reveal both the burden she carries as a mother and her quiet determination to secure her children’s future, despite having no knowledge of formal insurance.

Confidence gap evident

An insurance professional, Bolu Lawal, said that with the informal sector employing around 60 per cent of Nigerians, low insurance penetration reflects a deep lack of trust.

“It is not news that insurance penetration in Nigeria is very low. The last time I checked, it was around 0.7 per cent,” he said. “As the largest economy in Africa, that is not good enough, especially when compared with countries like South Africa. This means the Nigerian insurance industry contributes very little to our GDP, showing how underdeveloped the sector remains.

“For the informal sector, there is significant room for improvement. Microinsurance and other retail schemes could help stimulate growth. The informal sector represents around 60 per cent of the employed population, so poor insurance penetration points to a trust deficit in the insurance industry.

“It is also an indication of poverty levels in the country, as the situation persists despite attempts in recent years to improve insurance products and distribution.”

Commenting on the issue, a farmer, Joshua Olajubu, said mistrust was driven by fears of delayed or denied claims, unclear policies and the belief that premiums would not translate into timely support when disaster strikes.

“Life insurance penetration among farmers in the informal sector is very low because survival comes first,” he said. “Every day is spent battling climate change, unpredictable weather, rising labour costs, expensive farm inputs and unstable market prices. Farmers are focused on getting through each season, not planning for insurance, because their reality is shaped by immediate risks and constant uncertainty.

“There is also deep mistrust of life insurance in farming communities. Many farmers believe premiums are too expensive and fear that when disasters such as floods, fires or crop destruction occur, claims will not be paid on time or will not reflect the true value of their losses.

“From personal experience, I lost over N3m when perishable goods I bought from the North were delayed for days due to bad roads and security challenges and eventually spoilt, after I had already collected money from customers. Around the same period, I had a close brush with death while transporting goods. That experience made me think seriously about what would happen to my family if I were no longer there to provide for them.

“That moment planted the idea of life insurance in my mind, but fear held me back. The premiums felt too high for someone living with daily uncertainty, and I was not confident in the transparency of the system or how easily my family could access the money if anything happened to me. I believe more farmers would embrace life insurance if companies built stronger trust and created flexible plans that reflect the realities of informal workers.”

Insurance as a luxury

A freelancer, Daud Sulaimon, said insurance remained a luxury he could not realistically prioritise in the face of inconsistent income and daily financial pressures.

“As a freelancer navigating Nigeria’s economy, insurance feels like a luxury,” he said. “My approach to financial planning is shaped by irregular income streams and competing immediate priorities.

“While I recognise the importance of life insurance, especially as someone responsible for a family, I have had to make difficult choices about where limited resources go first. In the freelance economy, we face a hierarchy of urgent needs: ensuring consistent income generation, maintaining the tools and skills that keep us employable, managing variable monthly expenses and building emergency savings for the inevitable dry spells between projects.”

Experts speak

Commenting on the issue, the former National President of the Association of Senior Staff of Banks, Insurance and Financial Institutions, Olusoji Oluwole, said low insurance uptake in Nigeria’s informal sector leaves lives and micro-businesses exposed to avoidable losses from accidents, disasters and theft.

“Insurance penetration in Nigeria’s informal sector remains significantly low, largely because many operators view it as an added expense rather than a necessary safeguard against potential risks,” he said.

“Most of those who are insured likely do so only to comply with regulatory requirements, rather than from a proactive understanding of the benefits of coverage. This mindset leaves countless businesses and lives vulnerable to financial shocks that could otherwise be mitigated.

“The impact of this low coverage is evident in avoidable losses arising from accidents, disasters or criminal activity. Surveys of local markets destroyed by fires or targeted by theft often reveal that only a tiny fraction of businesses, if any, had insurance protection. This vulnerability cuts across multiple industries, including transport, agriculture and small-scale trade, underscoring the urgent need to increase awareness and provide affordable, accessible insurance solutions tailored to the informal sector.”

In a similar vein, the Executive Secretary and Chief Executive Officer of the Nigerian Council of Registered Insurance Brokers, Tope Adaramola, said that despite the vast potential within Nigeria’s informal sector, insurance penetration remains low.

“The extent of insurance penetration in the informal sector is abysmally low, creating the impression that insurance in Nigeria is elitist and reserved for the wealthy or corporate entities,” he said. “Currently, motor insurance is the only policy that consistently cuts across both the formal and informal sectors.

“This limited reach is a major concern for insurance brokers, who are expected to serve the retail end of the market more effectively. It is particularly troubling given the vast number of retail businesses, including pensions, life and certain property segments, that remain largely untapped. Fortunately, with the introduction of NIIRA 2025, a broader vista of opportunities has opened up for all sectors, raising hopes that the industry will seize the moment to deliver inclusive coverage across the economy.”

NAICOM drives innovation

In an exclusive interview with The PUNCH, the Head of Corporate Affairs at the National Insurance Commission, Abba Inuwa, said the body was leveraging microinsurance and digital innovation to expand insurance access and drive financial inclusion nationwide.

“NAICOM recognises the pivotal role of the informal sector in Nigeria’s economy and is actively deepening insurance inclusion through targeted initiatives,” he said. “We have licensed microinsurance companies to provide affordable, tailored products for low-income households and micro-entrepreneurs. The introduction of Takaful operators is also expanding Sharia-compliant insurance access, particularly in underserved regions.

“To strengthen digital access, NAICOM has established a dedicated Directorate for Innovation, issued guidelines for Insurtech companies, and licensed Insurtech firms and web aggregators. These measures enable innovative distribution channels, making insurance products more accessible to Nigerians in the informal sector through digital platforms.

“We are also partnering with stakeholders such as the Infrastructure Concession Regulatory Commission, the Nigerian Institute of Quantity Surveyors and Valuers, and development partners to drive penetration. Through these efforts, we are promoting financial inclusion, bridging the insurance gap and increasing penetration in underserved areas. Our goal is to make insurance more accessible and affordable for all Nigerians, while driving growth and development within the insurance industry.” (Punch)