INSURANCE IN NIGERIA - Guides, Types, Benefits & Best Insurance Companies

After reading this article, you would understand the basic things you need to know about Insurance in Nigeria, including the guides, types, policies, Benefits and the Best or top Insurance Companies in Nigeria which you can choose to work with.


A Basic Definition

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.

It is a contractual arrangement in which one party, the insurance company or the insurer, agrees to compensate the loss or damage sustained to another party, the insured, by paying a definite amount, in exchange for an adequate consideration called premium.

Insurance is a term in law and economics. It is something people buy to protect themselves from losing money. People who buy insurance pay a "premium" every month with a promise to be careful (a "duty of care").

Insurance company is a business that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment or hardship in exchange for premium payments. The company calculates the risk of occurrence then determines the cost to replace (pay for) the loss to determine the premium amount.

Insurance coverage refers to the amount of risk or liability that is covered for an individual or entity by way of insurance services. Insurance coverage helps consumers recover financially from unexpected events, such as car accidents or the loss of an income-producing adult supporting a family. Insurance coverage is often determined by multiple factors.

The Two Main Types of Insurance Coverage

Auto Insurance Coverage and Life Insurance Coverage

Auto insurance premiums depend on the insured party's driving record. A record free of accidents or serious traffic violations typically result in a lower premium. Drivers with histories of accidents or serious traffic violations may pay higher premiums. Likewise, because mature drivers tend to have fewer accidents than less experienced drivers, insurers typically charge more for drivers below age 25.

Full Coverage and Third Party Insurance cover

There are also Full Coverage and Third Party Insurance cover.

Full coverage comprises two additional types of cover - Collision and Comprehensive insurance. Collision insurance is generally for damage from situations when you are driving. Comprehensive insurance covers damage to the vehicle outside of driving situations, for example, weather damage, fire or theft.

Third-party offers coverage against claims of damages and losses incurred by a driver who is not the insured or the principal, and therefore not covered under the insurance policy. The driver who caused damages is the third party.

One major difference between comprehensive and third-party insurance is the range of protection offered to you and your vehicle. While a comprehensive plan provides multiple protection covers for you and your vehicle, a third-party cover is limited to offering protection against the claims of a third party.

Life insurance premiums depend on the age of the insured party. Younger people typically pay lower life insurance costs because younger people are less likely to die than older people. Gender plays a similar role. Because women tend to live longer than men, women tend to pay lower premiums. Engaging in risky activities increases insurance costs. For example, a race car driver faces an increased risk of death and, as a result, may pay high life insurance premiums or be denied coverage.

Seven Principles of Insurance

  • Principle of Utmost Good Faith (Uberrimae fidei)
  • Principle of Insurable Interest
  • Principle of Indemnity
  • Principle of Contribution
  • Principle of Subrogation
  • Principle of Loss Minimization
  • Principle of Causa Proxima (Nearest Cause)

7 Types of Insurance Business

  • Life Insurance or Personal Insurance.
  • Property Insurance.
  • Marine Insurance.
  • Fire Insurance.
  • Liability Insurance.
  • Guarantee Insurance.
  • Social Insurance.

Why do we need Insurance?

  1. Insurance helps you own a home, because mortgage lenders need to know your home is protected.
  2. It covers your day-to-day costs and larger expenses like your mortgage while you focus on your health and recovery.
  3. Cover health care costs like prescription drugs, dental care, vision care and other health-related items.

Benefits of Insurance

  1. The obvious and most important benefit of insurance is the payment of losses. An insurance policy is a contract used to indemnify individuals and organizations for covered losses.
  2. The second benefit of insurance is managing cash flow uncertainty. Insurance provides payment for covered losses when they occur.

Insurance Policy in Nigeria

In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. The policy also refers to all papers which are part of the policy.

Four Types Of Insurance Everyone Needs

Health Insurance

The soaring cost of medical care is enough reason to make health insurance a necessity. Even a simple visit to the family doctor can result in a hefty bill. More serious injuries that result in a hospital stay can generate a bill that tops the price of a one-week stay at a luxury resort. Injuries that require surgery can quickly rack up five-figure costs. Although the cost of health insurance is a financial burden for just about everyone, the potential cost of not having coverage is much higher.

Homeowner's Insurance

Replacing your home is an expensive proposition. Having the right homeowner's insurance can make the process less difficult. When shopping for a policy, look for one that covers the replacement of the structure and the contents, in addition to the cost of living somewhere else while your home is repaired.

Keep in mind the cost of rebuilding doesn't need to include the cost of the land since you already own it. Depending on the age of your home and the amenities it contains, the cost to replace it could be more or less than the price you paid for it.

Automobile Insurance

Some level of automobile insurance is required by law in most places, even if you are not required to have it. However, accidents happen quickly and the results are often tragic. Having no automobile insurance or purchasing only the minimum required coverage saves you only a tiny amount of money, and puts everything else you own at risk.

Business Insurance

Business owners need business insurance. Liability coverage in a litigation-happy society could be the difference between a long, prosperous endeavor and a trip to the bankruptcy court.

Factors to Consider Before Choosing an Insurer

There are top insurance companies in Nigeria that help individuals looking to secure their future from such misfortune. However, you have to know what you are looking for to pick the right one. In order to do that, there are factors to take into consideration

1. The Company'S Image: The company's track records should give you an idea about their strengths and capabilities

2. Legal Accreditation: The insurance company you decided to go with must be legally accredited and certified by the Nigerian government.

3. The Coverage: This is a vital and necessary factor in selecting an insurance company. Select the coverage that best suits your needs. 

4. Financial Strength and Price Factor: It’s important to find out how the insurance company fares during a bad economy and how that can affect you. Go through stock ratings and business resources to get the information you are searching for.

You may also want to consider the price factor when searching and eventually choosing your insurance company.

The Top 10 Insurance Companies in Nigeria

1. Aiico Insurance Plc

AIICO Insurance Plc is an insurance, pensions management, and asset management Group established in 1963. It's key focus are on, General insurance and special risks, Life assurance and annuity, Health insurance, Asset management and Pension management. They offer the following policies:
Income investment plan
Three payment plan
Travel insurance
corporate saving plan
Education investment plan
Flexible endowment plan
Term assurance plan
Electronics equipment policy plan

2. Lead Way Assurance company

Lead Way Assurance (founded in 1970) offers insurance services in General business insurance and Life & Pensions. The Company also offers allied financial services such as Secured Credit, Bond, Miscellaneous financial losses and Portfolio management.

They are very active online, across various social media channels and have computerized most of their operations to boost effectiveness. They offer the following policies:
Family Benefit plan
Lead way saving plan
Term assurance plan
Money policy plan.
Educational saving plan
Personal saving plan
Deferred annuity plan

3. Custodian and Allied Insurance:

Custodian and Allied insurance company provide a wide range of insurance plans to choose from as each plan is tailored to the needs of their clients. They offer the following policies:
Investment plus plan
Immediate annuity plan
Tuition protection plan
Auto insurance plan
Travel insurance plan
Capital plan

4. Cornerstone Insurance Plc:

Cornerstone Insurance company was incorporated as a private limited liability company on July 26, 1991 and eventually became a Public Limited Liability and was quoted on the Nigerian Stock Exchange(NSE) in 1997.

Since its inception, Cornerstone Insurance has remained dedicated, putting their client first and creating solutions that meet their needs.

It is licensed by NAICOM -the National Insurance Commission – to do both Life and General businesses insurance. They offer the following policies:
Motor insurance plan
Gadget protection plan
Investment plan
Halal Takaful plan
School fee guarantee plan
Goods in transit plan
Home insurance plan
Life insurance plan
Annuity plan
Marine insurance plan
Travel insurance plan

5. AXA Mansard Insurance Company:

The insurance company is a member of the AXA Group. AXA Group is a top player in insurance as well as asset management. The company serves 107 million clients in over 60 countries. The Company provides life insurance as well as on-life insurance solutions to individuals and organisations in the country. They offer the following policies:
Student protection plan
Autoflex plan
Equity income plan
Auto classic plan
Money market plan
Easy care plan
Life savings plan
Instant plan
Health plan
Retirement savings plan
General ( business/ tourism) protection plan

6. African Alliance Insurance Plc:

African Alliance Insurance plc. was incorporated on May 6, 1960. The insurance company has a reputation for being efficient and trustworthy in Life Assurance. In addition, they personalize their insurance products tailored for each stage of their clients’ lives.They offer the following policies:
Annuity assurance plan
Group life assurance plan
'Esusu' contribution plan
Direct debit form plan
Individual assurance plan
Investment assurance plan

7. Goldlink Insurance Plc:

This insurance company was incorporated as a Private Limited Liability Company on April 15, 1992 and later became a Public Liability Company on May 11, 2007, and was listed on the NSE by an introduction on February 12 2008.

Goldlink Insurance Plc is licensed to do both Life and General Businesses. These include plans such as Motor Insurance, Fire and Special Perils, Oil & Gas, Life & Pension, and Travel Insurance. Their policies include
Group Life Insurance plan
School Safety plan
Compulsory Insurance plan
Oil & Gas plan
Engineering Insurance
General Accident plan
Individual Life Insurance plan
Reinsurance plan
Liability Policies plan
Marine & Aviation plan
Motor Insurance plan

8. Continental Insurance:

Continental Insurance is a private sector leader of the pan-African insurance industry. The Company provides life and non-life insurance solutions to its clients across the continent. They offer the following insurance policies:
Business Insurance plan
Insurance plan
Auto Insurance plan
Home Insurance plan
Pet Insurance plan

9. Industrial and General Insurance Plc:

The insurance company was incorporated as a private limited liability company on October 31, 1991. The Company got registered as a public limited liability company in 2007. They commenced operations in Life and General insurance, in addition to Pensions and Special Risks in January 1992.
They offer tailor-made insurance solutions to match their client’s unique needs. Their policies include:
Group Life Products plan
Mobile Phone Insurance Plan
Aviation Insurance plan
Engineering Insurance plan
General Business Insurance plan
Health Insurance Plan
Marine Insurance plan
Oil & Energy

10. Lasaco Assurance Plc:

Lasaco Assurance Plc was incorporated on December 20, 1979, under the Companies and Allied Decree of 1968. The Company, was  initially called Lagos State Assurance Company Limited. Eventually, they got License as an Insurer on July 7, 1980, and commenced operations on August 1 1980. They offer the following insurance policies:
Motor insurance plan
Aviation insurance plan
Marine insurance plan
Professional indemnity plan
Fire and Special insurance plan
Personal accident plan
Bond insurance plan
Money insurance
Householder’s Insurance plan

The companies mentioned above are some of the top insurance companies in Nigeria in no particular order. A Broker can be of immense assistance in choosing a preferred company.

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