Nigeria's weak insurance sector poses risks to banks and financial stability, says analyst

Speaking on Arise News, Mbonu emphasized that insurance is a crucial foundation for banking, as many assets and securities held by financial institutions rely on adequate insurance coverage. He noted that Nigeria's insurance penetration is below one percent of GDP, attributing this to low public trust, insufficient awareness, poor product design, distribution issues, and concerns over claims settlement. Mbonu explained that many Nigerians believe insurance companies collect premiums but fail to honor claims, deterring both households and businesses from purchasing policies.

He advocated for strengthening the insurance industry to boost confidence, protect bank-backed assets, support lending, and stabilize sectors like mortgages, aviation, and oil and gas. Mbonu supported the National Insurance Commission’s recapitalization efforts, believing stronger capital requirements would create more financially resilient insurers capable of paying claims and supporting economic activities. He also called for stricter enforcement of compulsory insurance policies, highlighting that fake insurance certificates undermine the industry's credibility.

Additionally, Mbonu commented on the Central Bank of Nigeria’s 2025 financial statements, suggesting the apex bank should be evaluated based on its ability