More than three decades after Nigeria enacted laws making several classes of insurance compulsory, the segment continues to struggle with low adoption, with penetration remaining below one per cent of Gross Domestic Product (GDP).

Industry operators say the gap between regulation and uptake reflects weak enforcement, low public awareness, and limited confidence in insurers, noting that compulsory insurance has largely remained on paper rather than functioning as a reliable safety net.

Stakeholders argue that the stronger enforcement of existing laws alongside technology-driven verification and sustained education is critical to reposition insurance as a credible safety-net and a driver of economic stability.

They argued that without the measures, compulsory insurance will continue to exist largely on paper, rather than serving as a reliable social and economic safety net for individuals, businesses and the wider economy.

In an economy as large and complex as Nigeria’s, insurance remains one of the most underutilised yet potentially transformative sectors.

Experts insist the problem is not the absence of law but weak enforcement, low awareness and persistent distrust that have limited uptake across key compulsory covers.

The Commissioner for Insurance, Olusegun Omosehin, has repeatedly stressed that enforcing compulsory insurance laws is central to repositioning the industry.

According to him, such policies are designed primarily to protect third parties and vulnerable citizens who bear the consequences of accidents, negligence or systemic failures.

“When enforcement works and claims are paid promptly and transparently, insurance stops being abstract and becomes a practical tool for justice and financial resilience,” Omosehin said.

Third-party insurance illustrates both the challenge and the opportunity. Although mandatory for all vehicles, fake certificates and weak monitoring have long undermined its effectiveness.

NAICOM’s collaboration with law enforcement agencies and the rollout of digital verification platforms are now aimed at restoring credibility and ensuring genuine policies translate into real compensation for accident victims.

Beyond the road, builders’ liability insurance and occupiers’ liability insurance remain poorly enforced, despite frequent building collapses and fire incidents in markets, malls and public spaces.

Omosehin noted that enforcement in these areas is preventive rather than punitive, ensuring developers and property owners internalise safety standards while victims are not abandoned after disasters.

Compulsory insurance also extends to the workplace. Under the Pension Reform Act, Group Life Assurance and Employers’ Liability Insurance are meant to protect workers and their families against death, injury or disability.

President of the Chartered Insurance Institution of Nigeria (CIIN), Yetunde Ilori, said these policies promote decent work, social security and industrial harmony, linking insurance directly to productivity and sustainable development.

In healthcare, professional indemnity insurance is increasingly important as patient awareness grows and malpractice claims rise. Industry operators say it provides a structured compensation mechanism while protecting practitioners from ruinous litigation and encouraging adherence to professional standards.

High-risk sectors such as petroleum and gas retailing are also covered by compulsory insurance, given their proximity to densely populated areas. Explosions, fires and spills, experts warned, can have devastating consequences without insurance-backed compensation.

Chairman of the Nigerian Insurance Association (NIA), Kunle Ahmed, said effective enforcement would create a virtuous cycle of trust and growth.

“When people see insurance working through prompt claims settlement, confidence improves, voluntary uptake rises, and penetration deepens, “he noted.

Brokers have called for enforcement to be matched with education. President of the Nigerian Council of Registered Insurance Brokers (NCRIB), Ekeoma Ezeibe, said many Nigerians default on compulsory insurance simply because they do not understand it, urging stronger collaboration among regulators, insurers and intermediaries.

In line with the push, the NIA recently hosted a two-day workshop on Compulsory Container Insurance under the Nigeria Insurance Industry Reform Act (NIIRA) 2025, bringing together over 40 underwriters in Lagos.

The programme focused on regulation, risk assessment, claims management and the use of technology to monitor compliance.

Director-General of the NIA, Bola Odukale, said compulsory insurance, including container insurance, is vital to safeguarding trade, logistics and investor confidence.

“A well-regulated insurance industry is critical to economic growth and public protection,” she said.

As regulators and operators intensify collaboration on enforcement, innovation and capacity building, stakeholders insist compulsory insurance must move from the margins to the mainstream, not merely as compliance, but as a cornerstone of Nigeria’s economic and social infrastructure.