Shares of insurance companies listed on the Nigerian Exchange Limited (NGX) are battling low demand and investors’ apathy, as returns, weak market sentiment and structural industry challenges continue to weigh heavily on the industry’s attractiveness.

Despite modest growth in premium income and claims settlement in the last two years, insurance stocks remain largely illiquid, undervalued and among the least traded on the exchange, raising concerns about the long-term viability of the sector’s capital market presence.

Although there are a few underwriting firms whose stocks still appeal to investors, observers in the market said, the persistent bearish sentiment around insurance stocks stems from structural issues within the industry.

Other factors, experts listed, included low capitalisation, regulatory uncertainties, delayed recapitalisation efforts and limited public awareness about the sector’s economic relevance.

Speaking on the development, a shareholder of popular insurance firm, Adebayo Ogunleye, said as much as insurance is crucial to economic growth, investors have not seen strong fundamentals or corporate governance that would inspire long-term investment. He noted that many of the firms are trading below par value, with limited liquidity and poor dividend history.

According to the data from the NGX, most insurance stocks trade below N1 with little daily turnover, reflecting low investors’ appetite. The insurance index has consistently lagged other sectoral indices such as banking and consumer goods.
Market analysts noted that despite recent improvements in gross premium income and claims payment by several insurers, the sector is yet to get attention.

In addition, the capital market has yet to fully absorb the impact of ongoing regulatory reforms led by the National Insurance Commission (NAICOM), particularly those around risk-based supervision and capital restructuring.

The delayed implementation of the insurance recapitalisation plan may have also contributed to the sector’s stagnant stock market performance.
Some investors have called for deeper reforms, better transparency and stronger enforcement of market disclosures to restore confidence.

“Insurance companies need to show stronger financial results, engage in aggressive investor relations and improve their corporate governance practices,” said an institutional investor, Uche Nwosu.

“Until then, it will be difficult for the market to reprice the stocks fairly,” he added.