Despite the growing awareness of financial literacy and risk management, insurance remains one of the most misunderstood concepts in many parts of the world, particularly in developing countries. The hesitation around embracing it is rooted in a complex web of cultural, religious, economic, and systemic factors. Below are some of the key reasons why it is still viewed with suspicion or indifference:
1. Cultural reasons: A deep-seated dependence on community support
In many African societies, there’s a strong tradition of communal support during times of crisis. If someone falls ill or loses a loved one, extended family, friends, and even communities often rally around them, raising funds and offering help. This cultural safety net has, in many cases, reduced the perceived need for formal risk mitigation. People believe they will be supported by relatives; however, this might not be sufficient or sustainable. Oftentimes, even when help comes through, it might come with a certain level of stigma; however, with proper risk management measures, this need not be.
2. Religious beliefs and misinterpretations
Some religious doctrines or their interpretations have contributed to negative views on this. In certain circles, it is equated with gambling or a lack of faith in divine protection. The idea that one must prepare for tragedy is sometimes seen as a contradiction of trust in God’s will.
Additionally, conventional insurance models, especially those involving interest (in savings-related plans) or risk pooling, may conflict with the principles of certain faiths, especially Islam. This is why models like Takaful (Islamic insurance) have emerged, although they are still underutilised due to low awareness and limited access. Moreover, conversations about death, illness, or loss are often considered taboo. Buying life policies or health coverage may be seen as “inviting misfortune” or being overly pessimistic. These religious attitudes run deep and form a major barrier to their widespread adoption.
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3. Affordability and competing priorities
For many people living on modest or irregular incomes, this simply feels like a luxury product. When families are struggling to pay for food, school fees, or rent, allocating money for a “maybe” event like fire, theft, or a health emergency seems impractical.
This issue is compounded by the fact that many policies demand upfront annual premiums, which can be a barrier for low-income earners. Even when microinsurance options exist, they are not always well-promoted or integrated into communities in ways that feel accessible.
4. Negative influence from others
Stories travel faster than statistics, especially when those stories are negative. It only takes a few people who have had poor experiences with insurance providers to sour the perception of an entire community. Whether it’s a claim that took months to settle, one that was denied due to fine print, or customer service that felt dismissive, these approaches discourage others from even considering insurance.
Trust, once broken, is hard to regain, especially in systems where people already feel underserved or taken advantage of by institutions. To the contrary, when claims are properly settled, the testimonials as well as the positive experience are often not shared enough by the insured and the insurer. There is plenty of room to change that narrative.
5. Issues around claims settlement and transparency from the practitioners
This is perhaps one of the biggest and most valid criticisms of our context. Delays in processing claims, unclear policy language, and poor customer engagement all contribute to a growing scepticism. People don’t just want to buy protection; they want assurance that when they need help, the system will work smoothly and fairly.
Unfortunately, the behaviour of a few insurers who overcomplicate the claims process, reject claims on technicalities, or fail to communicate has created a trust gap that affects even the most reputable companies in the industry.
Abimbola Afolabi is the Admin & Executive Assistant at Impact Insurance Brokers Limited. The company was incorporated on the 19th of March 1981, with incorporation number RC 38225 as an unlimited liability company under the Companies Act, 1968, but now as a limited liability company under the Insurance Decree No. 2 1997, having fulfilled all requirements.
