As Nigeria’s micro, small and medium enterprises (MSMEs) grapple with the harsh realities of soaring inflation and limited access to financing, fresh industry insight has spotlighted insurance as an indispensable tool for business survival.

Despite accounting for nearly the country’s GDP and employing over 80 per cent of the workforce, millions of MSMEs remain vulnerable to financial shocks. Yet, data show insurance acceptance could provide the safety net needed to sustain operations and support long-term growth.

According to figures from the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Nigeria is home to over 39 million MSMEs, which contribute over 48 per cent to GDP and account for more than 80 per cent of total employment.

Data from the Nigerian Insurers Association (NIA) indicates that while MSMEs account for most informal economic activity, they represent less than two per cent of total gross premiums written in 2024.

Less than 1.5 per cent of the businesses are insured, exposing them to vulnerability in the face of operational risks, asset losses and natural disasters.

The low penetration persists despite the sector suffering an estimated N2.8 trillion in cumulative losses over the past five years due to fire, theft, and flood-related incidents.

Insurance stakeholders who gathered at the ongoing Insurance Week at the weekend said underinsurance leaves a significant portion of Nigeria’s entrepreneurial backbone exposed to collapse at the first sign of disruption, from fire outbreaks to market shutdowns, theft to flood damage.

“The survival of MSMEs in today’s volatile climate depends heavily on how well risks are managed. Insurance offers a safety net that can prevent a temporary setback from becoming a terminal event,” said the Commissioner for Insurance, Olusegun Ayo Omosehin.

Stakeholders blame the gap on poor awareness, distrust and the lack of tailor-made products designed for small business risks.