Repeated fire disasters across Nigeria have destroyed markets and small businesses, with an estimated N4.6 trillion in assets. The informal sector bears the heaviest losses yet remains largely uninsured. BusinessDay Investigations examines how frequent fire incidents reveal the cost of Nigeria’s insurance gap and why informal traders continue to operate without protection. SODIQ OJUROUNGBE writes.
When a fire tore through Alaba Market last December, destroying goods worth millions of naira, Chibuke Nwosu’s shop was spared. Still, instead of rushing to insure his merchandise against future losses, he chose to take the risk alone.
The refusal that defines Nwosu’s approach to insurance did not start with market fires, it began years ago with the sudden death of his younger brother.
Nwosu’s late brother had faithfully paid life-insurance premiums for years, believing the policy would protect his family in their darkest moments.
However, just days after his demise, the family received nothing, meetings dragged on, forms piled up, until the process collapsed completely, leaving his brother’s widow to raise the children alone while scraping by without the safety net they had been promised.
Nwosu, who now owns two large stores in Lagos, one in the bustling Alaba market and another at Arena, insists he would rather shoulder the risks himself.
Fires, theft, power surges, and accidents are constant threats, but for him, paying premiums for the promise of protection feels like gambling with no chance of winning.
“Any kind of insurance doesn’t work in Nigeria. There is always someone between you and the company. When bribes are involved, nothing you do matters,” he says.
In his office, Nwosu says, people regularly come to sell insurance products to him, but he always turns them away without listening.
High Premium dissuades traders
While Nwosu’s distrust of insurance began with the death of his younger brother, Peter Onyemaechi chose not to insure his business because the premiums were high and he needed to prioritise every naira toward buying stock and keeping his operations running.
For him, every naira spent is a choice, and in a place like Alaba International Market, choices are survival.
His warehouse is stacked from floor to ceiling with household electronics, but each box represents borrowed money, loans from friends, or funds pooled with family, capital that must turn into profit or risk plunging him into debt.
Spending on insurance, he explains, would mean diverting that money from stock he can sell today into a policy that may never pay out tomorrow.
Speaking with our correspondent about why he does not buy insurance, Onyemaechi says, “It is not that I don’t understand insurance. The problem is that the cost is too high. Every naira I spend on a policy is a naira I cannot use to buy goods, pay staff, or keep this business running. I have to focus on what keeps the business alive now.”
Onyemaechi stresses that he has watched friends and fellow traders struggle with insurance premiums due to their high cost.
Counting the losses
The stories of Nwosu and Onyemaechi reveal a shared pattern of repeated disappointments with formal systems that have left them sceptical of insurance as a safety net.
However, this gap is whisking away several years of hard work, loans and plunging families into irrecoverable debt.
BusinessDay Investigations analysed officially reported fire incidents, market association estimates, and documented loss valuations across major commercial centres between 2022 and 2025.
During the period, at least N4.6 trillion worth of goods, property and business assets were destroyed, much of it belonging to informal operators.
The stories of Nwosu and Onyemaechi reveal a shared pattern of repeated disappointments with formal systems that have left them sceptical of insurance as a safety net.
However, these gap is whisking away several years of hard work, loans and plunging families into irrecoverable debt.
Findings by BusinessDay Investigations show that Lagos State, Nigeria’s commercial heartbeat and home to the country’s largest concentration of informal businesses, accounts for a significant share of these losses.
In April 2024, a fire outbreak at Dosumu Market on Lagos Island destroyed goods estimated at N2.5 trillion, making it one of the single most expensive market disasters recorded in the country in recent years.
The Dosunmu fire incident came after, the Mandilas Building fire, which caused losses valued at N19.5 billion, affecting traders, importers and small offices operating within the commercial complex.
The pattern continued into 2025 when a fire outbreak in February at Ladipo Auto Market, one of West Africa’s largest spare-parts hubs, destroyed goods estimated at N3.8 billion after chemicals stored in the market ignited.
Months later, Arena Market in Oshodi recorded losses of about N500 million, while Elegushi Model Market lost goods worth roughly N300 million in a gas-related fire incident.
Fires at Iponri Sawmill, Abule Egba Plank Market, Oyingbo Market, Balogun Market, and Ilepo Market over the past three years together wiped out several billions of naira in timber, food items and household goods, much of it uninsured.
Also, on Christmas Eve, a fire at the Great Nigeria Insurance (GNI) building on Lagos Island caused deaths, partial collapse, and massive losses, which BusinessDay Investigations estimates at over N5 billion for affected traders.
Beyond Lagos, similar patterns emerge in other parts of the country, as fires at Sabon Gari Market, Dawanau Grains Market, Singer Market, and Kantin Kwari in Kano cumulatively destroyed trillions of naira worth of goods between 2022 and 2023.
In the South-East, Onitsha Main Market recorded losses estimated at N800 million in 2025 alone, while markets in Aba, Umuahia and other commercial towns suffered repeated setbacks from electrical faults and power surges.
Findings by BusinessDay Investigations show that what links these incidents is not just fire but exposure, as markets and informal business clusters are often densely packed, poorly regulated, and heavily reliant on unstable electricity, generators, and makeshift wiring, yet insurance coverage remains rare.
According to Nigeria’s rebased GDP figures, the informal sector accounts for between 57.7 and 58.5 per cent of total economic output in 2023 and 2024, with projections suggesting it could have reached around 59 per cent in 2025 as more shadow activities are captured in national accounts.
Findings by BusinessDay Investigations reveal that hundreds of trillions of naira in economic activity operate without insurance, and when fires strike, the sector that sustains daily commerce and jobs suffers the heaviest losses, leaving traders to rebuild from scratch or close down.
Layers of distrust
Despite the overwhelming evidence of repeated disasters and massive losses in the country’s informal economy, the vast majority of informal workers and small business owners still do not subscribe to any form of insurance.
Visits by BusinessDay Investigations to major commercial hubs in Lagos, such as Lagos Island, Idumota, Oshodi, Arena, Ebute-Ero and Alaba trading corridors, reveal that the majority of traders do not insure their goods.
It was discovered that the traders with no insurance are not just about ignorance, but a layered resistance built on experience, hearsay, religion, economic pressure and, above all, distrust.
More than 30 traders who spoke with BusinessDay Investigations at various markets across Lagos repeatedly pointed to a lack of trust in claims payment, belief that insurance companies evade responsibility, perception that insurance favours the rich, confusion about coverage rules, and the sense that informal businesses are structurally excluded from meaningful protection.
At the Police Post area of Lagos Island Market, Tajudeen Olanipekun, a wholesale electronics trader, says he once insured his goods with African Alliance Insurance but quickly became disillusioned.
“If a fire starts in another shop and spreads to mine, the insurance company will argue that the damage didn’t originate from my store. They will insist that no compensation is due,” he says.
Olanipekun recounts scenarios where policyholders, facing urgent business pressures, try to withdraw or terminate long-term policies to free up cash.
“If you pay for two years and need the money for something urgent, the company deducts a very large portion of what you’ve paid,” he adds.
In Idumota Market, another trader, Yakub Ayanfowora, acknowledges that insurance offers some benefits but insists there are too many conditions for small business owners to realistically benefit.
Many traders in Oshodi Market dismissed insurance as unnecessary or risky, insisting that they rely instead on their own business strategies and faith.
One trader stated, “Na God be my insurance”.
The Micro-insurance gap
For many traders, the decision not to insure is driven not only by mistrust but also by the high cost and complexity of traditional insurance.
BusinessDay Investigations also discovered that awareness remains extremely low among informal traders.
Micro-insurance was introduced precisely to bridge this divide, designed as a simple, low-cost product for low-income individuals, traders, artisans, farmers and informal workers who cannot afford traditional insurance products.
Findings indicate that awareness of micro‑insurance remains low, with only a small fraction of Nigerians aware of these products. Low financial literacy compounds this, as potential customers struggle to understand the benefits and terms.
BusinessDay Investigations also found that structural constraints limit uptake, as distribution remains expensive, regulatory compliance burdens smaller operators, and many products do not reflect the risk profiles of informal workers.
The failure of micro-insurance to penetrate Nigeria’s informal economy is more than a simple market gap and reflects a broader problem.
Traders and artisans who have lost billions to fires and other disasters in Lagos, Kano, Onitsha, and other places often lack the protective mechanisms to cushion shocks, rebuild quickly, or preserve family livelihoods.
Findings by BusinessDay Investigations show that this creates a cycle where disasters destroy capital, mistrust of insurers persists, and economic recovery is slowed or stalled.
Despite these challenges, analysts and industry insiders see enormous untapped potential.
Research into micro-insurance also indicates that over 30 million Nigerians are interested in micro-insurance, and millions more can be reached through mobile platforms, cooperatives, and microfinance institutions.
Regulations yet to yield
Nigeria continues to face repeated market disasters and massive losses in its informal economy, while policy and regulation have struggled to turn frameworks into meaningful protection for vulnerable business owners.
At the centre of insurance oversight is the National Insurance Commission (NAICOM), responsible for licensing insurers, enforcing solvency standards, and ensuring consumer protection.
NAICOM has issued guidelines for micro-insurance intended to simplify access with minimal documentation, lower premiums, and easier claims processes, but BusinessDay Investigations discovered that these rules have done little to increase uptake on the ground.
The Central Bank of Nigeria’s National Financial Inclusion Strategy (NFIS) recognises insurance as an essential component of economic resilience, yet progress in extending coverage to low-income populations has been limited.
While mobile payments and microcredit programs have grown, insurance uptake remains low, underscoring that financial inclusion does not automatically translate into risk protection.
Bola Odukale, the Director-General of the Nigerian Insurers Association, says insurance penetration remained extremely low among informal traders in Nigeria due to poor awareness, low financial literacy, irregular income patterns and longstanding distrust arising from past claims experiences.
She admits that microinsurance has struggled to gain trust and adoption in markets due to low awareness, weak distribution channels, inadequate product customisation, and low financial literacy among informal sector operators.
“There is also confusion between traditional insurance products and the realities of informal trading, compounded by low financial literacy and negative past experiences such as delayed or unpaid claims,” she stresses.
On allegations of delays or denial of claims, particularly when fires originate from neighbouring shops, the NIA DG says unjustified delay or non-payment of valid claims is unacceptable and contrary to industry regulations.
She explains that the National Insurance Commission has prescribed a maximum of 90 days for claims settlement, with sanctions for insurers that default.
“Claims are assessed strictly based on policy terms and conditions, scope of cover, insured perils, disclosure of risk and the proximate cause of loss,” she adds.
Odukale notes that delays often arise from incomplete documentation, non-disclosure, underinsurance or coverage disputes, rather than deliberate refusal to pay claims.
To rebuild confidence and ensure faster claims payment, Odukale says insurers have embarked on reforms including simplification of policy wordings and claims procedures, digitisation of policy issuance and claims processing, and deployment of mobile and technology-driven microinsurance platforms.
She adds that insurers are now accepting alternative documentation for informal sector claims, strengthening internal claims management processes, and working closely with NAICOM to enforce prompt settlement.
Closing the gap
Experts and Insurance Industry leaders who spoke to our correspondent point to a mix of cultural, economic, and structural factors behind this gap.
Tope Adaramola, Executive Secretary of the Nigerian Council of Registered Insurance Brokers, notes that widespread distrust of insurance is often exaggerated.
He describes it as the “somebody said, somebody said syndrome,” where many traders rely on hearsay rather than personal experience.
“The so-called trust issue is over-amplified concerning insurance. Today’s insurance industry is remarkably different from that of yesteryear, with stringent regulatory measures ensuring claims are honoured,” he said.
He notes that Nigeria’s markets, unlike those in more developed economies, are often densely packed, informally structured, and highly vulnerable to a range of hazards, from makeshift wooden shanties to poorly maintained electrical wiring and inadequate fire-prevention measures.
These conditions, he explains, magnify the exposure of traders to loss, yet they should not be viewed as obstacles for insurers.
The insurance expert says there is a need for a combination of practical risk assessment, clear guidance on preventive measures, and insurance premiums that fairly reflect the level of exposure.
“If insurers actively incorporate these strategies, advising traders on how to reduce hazards while pricing policies in line with actual risk, they can create meaningful protection that is both affordable and effective for vulnerable informal businesses,” he said.
Ademola Adenekan, Senior Manager at AIICO Insurance Plc, points to deliberate awareness campaigns tailored for the informal sector, including radio programmes and social media engagement, as a catalyst to building an insured sector.
“At AIICO Insurance Plc, for instance, we run a weekly radio programme targeted at grassroots and informal audiences, where insurance concepts are broken down in practical and relatable terms,” he noted.
For him, such programmes allow for live interaction and encourage progress through call-ins from listeners seeking more information, clarification, and guidance.
