The perennial fire outbreaks in Lagos markets have exposed the gap in financial literacy on insurance protection, as the traders were thrown into a state of helplessness as a result of the fire outbreak.
The recent fire outbreak at Mandilas, which occurred on September 16, razing over 200 shops worth billions of naira, has not only left sour tastes in the mouths of shop owners but also ravaged a major financial driver of the economy and exposed the gaps in insurance cover, mostly in the informal sector.
Unarguably, insurance is a cornerstone of financial resilience in some developed economies. It mitigates risks that support entrepreneurship, secures households against unforeseen shocks, promotes long-term savings and investments, and stabilises financial markets.
However, Nigeria's insurance penetration remains alarmingly low at less than 1.0 per cent, compared to South Africa's 11.54 per cent, Namibia's 7.41 per cent, Morocco's 4.10 per cent, Kenya's 2.25 per cent, and the global average of 6.8 per cent.
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Conversely, the NIIRA 2025 ushers in a fresh attempt to resolve the constraints in the repealed 2003 Act, promising to revamp the industry.
Daily Trust findings showed that some of the shop owners who lost millions of naira during the recent fire outbreak lacked insurance cover, leaving them with the burden of restocking amidst little hope of recovery.
Tales of unfortunate incidents
Anthony Obidi, who sells both cloth and footwear at King Plaza, narrated his ordeal, stressing that the unfortunate incident was his second experience in less than two years.
He recalled the fire outbreak in January 2024, describing the recent occurrence as adding salt to injury, especially at the period of business boom with the imminent festive seasons.
"Personally, I lost goods and I lost my shops in the process as well. Last year we experienced something like that and then we experienced something like this and then, unfortunately, this year at this critical time of the year.
"We are facing the same unfortunate incident. But, I think the long and short of it is that we lost goods, our means of livelihood, but life itself subsists. So I think that's just the most important thing and that is the hope that everybody is holding on to," he said.
He lamented that the fire outbreak has not only destroyed their businesses but also deprived them of the ability to meet financial responsibilities at the home front, including paying their children's school fees.
"There is the psychological effect on the people that lost one thing or the other. For the past two weeks we have been hanging around. No business and all of that. Calculate that, people that got dependents. If you calculate the multiplier effect of this, you realize that so many people are at this critical period when people are paying school fees," he said.
He revealed that his business, worth millions of naira, was not insured, saying he has never thought of insuring his business.
"This is the second time I was getting involved in this kind of stuff. Another thing is, the insurance companies come with their own conditions and those conditions deal with the present situation. Because a whole lot of things have to be involved. They have to find the situation conducive for them too.
"It's not something that one man can handle. When the insurance companies come, they see some of the dangers involved and they believe that going into this, this is not going to work in their favor. The tendency is there for them to just withdraw."
He, however, emphasized the need for insurance companies to enlighten market unions in an attempt to avert the risk of any future occurrence.
"It's about enlightenment on the part of both the insurance companies, government and the unions involved. The insurance companies can liaise with the leaders of the market unions. It's a fact of life that while you are living, we are living in the midst of death, calamities, emergencies and all of that. But the problem is about enlightenment," he said.
Evans Iheanancho, whose shop was razed by fire, recounted that he lost over N7m, resorting to his faith in God and possible support from the government.
"I lost over N7m. We are trying to see whether the government will help or assist us to know what to do about because since then we are stranded and looking unto God to know our next fate," he said.
He highlighted the attendant challenges arising from the loss of his goods, noting that he has been struggling to meet financial obligations at home.
"As a family man, it has affected my family because it is from the business I feed and take care of my children and the school fees are very expensive and they have resumed but I don't have the money to pay their school fees," he lamented.
He disclosed that his business was not insured.
"I don't have insurance for my business and now it has crashed," he said.
Another shop owner who identified himself as Sodiq said he is also hoping for miracle to recover from the fire incident, admitting that his business was not insured.
"We need help. The fire outbreak ruined my business. It has become hard to feed. I don't have insurance on my business," he said.
Experts weigh in
Professor of Insurance and Finance at Ebonyi State University Abakaliki, Prof. Nwite Christian, emphasized the need for shop owners to be covered by fire insurance policy.
He, however, expressed concerns over the apathy towards insurance cover in the informal sector.
"Nigeria, as a developing country, doesn't value insurance, and most of the policies the government makes are not actually supervised or implemented. Fire insurance policy is actually a necessary thing. And the condition of that, because one, some of them are very careless," he said.
He called on the government to ensure that shop owners subscribe to fire insurance.
"They should make it compulsory for you if you have a shop in this market, that you need to have fire insurance in case of any fire accident. In advanced countries, you insure your watch, you insure your shoes, you insure everything," he said.
The Commissioner for National Insurance Commission, Olusegun Omosehin, emphasised the need for financial literacy for entrepreneurs in medium and small-scale enterprises (MSMEs) to understand the importance of fire insurance policy.
"The issue is certainly not that of lack of availability of products. It's the non-desire of those entrepreneurs, or their lack of understanding to deliver the actual need of protection," he said.
He stressed that adequate regulations are in place for public buildings to have fire insurance policies, saying that entrepreneurs should have insurance protection in a bid to protect them against the risk of destruction of their assets against fire.
"All those public buildings are made compulsory by law, right, for them to have fire policies. But yes, I think there's a whole lot of financial literacy that needs to happen with our MSMEs, medium and small-scale enterprises. We need to understand that, honestly, the little capital you have that you are trading with needs to be protected.
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"If you value that shop, if you value that asset, then you need to provide some minimum level of protection. And honestly, the least you can do is a fire policy and especially for those sorts of locations, it's compulsory," he said.
A unit manager at the American International Insurance Company (AIICO), who did not want his name in print, explained that businesses in the informal sector fall under the non-life insurance category, which protects their assets from both fire and burglary risks.
"The purpose of insurance is to bring the person back to this current position. For instance, if one has like a billion naira worth of business, what the person might pay can be less than 1% of that worth. In some cases we have 0.5, 0.8, 0.05% of the value of that business," he said.
He revealed that there is a growing apathy for entrepreneurs to insure their businesses, but added that insurance institutions that fail on their part can be sued.
"I want to believe that and again, their complaint is that at times, insurance doesn't pay, which is not true. It may have been before but presently, there are bodies that are controlling the insurance business. We have what we call NAICOM, PENCOM and different bodies in the country controlling this.
"So, if somebody is insured and it's not paid, you can sue the person. But there is a policy document that will be given to you. When you insure, you have a document called a policy document. It's a legal document. It can be tendered anywhere.
"But the turnout is low in the country and again, people think they are wasting money, until the eventuality happens. Nobody wants to just give out, they think it's free money," h
