Low trust: Why many Africans think insurance will never pay

Why People Fear Insurance in Africa And How Trust Can Grow

A market trader in Lagos watches her neighbor lose a shop to fire and still refuse insurance the next week. A boda boda rider in Nairobi shrugs off motor cover, even after seeing a crash on the same road. These choices are common, and they help explain why insurance in Africa stays far lower than in most regions of the world. This post breaks down, in simple language, why people fear insurance and what could slowly change that.

Low trust: Why many Africans think insurance will never pay

The biggest fear is simple: people think insurers will not pay when trouble comes. Many have heard of delayed claims, small print traps, or outright refusal to honor policies. When money is tight, the idea of “paying and praying” feels like a bad deal.

In Nigeria, experts still talk about penetration stuck close to 1 percent of GDP, with low trust as a major drag on growth, as covered in this report on hurdles to insurance adoption in Nigeria. Kenya also struggles with mistrust, enough that regulators are pushing new rules to stop insurers from denying claims unfairly. When few people can name a friend who was paid quickly, fear feels logical.

Bad past experiences and scary stories spread fast

One denied claim can shape how a whole village thinks. A man who lost a car but never got paid will repeat that story in buses, churches, mosques, and markets. People hear these loud, painful stories, but almost never hear quiet success stories, so fear grows stronger with every retelling.

Complex fine print and confusing language create fear

Insurance contracts are long, full of legal terms, and often only in English. For many, the forms feel like an exam they never studied for. If they do not fully understand what they are buying, they assume the company will use the fine print against them.

Money worries: When daily survival beats long term protection

Many African households live on low or unstable incomes, especially in the informal sector. They think about food, rent, school fees, and transport long before they think about premiums. Even in South Africa, where penetration is far higher than the African average, people often cancel policies when the economy tightens.

Across the continent, non‑life insurance still represents only a tiny share of global premiums, as explained in this overview of why non‑life insurance is not taking off in Africa. When money feels short every month, buying cover looks like a luxury, not a basic need.

Irregular income makes monthly premiums feel risky

Street vendors, small farmers, and gig workers can earn well one week and almost nothing the next. Locking part of that money into a monthly premium feels dangerous. They worry that when a child falls sick, the cash “trapped” in insurance will not be there for medicine.

Insurance looks expensive compared to informal help

Many people lean on family, savings groups, or church and mosque collections in hard times. These options feel cheaper and more human than a distant company office. Even if they fail during big crises, the comfort of familiar support often beats a formal policy.

Cultural beliefs and low awareness: When insurance feels strange or unlucky

In some homes, buying life or health cover feels like inviting death to the door. Talking about sickness or funerals can be seen as calling them in. At the same time, low financial literacy means many people first hear about insurance from aggressive sales pitches, not from teachers or trusted community leaders.

Studies on Africa show that poor awareness is a major brake on growth for insurers, as highlighted in this piece on how poor awareness slows insurance growth. Kenya and Nigeria are seeing more ads and products, yet fear and misunderstanding still run deep.

Talking about death, illness, and loss feels taboo

In many cultures, speaking openly about death is viewed as negative or disrespectful. When an agent asks someone to imagine dying or losing a home, the whole talk feels wrong. Instead of peace of mind, the discussion stirs anxiety.

New digital insurance is helping slowly change minds

There is some hope. Simple, low‑cost micro‑insurance on mobile phones is growing in places like Kenya and South Africa. When people see small premiums, clear text messages, and fast payouts straight to their phones, fear starts to fade. Programs highlighted in the BimaLab work on microinsurance innovation in Kenya show how trust can grow one prompt payout at a time.

Conclusion

Fear of insurance in Africa comes mainly from three places: low trust in claims, money pressure from daily survival, and cultural or knowledge gaps. Change will take clearer language, faster mobile payouts, and honest community education that shares real examples. If products fit irregular incomes and local beliefs, more people will see insurance as protection, not a trap. Built around real African lives, insurance can become something people choose with confidence.