Author: The Nation

What burned at Balogun was not just GNI House, but Nigeria’s illusion of financial protection. When a Christmas Eve inferno turned prosperity into ashes, it exposed a dangerous gap in the country’s insurance safety net and the urgent need for Lagos State, regulators, insurers and market stakeholders to confront the exclusion of millions of economic participants. Omobola Tolu-Kusimo reports.

As the inferno consumed multi‑storey buildings and neighbouring shops, over 10 people lost their lives, dozens were injured, and hundreds of traders saw years of hard‑earned trillion naira investments wiped out in minutes.

But as the smoke cleared, another tragedy emerged: many of the very market traders whose livelihoods fuel Nigeria‘s economy were not insured and were actively excluded by insurers.

The blaze began on the fourth floor of the GNI House and quickly spread under dry, crowded, market conditions. Lagos State authorities would later confirm that flammable materials and stored explosive‑aided goods, including kerosene and banned electronics, accelerated the fire’s intensity.

Residents and traders watched in horror as flames devoured stock worth billions of naira. What compounded their grief was the sting of knowing that while corporate offices and corporate risks were well covered by insurers, the traders who form the backbone of both the informal and formal economy were repeatedly denied fire, burglary and even life insurance.

“They said the risk was too high, that premiums wouldn’t be profitable,” one trader lamented, tearfully recounting total loss of goods that took years to accumulate.

Financial Inclusion or Exclusion

Nigeria’s insurance penetration remains alarmingly low, with fewer than two million insured lives and businesses out of an estimated population of 230 million. Despite being Africa’s largest economy with bustling commercial hubs like Balogun Market, the vast majority of Nigerians still have no insurance protection.

Investigations show that even when traders sought coverage for fire and other basic risks, many were systematically excluded by underwriters, who cited frequent fire outbreaks and volatile informal market dynamics. What should have been a financial inclusion venture became a case study in financial exclusion.

This refusal not only denied traders protection, it also denied the insurance sector potential premiums, revenue streams, and opportunities for meaningful market expansion.

“It’s not that the risk didn’t exist,” says a risk analyst familiar with market insurance portfolios. “It’s that insurers chose risk avoidance over innovation.”

Emergency Response under Fire

The tragedy was made worse by troubling allegations against Lagos State Fire Service. Multiple witnesses claim fire crews arrived late, more than 40 minutes after first alerts and initially demanded payments before proceeding with full suppression efforts.

Social media videos captured traders pleading with fire personnel to act, suggesting that fire engines and personnel stood idle until unofficial negotiations were made.

Activist Nedu Ani tweeted: “Fire service demanded millions before quenching the fire. How can safety be monetised like this?”

Though the Lagos State government has not publicly confirmed demands for payment, the allegations have intensified frustrations with authorities whose role is to protect lives, enforce building codes, and ensure community safety.

Voices from the Ground

“Everything is gone, no insurance, no help, nothing”, said Mrs. Kemi Ade, trader affected by the fire.

Mr. Olu Fashola, market leader also said If insurers can cover big corporate assets, they can innovate products for markets like ours.

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We pay taxes and levies every month, but there’s no sprinkler system, no hydrants, not even basic enforcement of safety codes, he added.

The Financial Cost of Exclusion

Experts say the industry’s decision to shun high‑risk markets is both a social and economic failure. By excluding informal traders, insurers miss out on revenue opportunities in an economy where informal trade accounts for a significant share of GDP.

Instead of tapping into premium streams from thousands of underwriters, the industry has concentrated on low‑risk corporate and compulsory covers, leaving behind millions of potential policyholders, an actuarial consultant, Dr. Aisha Ogunleye noted.

A Nation at Risk, a Sector at Crossroads

The GNI House fire is more than a tragedy. It is a stark reminder that financial exclusion in the insurance sector has grave human and economic costs. When insurers walked away and authorities failed to enforce safety and inclusion, ordinary Nigerians pay the price.

Now, surviving traders, families of victims, and civil society are asking: Who will insure the people who make this economy thrive?

Government’s Complicity and Safety Lapses

While insurers have largely stepped back, market leaders have criticized the Lagos State Government for prioritising revenue collection over structured safety enforcement.

The market traders who do not want their names mentioned complained that their taxes, levies, and licences earn them little more than routine inspections and occasional demolitions without meaningful investment in fire mitigation infrastructure.

Despite repeated fire incidents in the Balogun area over the years, designated fire service points, hydrants, enforced building code compliance or sprinkler systems have not been systematically implemented, the traders assert.

“We cannot keep paying taxes and watching our shops burn,” one frustrated vendor said.

Insurance Regulator

The Deputy Commissioner for Insurance Technical, Dr. Usman Jankara Jimada, admitted that the reported rejection of market traders by insurers was a new discovery for the regulator, even though repeated fires in commercial hubs such as Mandilas, Balogun and the GNI House suggest a long-standing protection gap. He said the issue deserves public attention, particularly because insurance is expected to play a stabilising role after large-scale losses.

While stressing that he was not defending underwriters, Jankara explained that insurance globally operates on the principle of uncertainty, not inevitability. Where a risk is assessed as highly likely to occur, insurers are faced with two options: charge premiums so high they become unaffordable, or decline the risk altogether. “Insurance cannot sustainably cover certainty,” he said, noting that this dilemma is not unique to Nigeria.

He cited international examples, including health insurance markets in developed countries, where high-risk individuals or communities are often excluded unless government intervention alters the risk framework. According to him, if the probability of loss approaches certainty, insurance ceases to function as a risk-pooling mechanism.

However, Jankara was clear that traders are not solely responsible for the uninsurable nature of many markets. He pointed to weak housekeeping standards, lack of fire alarms, blocked access routes for fire engines, and the absence of enforced safety regulations as key contributors to elevated risk levels. These, he said, are failures of governance and enforcement rather than individual choice.

He emphasised that risk mitigation is the bridge between exclusion and inclusion. Improving safety standards, enforcing building regulations, and ensuring functional firefighting infrastructure would significantly reduce loss probabilities and make such markets more attractive to insurers. “If the risk improves, insurance becomes possible,” he noted.

On compulsory insurance, Jankara clarified that the major challenge is enforcement, not legislation. Nigeria’s insurance laws already provide for compulsory covers, but weak enforcement mechanisms, overstretched law enforcement agencies, and prosecutorial bottlenecks have undermined compliance over the years.

He disclosed that NAICOM often faces frustration when cases are handed over to the police or prosecuting authorities, only for them to be deprioritised amid broader security challenges. This, he said, discourages sustained enforcement and weakens deterrence across the system.

To address this, the commission is shifting towards a preventive approach by working with agencies responsible for building approvals and compliance. The aim, according to him, is to embed insurance and safety requirements into approval processes so that risks are addressed before losses occur, rather than relying solely on post-event enforcement.

Jankara also acknowledged the limitations of the Fire Service Maintenance Fund, which is financed through a small percentage of fire insurance premiums. While the fund has been deployed in the past, he said its impact is constrained by Nigeria’s low fire insurance premium base, making it insufficient to meet nationwide needs.

Ultimately, he argued that financial exclusion in insurance must be addressed through collaboration rather than compulsion. Government, regulators, insurers, fire services and market authorities must jointly reduce risks to make insurance viable. “Public discourse like this,” he said, “is the starting point for finding sustainable solutions.”

The Director-General of the Nigerian Insurers Association (NIA), Mrs. Bola Odukale, said she did not have formal industry-wide data confirming that insurers were systematically rejecting traders in markets such as Balogun.

However, speaking from professional experience as an insurance practitioner, she acknowledged that if such rejections were occurring, they would most likely be rooted in risk assessment rather than deliberate exclusion.

She explained that insurers have a duty to assess risks before underwriting them, and where a risk is considered excessively high, companies may legitimately decline to provide cover.

According to her, the physical layout of many markets, the way shops are organised, and daily operating practices often elevate the level of risk beyond what insurers can prudently accept.

The NIA DG pointed specifically to unsafe practices commonly observed in markets, including the storage of petrol and other flammable materials inside shops, overcrowding of electrical appliances, and the indiscriminate placement of generators. These conditions, she said, create what insurers classify as near-certain loss scenarios rather than uncertain events.

She stressed that insurance is fundamentally designed to cover unexpected occurrences, not situations where loss is highly predictable.

Drawing an analogy, she noted that insurers would not cover a person with a terminal illness because the outcome is no longer uncertain. “Insurance does not cover certainty; it covers uncertainty,” she said.

While acknowledging concerns around financial inclusion, the NIA DG cautioned against treating insurance as a social service.

She emphasised that insurance remains a commercial enterprise and must operate within the bounds of sound underwriting principles. Granting cover “just anyhow,” she warned, would undermine the sustainability of the industry.

She made comparisons with other high-risk sectors, such as commercial transport, where poor driving culture, substance abuse, and lack of formal training significantly increase accident rates. In such cases, insurers also struggle to provide affordable or viable coverage unless risks are properly managed.

She agreed that collaboration with government could help address some of the underlying problems, particularly through improved regulation, safety standards, and enforcement. However, he maintained that such partnerships must still respect the fundamentals of underwriting and exposure management.

Ultimately, the NIA DG acknowledged that markets represent a significant opportunity for insurance expansion, potentially worth trillions of naira. He said the industry recognises this potential but insists that any meaningful penetration must be preceded by deliberate efforts at risk mitigation, awareness, and structured engagement to make coverage viable and sustainable.

Conclusion

Risk, Responsibility, and the Cost of Exclusion

The market fires that have devastated Nigeria’s commercial centres are more than isolated tragedies; they are a public interest failure with national economic consequences.

When entire trading communities operate without insurance, losses cascade beyond individual traders to families, supply chains, lenders, and ultimately the state. This is not a niche industry issue but a systemic vulnerability affecting millions of livelihoods and the resilience of the informal economy.

The investigation shows that exclusion did not occur in a vacuum. Insurers insist, correctly, that insurance cannot cover certainty, only uncertainty. Regulators admit that enforcement of safety standards and compulsory insurance remains weak. Market environments, shaped by years of regulatory neglect, now present risks so elevated that exclusion becomes the rational outcome. In this chain, no single actor is solely to blame, but each bears responsibility.

Accountability therefore lies not in assigning guilt after infernos, but in examining why certainty was allowed to replace uncertainty in the first place. Unsafe electrical systems, blocked access routes, fuel storage inside shops, and the absence of functional fire infrastructure are not acts of nature. They are the result of policy gaps, weak oversight, and a failure to integrate risk management into market governance.

The voices of regulators and industry leaders point to a shared truth that insurance exclusion is the consequence of unmanaged risk. Yet risk management itself has been treated as an afterthought, activated only after lives and capital have been lost. This reactive posture undermines both financial inclusion and public trust in the insurance system.

Solutions, however, are neither abstract nor unattainable. Embedding safety and insurance compliance into market approvals, strengthening enforcement of existing compulsory insurance laws, and fostering structured collaboration between insurers, regulators, fire services and market authorities can gradually convert certainty back into insurable uncertainty.

For insurers, this means investing in risk awareness and phased underwriting models rather than blanket rejection. For regulators, it requires shifting from post-disaster responses to preventive oversight. For government, it demands recognising markets as critical economic infrastructure deserving of the same risk governance applied to formal commercial assets.

Until these responsibilities align, Nigeria will continue to witness fires that are described as “uninsurable” despite being entirely foreseeable.

The real failure, therefore, is not that insurance walked away when certainty prevailed, but that the system allowed certainty to flourish unchecked. Addressing that failure is where true financial inclusion in insurance must begin.