Volume 10  
Number  2 ,

 2025

 
 

Faculty of Social Sciences, 
Enugu State University of Science And Technology

EDITOR-IN-CHIEF

Prof. Nicholas Attamah

MANAGING EDITOR
Prof. Barnabas Nwankwo

PUBLISHED BY

ENUGU STATE UNIVERSITY OF 
SCIENCE & TECHNOLOGY

JOURNAL OF SOCIAL SCIENCES & HUMANITIES



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Evaluating the Impact of Road Infrastructure on Motor Insurance Claims: Empirical 

Evidence from Lagos State, Nigeria 

 

DAWODU, Adenrele Wasiu 

AIICO Insurance PLC 

AIICO House, Plot 2, Oba-Akran Avenue, Ikeja, Lagos Nigeria 

Dawoduwasiu5@gmail.com  

+2348028344263, +234803231892 

 

Abstract  

 

This study investigated the intricate relationship between road infrastructure conditions and 

motor insurance claim patterns, drawing empirical evidence from Lagos State, Nigeria. The 

research aimed to determine the significant relationship between specific road infrastructure 

deficiencies and the frequency of motor insurance claims, and to evaluate the impact of road 

infrastructure quality on the severity and cost of these claims in Nigeria. The findings reveal 

a significant association between road infrastructure deficiencies and higher frequencies of 

motor insurance claims. The model explained approximately 39.7% of the variation in claim 

frequency, with potholes, signage, drainage, and intersections being statistically significant 

predictors. Furthermore, road infrastructure quality significantly impacts the severity and 

cost of motor insurance claims. The model accounted for 34.8% of the variation in claim 

severity, with potholes, signage, drainage, intersections, and traffic calming measures all 

being significant predictors. Notably, improved drainage systems were strongly associated 

with a reduction in claim severity and cost. The study concludes that poor road infrastructure 

exacerbates accident incidence and escalates the financial magnitude of insurance claims in 

Nigeria. These results align with Cramér’s Risk Theory, suggesting that environmental 

factors significantly alter the risk profile of motor insurance portfolios. The implications for 

the Nigerian insurance sector are substantial, highlighting the need for integrating spatial 

risk factors into underwriting models to enhance pricing precision and capital adequacy. The 

study advocates for urgent and targeted investment in road infrastructure improvements, 

such as better drainage systems, traffic signage, road lighting, and traffic calming features, 

to reduce both the frequency and cost of motor insurance claims and foster sustainable road 

safety progress in Nigeria. 

Keywords: Road Infrastructure, Motor Insurance Claims, Claim Frequency, Claim Severity, 

Lagos State, Nigeria. 

 

Introduction 

The interrelation of road infrastructure to motor insurance claims is one of the highly 

pertinent fields of investigation that are felt both to the safety of the society and stability of 

the insurance market. The conditions of the road play an important role in causing and 

intensifying accidents that involve cars and directly affect motor insurance claim frequency 

and the amount charged. Poor road infrastructure, including potholes, cracks, and rough 

surfaces, bad lighting, and insufficient signs, are major contributors to accidents. Potholes, as 

an example, may include abrupt movements of the vehicle, damage of the tires, or even crash 

as a driver loses control of the vehicle. Similarly, uneven pavement can disrupt a vehicle's 

stability, making it difficult for drivers to maintain control, especially in adverse weather 

conditions. Besides causing mayhem to the vehicles, bad road conditions may also result in 

mailto:Dawoduwasiu5@gmail.com


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serious injury. As shown by a research conducted by Feber et al. (2003) there is evidence 

suggesting it is possible to estimate the benefits of highway infrastructure improvements 

based on insurance claims data confirming that there is a distinct connection between road 

quality and the cost of claims. More so, the design of roads is also significant to the 

determination of collision risks. The presence of sharp curves, low visibility and narrow lanes 

of the road, or inadequate safety measures such as the use of guardrails increase the risk of 

accidents. Intersections with acute angles may increase confusion and cause more accidents 

to occur, especially during difficult weather conditions (Feber et al., 2003). Conversely, 

improvements in road infrastructure, such as the addition of left-turn lanes or left-turn phases 

in traffic lights, have been shown to reduce insurers' claim costs (Feber et al., 2003). This 

implies that there is a direct relationship between investment in road safety measures and the 

decline in motor insurance claims. 

Nigeria also faces an especially acute road infrastructure problem that blockades the 

aforementioned global issues further. The country's road network is often characterized by 

significant deterioration, a lack of proper maintenance, and inadequate design, all of which 

contribute to a high incidence of road traffic accidents. Other researchers like Aderamo 

(2012) have studied the spatial pattern of road traffic accident casualties in Nigeria, 

evidencing the major role defects of the highway infrastructure including potholes, sharp 

bends as key factors to road crashes. Olorunfemi (2021) also evaluated road infrastructure 

situation in several urban areas in Kogi State (Nigeria), which demonstrated that urban 

residents were rather dissatisfied with the quality of roads in the studied areas. Along with 

numerous potholes, erosion, and a lack of visible road markings and signs, these conditions 

deteriorate vehicles, as well as negatively affect road safety by adding to a hazardous road 

experience and increasing the likelihood of collisions (Aderamo, 2012; Olorunfemi, 2021). 

According to Balogun et al. (2021), it was also mentioned that the rate of traffic accidents 

occurring on the Nigerian roads continues to rise, and the measures of the government and 

the respective agencies to combat this threat have been unsuccessful with particularly unsafe 

conditions leading to the daily loss of innocent lives. 

The rate of accidents translates directly to higher rates of claims being made, which in turn 

puts an extra financial burden on insurance companies. This is worsened by the fact that 

accidents that usually follow poor road conditions, are severe and this means that repair costs 

will be increased and in worst cases, large sums of money will be paid as compensation on 

injuries or loss of life. Enyinda (2022) evaluated the trend of Nigerian motor accident 

insurance claims, and it was observed that the insurance companies were not doing quite well 

as regards claims settlement until following a phase of recapitalization. Re/insurers also bear 

the economic burden of poor infrastructure, which may result in increased claims in different 

business lines, such as auto insurance (Ibrahim, 2022; Gbenga, 2024). Consequently, 

Nigerian insurance companies face unique challenges in risk assessment and premium 

setting, as the inherent risks associated with the country's road network are significantly 

elevated. It is crucial to understand this complex interplay between road system development 

and motor insurance claims because this would be crucial in formulating a way forward to 

eliminate road carnage caused by lack of adequate road systems and the subsequent decrease 

in the rate of accidents and the eventual impact on the insurance sector in the country and the 

individuals involved. To achieve this, the following objectives were formulated to guide this 

study: 

i. To determine the significant relationship between specific road infrastructure 

deficiencies and the frequency of motor insurance claims in Nigeria. 



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ii. To evaluate the impact of road infrastructure quality on the severity and cost of motor 

insurance claims in Nigeria. 

Statement of Hypotheses 

H₀₁: There is no significant relationship between specific road infrastructure deficiencies and 

the frequency of motor insurance claims in Nigeria. 

H₀₂: Road infrastructure quality has no significant impact on the severity and cost of motor 

insurance claims in Nigeria. 

Review of Related Literature 

Road Infrastructure and Accident Risk 

Road traffic accidents (RTAs) have become a serious international safety concern as they are 

a major burdening problem in terms of human as well as economic costs on a global scale 

regardless of the developed and developing economies. Low- and middle-income countries 

disproportionately bear the burden since they own a small percentage of the world vehicle 

fleet but have a majority of road fatalities and injuries (Esbester & Wetmore, 2015; Gebru, 

2017). These tragedies do not only lead to tragic loss of life but also socioeconomic 

destabilization, especially in regions already facing healthcare and insurance overload. In this 

respect, road infrastructure can reduce or increase the chances of an accident and it 

consequently becomes an area of research interest and implementation of policies. The 

prevalence of RTAs in the world is a testament to a long-term problem of public health and 

economic efficiency. According to studies by Dorri et al. (2024) and Martinez, Sanchez, and 

Yanez-Pagans (2019), RTAs are not just transportation failures but are embedded in larger 

development shortcomings such as urbanization, enforcement capacity, and policy-making 

prioritization. Clemente, Della Corte, and Zappa (2024) argue that numerous countries do not 

possess spatial risk models to predict and prevent accidents on the network level 

comprehensively. Such a lack of a predictive structure increases the chances of collision, 

especially when dealing with fast urbanizing areas. In high-income nations, a multi-pronged 

approach has led to road safety improvement, which includes all these approaches namely 

infrastructural investment, enforcement, vehicular technology, and behavior change (Alli & 

Ganiyu, 2025). To facilitate these activities, sound data capture and analytical capabilities are 

essential to ensure ongoing monitoring of risks (Bonera et al., 2024; Pei, Wen, & Pan, 2024). 

As an example, risk screening frameworks involving real-time traffic and crash data have 

been found to effectively decrease causalities by focusing on high-risk routes to take remedial 

action promptly. 

Conversely, structural factors promote an inability to reproduce these successes in low- and 

middle-income countries. The hasty motorization does not take into consideration building 

resilient road infrastructure, resulting in the traffic volume being out of balance with the road 

capacities (Alli, Aina, & Ganiyu, 2023). Chand, Jayesh, and Bhasi (2021) present data 

fragmentation and absence of common systems to report accidents as a barrier to making 

informed safety plans. Further, road design characteristics, including the width of the lanes, 

illumination, road surface, and road markings all serve as predictors of accident hotspots 

consistently across under-resourced areas (Imamaliev et al., 2021). There is also the balance 

between infrastructure and behavioral risk. The authors believe that psycho-somatic pressure, 

health status, and road environmental factors interactively influence the risk of RTA (Wang 

et al., 2023). Take, for instance, slippery ground, bad drainage, or lack of markings in the 



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intersections do not only physical defects; they are fatal additions to a man with poor 

judgment and over speeding. Another factor is the situational context, either in the city or the 

countryside. Roads in urban areas can be congested and complex in terms of signaling 

whereas the rural roads do not have guardrails, lighting or any sight improvement measures. 

Such environmental imbalances require the sensitive context-based infrastructure solution. 

Concerns of accident prevention and prediction have been provided with new opportunities 

offered by technological progress. Huang, Wang, and Sharma (2020) and Pei, Wen, and Pan 

(2024) emphasize the ability to identify central predictors of accidents in massive telemetry 

and sensor databases using deep learning and explainable AI models. The adoption of these 

systems is nevertheless patchy, as developing countries do not have the digital networks and 

institutional capacity to implement them successfully. 

Nigerian Road Infrastructure and Traffic Accidents 

Road Traffic Crashes (RTCs) form one of the most severe crises of public health, developing, 

and economic crises in Nigeria having always been a leading cause of untimely deaths and 

morbidity. Such suffering and suffering are not only inhuman consequences related to the 

number of people killed, lives ruined, persons permanently handicapped, and psychological 

shocks to the affected individuals, but also present an enormous economic burden on 

productivity, health care sectors, and insurance provided in society as well as transport 

logistics (Noah, 2025; Tandrayen-Ragoobur, 2025; Afolabi & Gbadamosi, 2017). Since 

Nigeria moves on to its national development agenda, it becomes increasingly imperative to 

analyze and comprehensively conceptualise the multiple causalities of RTCs in an attempt to 

think systematically. Recent empirical research findings have shed critical light on the 

regional and systemic aspects of road crashes in Nigeria. Specifically, Awoniyi et al. (2022) 

employed disaggregated national data in a longitudinal trend analysis of RTCs and 

established the intensification of the prevalence and severity of crashes in recent years, 

especially in the southern geopolitical zones. Their results reflect the geographical differences 

also noticed by Ezeibe et al. (2019), who point at the infrastructural insufficiencies, namely 

traffic-sign shortages, to contribute to the increased rate of crash occurrences in southeastern 

corridors. A similar idea was supported by a recent study performed with the use of Six 

Sigma (DMAIC) analytical method on RTC causation across the south- south and southeast 

regions of Nigeria, which revealed significant geographic disparities in accidents outcomes 

reported during 20202023 periods. The south-south area had a much higher percentage of 

crashes that were fatal, 17.5 percent of total incidents as compared to 14.4 percent in the 

southeast. These geographic areas were similar in terms of terrain and people but displayed 

considerable completions in case fatality and severity of injury, highlighting the roles played 

by region-specific infrastructural, behavioral, and enforcement dynamics in exposure to 

accidents (Bayode, Aderinola, & Oluyemi-Ayibiowu, 2025; Kenneth, 2021). Most 

importantly, these studies all point to a single, dominant causative factor, which is speeding 

violations. Throughout the dataset, speeding as an isolated cause of crashes comprised more 

than a third of total accidents and exceeded half of the crash record in certain locations 

(Uzondu, Jamson, & Marsden, 2022; Mahmud, Ogunlana, & Hong, 2021). This is not only an 

indication of driving recklessness by individuals, but also indicative of the regulatory and 

infrastructural failure of the system such as poor speed calming infrastructure, the lack of 

surveillance technology and the lack of police manpower. 

The Federal Road Safety Corps (FRSC), Nigeria's statutory road safety agency, continues to 

issue quarterly statistics revealing a persistently high incidence of crashes. Case in point, 

during the first quarter of 2025, the FRSC noted 2,650 RTCs leading to 1,593 deaths, levels 



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that indicate a national emergency (Atubi, 2021; Mohammed et al., 2019). These statistics 

underscore the idea that interventions to date have lacked systemic traction or sustainability, 

and questions institutional capacity, coordination, and accountability mechanisms. Besides 

human costs, the economic impact is far-reaching. According to SBM intelligence (2025) and 

Intertransport (2025), negative road infrastructure design indirectly affects national 

productivity by increasing the cost of using a vehicle, slowing logistics operations, spoiling 

perishable items and putting off regional trade. It is estimated that bad roads and RTCs cause 

1 trillion Nigerian naira in annual losses, including medical expenses, vehicle repairs, and lost 

productivity, as well as insurance claims (Ben, 2019; Tandrayen-Ragoobur, 2025). 

Road Infrastructure Challenges in Nigeria 

With a road network of more than 195,000 kilometers, Nigeria has one of the largest road 

networks in Africa, but also among the most poorly maintained. More than 63 per cent of 

these roads are categorised as being under poor condition mainly because of a long-term 

under investment in roads, poor development and little maintenance (Agusto Research, 2022; 

Adepoju, 2021). In total, only a third of Nigerian roads can be considered in good repair, with 

even good roads facing routine overuse, as the spatial distribution of road quality is saturated 

(Premium Times, 2025). According to what is found in the study by Onokala and Olajide 

(2020), this infrastructure deterioration creates not only significant transportation 

inefficiencies but also increased risks of accidents. High travel time durations, amount of fuel 

consumed by road user vehicles, high maintenance requirements, and risk exposure to road 

accidents such potholes, gorged shoulder and bridge collapses are realities faced by 

commuters on a daily basis in Nigeria. Road transport logistics in Nigeria are therefore, one 

of the most expensive and time-consuming logistics in West Africa. The deteriorating state of 

the roads has given rise to what can be described as a culture of improvisation, where 

communities fill potholes manually using rocks, wood, or sand. This ostensibly sound 

approach is, however, indicative of an inherent deterioration in formal road management 

systems (IJURR, 2025). Furthermore, temporary repairs, although helpful, tend to exacerbate 

long run road conditions, due to disrupting the road grades and the drainage patterns. 

The engineering flaws of the Nigerian roads are the result of a combination of technical, and 

the factors of governance. Technically, road pavements are seldom based on local 

geotechnical and hydrological circumstances. WJAETS (2023) resolves that the pavement 

often experiences fast fatigue and rutting due to poor materials used in the construction of the 

roads, as well as insufficient attention to the axle load limits. One of the most important 

technical faults is almost lack of drainage systems. In the absence of proper drainage, water 

can stagnate on the road surface, causing faster degradation of asphalt, erosion of 

embankments, and saturation of subgrades, and thus collapse (Adepoju, 2021; Atalay et al., 

2025). In addition, most of the city and inter-city roads do not have shoulders, crash barriers 

or proper lane markings, so there are chances of off-road accidents and head-on crash, 

particularly at night. Policy-level inefficiencies make the problem even greater. Mahmud, 

Ogunlana, and Hong (2021) state that ineffective institutional coordination and systemic 

corruption in the procurement and project management areas make road projects chronically 

delayed, endlessly costly, and eventually fail. What you end up with is a system in which bad 

roads are not bad, but intentionally dangerous. Another key issue is road design. Nigerians 

have many single-laned carriageways that are built along the highways, whereas the amount 

of traffic that flows ordinarily warrants them to be dualized. U-turns, unmarked intersections, 

and lack of road signs are common, especially in rural settings. Ezeibe et al. (2019) 

demonstrate a high relationship between signpost deficits and hotspots. In addition, Uzondu 



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et al. (2022) highlight that emergency response systems are typically poorly equipped or far 

enough away to reach crashes in time and serve as the causes of preventable deaths. 

The challenge of road safety in Nigeria is made worse by the poor state of the road network, 

inefficient maintenance funding, and ineffective enforcement of road designs. The country 

reflects the risk asymmetry reported in the international literature: lower vehicle density does 

not necessarily mean a lower level of accidents and death rates. This contradiction, as Gebru 

(2017) puts it, lies in the systematic problems of governance, inefficient urban planning, and 

long-term transport infrastructure underinvestment. Road surfaces in bad condition are one of 

the key factors that expose road users to accidents in Nigeria. There are dangerous potholes, 

damaged bridges, worn out shoulders, and drainage systems that are wanting. Not only do 

these slow down traffic but they also pose sudden risks that result into crashes. Dorri et al. 

(2024) focus on the fact that these infrastructural deficiencies greatly decrease the reaction 

times and especially in high-speed scenarios. This is further aggravated by inconsistent 

signage and absence of segregation between pedestrian traffic and vehicular traffic. Urban 

version of such issues can be explained by Lagos State which is the commercial capital of 

Nigeria. According to Bonera et al. (2024), metropolitan settings that are congested, with 

inefficient road hierarchy and the competing right-of-way guidelines tend to turn into zones 

with a high concentration of accidents. In Lagos, both insufficiency of adequate traffic 

management systems and influx of unofficial transit companies increase risks. There are no 

working lights on traffic, walk-over signings, or markings, so it is not only hard to navigate 

but also hazardous. Moreover, infrastructural disparity among Nigerian states intensifies 

regional differences in accident risk. In some states in the south, roads are better maintained 

to a larger extent as a result of healthier state budgets or international development 

cooperation. Others, especially those in the north and central, are dealing with highly 

dilapidated highways that can hardly pass in times of rain (Clemente et al., 2024). The result 

is a very imbalanced risk terrain, where driving attitude is not only suppressed by individual 

factors, but also by geographical and structural context. The road safety crisis in Nigeria is 

not merely the result of thoughtless driving or traffic jams in urban centers; it is not only the 

lack of coherent governance, planning, and underdevelopment of infrastructure. Although the 

level of severity is differing in the regions indicating on local infrastructural gaps, the 

national outlook proves to be more alarming indicating a comprehensive infrastructural 

reform on the national level. Policies should shift away to reactive post-crash responses to 

proactive investments in infrastructure, risk mapping data-driven, and strong design 

protocols. The use of advanced geospatial applications (Yunus & Abdulkarim, 2022), 

intelligent transportation systems (Ajayi et al., 2021; Alli & Ganiyu, 2021), and insurance 

claims analytics (Bayode et al., 2025) may assist in prioritizing national interventions in the 

course of planning..  

Implications for the Nigerian Motor Insurance Industry 

The road safety crisis in Nigeria carries significant implications for the country's motor 

insurance sector. The high number and magnitude of claims caused by recurrent accidents 

impose heavy burden on the insurance providers increasing their activities costs and low 

returns. The authors urge that in turbulent accident environments, insurers are impotent in 

setting reasonable premiums, commonly utilizing general risk swimming pools instead of 

fine-grained, behavior-based designs (Martinez et al., 2019). The article by Dorri et al. (2024) 

provides a more sustainable approach by highlighting that in the absence of good 

infrastructure, the actuarial assumptions become unreliable, and the underwriters are not able 

to distinguish appropriately between high-risk and low-risk clients. This leaves insurers with 



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only two options; increase insurance rates across the board and make policies unaffordable or 

leave some markets altogether. This can be detrimental in a developing economy such as 

Nigeria where insurance penetration is already low and it can undo any slight progress in the 

facilitation of financial inclusions and consumer protections. But in these difficulties lies an 

opportunity. When systematically gathered and analyzed, claims data can act as a proxy when 

determining infrastructural deficiencies. Pei et al. (2024) suggest utilizing insurance data as a 

loop within the municipality planning which in turn would prioritize the areas with high 

claims with the requested infrastructure evolvements. Insurers, regulators and urban planners 

unite to convert claims into actionable intelligence in this model. In addition to this, Wang et 

al. (2023) and van Heerdena, van Vuurena, and Grobbelaarb (n.d.) promote the creation of 

national accidents databases that will integrate accident data taken by police, hospitals, and 

insurance companies. Predictive models could be developed on such platforms, to enable 

preventive interventions, and dynamic premium adjustment. This has the advantages not only 

of enhancing financial sustainability to insurers but also helps in wider road safety objectives. 

Spatial and Regional Variations in Road Infrastructure Conditions in Nigeria 

The spatial differences in road conditions throughout Nigeria are stark. Certain cities like 

Abuja, certain Lagos areas, and certain state capitals have relatively better maintained roads, 

frequently as a result of focused federal funding, public-private alliances, or improved 

subnational administrative structures. Conversely, large sections of the northeast, and the 

middle belt are plagued with maintained roads that are in very poor conditions, undersurfaced 

or even impassable roads. These disparities are not just anecdotal, but are backed by 

empirical research that finds geography to be a fundamental base of the condition of roads 

and the safety of transport in transport. Adeleke, Osayomi, and Iyanda (2020) present clear 

and strong evidence that this spatial distribution of road traffic crashes in occurrence and 

severity is critical, and the quality of infrastructure is an important factor. The reflections of 

regional variation in human and mechanical components make their study remarkable as the 

components combine with the infrastructural gaps at the local level to generate highly 

inconsistent road safety results. The report by Akinyemi (2019) uses exploratory spatial data 

analysis (ESDA) methods to delve deeper into these geospatial dynamics, showing that road 

mortality and morbidity are concentrated in infrastrurally deprived areas. Such results 

validate what ordinary commuters and logistics providers have long had their instincts tell 

them, that geography and infrastructure act in concert to generate unequal transport risks in 

Nigeria. These spatial disparities also have a significant impact on public health outcomes. 

The article by Odusola et al. (2023) shows that the response time of ambulances in Lagos 

State is highly dependent on the conditions of local traffic and the state of roads. Back in 

Nigeria, in the most economically advanced state, the emergency response time costs people 

life and problems in some districts is high because of the overcrowding and the road 

conditions being poor. The context-sensitive and regionally calibrated infrastructure planning 

is backed by their spatial and temporal analysis.  

Where road infrastructure is most lacking, the economic costs are also aggravated. Late 

deliveries of goods, spoilage of agricultural products, and greater fuel wastage and 

maintenance expenses damage economic activities and thus depleted household income. 

These effects are severe especially in the rural economies which depend on the road networks 

in order to reach markets, health and education. By building a geographic road accident 

severity index, Iyanda (2019) highlights the correlation between poor road infrastructure and 

the severity of accidents. This research concludes that the chances of fatal accidents on the 

road are considerably high in areas where the road is poorly constructed or maintained. Such 

an association has far- reaching policy implications, especially in a nation with an uneven 



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distribution in access to emergency care and trauma management. Moreover, these 

infrastructural disparities closely align with the larger pattern of regional inequality in 

Nigeria, overlapping with the patterns of poverty, political marginalization, and low 

institutional capacity. Bayode et al. (2022) are a bit spatially narrower in their subject of 

research, being occupied with the spatial distribution of COVID-19 risk factors, but still have 

a methodologically applicable contribution to make in the field in question, having applied 

spatial regression methods which can be effectively applied to the same areas of concern as 

the road infrastructure and crash analysis. Their effort directs to the utility of spatial modeling 

in resolving clusters of infrastructural disregard and permitting more exact interventions. In 

spite of marginal gains in some urban centers, the situation nationally is grim (Alli, 2024).  

Urban Infrastructure and Road Safety Challenges in Lagos State 

Lagos, the prime economic center of Nigeria that is one of the most dense urban 

agglomerations in Africa, is emblematic of infrastructural problems in the rapidly urbanizing 

cities of the global South. With its already large population and the combination of natural 

and internal migration, the city has surpassed its transport system, showing severe 

shortcomings in urban planning and infrastructure resilience (Uduku et al., 2021). 

Consequently, Lagos records chronic and acute shortages of road infrastructure, which not 

only cause paralyzing traffic jams, massive troubles to commuters, high costs of vehicular 

operations and an increase in accidents. The problems are not isolated technical challenges 

but as a symptom of structural, administrative, and ecological weaknesses of urban transport 

ecosystem in the city (Salisu, 2019). 

One of the major qualities of the infrastructural images in Lagos is that its road network has 

perennially and failing to match the vastly-rising urban needs. Major arterial roads, inner-city 

routes, and feeder roads are at various levels of physical degradation, caused by the lack of 

preventive maintenance and the poor (inferior quality) materials used in construction (Femi & 

Tolorunloju, 2020; Adepoju, 2021). Potholes are everywhere across the state and what might 

have been a relatively brief commute turns into a hours long gridlock. Micro and macro-

economic effects are attached to this malfunctioning of the mobility network. The disruption 

in productivity associated with lengthy commutes on a daily basis is compounded by the cost 

premium that vehicles need to maintain as commuters and commercial operators alike 

(Edema, 2019). Studies have reported that such infrastructural dysfunction is the single most 

crucial factor that determines the inefficiencies in traffic in the metropolis, not only of their 

time-use patterns but also the composition of household and business expenditures (Adepoju, 

2021). 

Added to these woes is the issue of urban flooding that has stubbornly persisted. Drainage 

systems in the city are many times severely lacking, or completely nonexistent in some areas. 

The rainy season, the slightest amount of rain may lead to the full immersion of roads in 

water, thus making entire routes inaccessible (Beitelmal et al., 2024). This frequent flood 

does not only cause holdup in terms of vehicular traffic but also to the high rates of road 

surfaces degradation. When water penetrates the pavement structure, it undermines the 

subgrade resulting in structural weakening due to rutting or cracking and the roadway 

collapsing. Furthermore, stored stagnant water leads to significant risks to health, acting as a 

source of life cycles of vector-borne diseases, as well as limiting the serviceability of road 

surfaces and the possibility of crashing (Beitelmal et al., 2024). 

The public safety implications are far-reaching. In addition to the poor physical status of the 

roads, poor street lighting namely, especially in in the outlying districts, as well as absence of 



239 
 

appropriate traffic signs poses a big risk to drivers, motor-cyclers, and pedestrians. Driving at 

night, especially, poses a great risk since visibility is low, and reflective markings and 

operational stoplights usually do not exist (Femi & Tolorunloju, 2020). This is further 

compounded by roadside businesses and informal markets occupying road traffic and little 

pedestrian infrastructure leading to problematic, dangerous urban mobility conditions (Salisu, 

2019). These physical shortcomings could not be merely the result of overlooks or inadequate 

investment, but the problem can be attributed to a dysfunctional administration and 

ineffective administrative coordination between involved transport authorities. The biggest 

obstacles to effective infrastructure planning and project implementation have been 

discovered to be inter-agency rivalries, overlapping mandates, and general institutional 

capacity (Salisu, 2019). Although there has been a long track record of policy blueprints and 

strategic frameworks created on the federal and state levels, implementation has been 

haphazard following the politicization, corruption, and lack of the technical expertise 

(Mahmud et al., 2021).  

The transport problems of Lagos have been punctuated by the introduction of a sense of 

urgency to climate change. The already weak road infrastructure system will be even further 

strained by the increase in sea level and intensification of precipitation events (Beitelmal et 

al., 2024). Unless the city invests heavily in climate resilient transport planning and drainage 

infrastructure, Lagos will face a future in which mobility paralysis and socio-economic 

marginalization will worsen, most especially among the most vulnerable groups living there. 

Nevertheless, there are new initiatives that suggest potential ways ahead. More recently, the 

emergence of sustainable transportation options, like bicycle infrastructure and mass transit 

integration within urban settings, has become a topic of growing interest in the policy realm. 

Although such efforts are still relatively young and unequally applied, they reflect an 

acknowledgment that the mobility of Lagos in the future cannot be limited to increasing the 

capacity of the road infrastructure (Mogaji, 2022). Instead, there is a need to develop a 

multimodal, environmentally adaptive and socially inclusive principle to enhance long-term 

road safety and urban resilience within the state. 

Infrastructure Improvements and Accident Rates Reduction 

An increasing amount of empirical evidence is available in various jurisdictions to 

corroborate the statement that upgrading of the road infrastructure is one of the most effective 

interventions in lessening road traffic accidents (RTA). Infrastructure quality, which includes 

road geometry, surface condition, signage, lighting, drainage and provisions made to 

pedestrians, is not only a conductor of movement of vehicles, but also one of the greatest 

determinants that affect the results of road safety. Macro-level investment and micro-level 

engineering adjustments have been shown to have a quantifiable effect in the reduction of 

crash incidence and severity, especially when carried out as part of an integrated road safety 

program. Statistical examinations on a large scale scale revealed that infrastructure 

improvements can decrease the occurrence of accidents by a maximum of 50 percent under 

particular conditions, although it varies according to the kind and level of the improvements. 

Accidents that occur in such areas can be partially reduced by ensuring the visibility (clear 

lane delineation, wide shoulders, median barriers), ballasting of curves, and sufficient control 

of behavior of vehicles (good banking of curves, proper width of shoulders, etc.). Such 

interventions work particularly well when applied to black spots or high-risk corridors 

determined by crash mapping and historical trend analysis. 

Such interventions are also justified by economic assessments. The cost-benefit analysis 

shows that not only does spending on an infrastructure with decreased risks of death and 



240 
 

injury, but this also provides savings in the long run as the cost of insurance claims declines, 

emergency services no longer have to stretch as much, and people have a greater trust in the 

transportation systems (Feber et al., 2003; Yannis et al., 2016). In other locations, it is said 

that the public-private partnership has been crucial in the faster satisfaction of infrastructure 

improvements and there is a quantified decrease in crash rates on highways under 

concessions (Albalate & Bel-Piñana, 2019).  

Localized interventions like roundabouts, speed-calming treatments, pedestrian refuges, and 

protected bike facilities have demonstrated measurable decreases in collision risks, especially 

among vulnerable road users. An example is curb extension connections where car movement 

turning speeds have been hampered and pedestrian visibility has improved at intersections 

and in cities, leading to a major decrease in pedestrian injury (Goniewicz et al., 2016). 

Cyclist-specific infrastructure, including physically separated bike lanes, has also been found 

to be linked with a significant decrease in bicycle-related crashes (Uzondu et al., 2020). 

Moreover, there have been good safety results with the combination of intelligent 

transportation systems (ITS) and the implementation of average speed enforcement 

mechanisms in the larger highways. Experience with the work of the Italian system of 

tracking average speeds, known as the Safety Tutor, over long distances on the road, showed 

that the number of fatal and harmful accidents decreased with the introduction of the new 

system by statistically significant level (Borsati et al., 2019). This concurs with larger studies 

that show that consistent and automated enforcement, coupled with separated infrastructure, 

help reduce crashes sustainably. The collateral benefits of infrastructure improvements have 

been emphasized in further studies. One illustration is the effect of quality investments in 

road infrastructure where quality roadwork was proven to manipulate road user behaviour, 

increasing adherence to speed limits and lanes. On the other hand, infrastructure in poor 

conditions of construction or design is linked to aggressive driving, or even compensation 

driving that also raises the risk of accidents (Wang et al., 2013; Noland, 2003). Infrastructure 

investments also can be very significant in increasing safety at night, where reflective 

products and improved lighting at night contribute greatly in ensuring that the occurrence of 

crashes at night, during low visibility, is minimized (Johnston, 2004). Although spending 

money on infrastructure cannot eradicate traffic crashes, despite the intricate interaction 

between human error, the state of the vehicle or elements (known as the Swiss cheese model), 

this type of investment is the cornerstone of current road safety planning. Infrastructural 

infrastructure improvement and regulatory interventions, including speed enforcement and 

driver education programs, have regularly been cited as a critical predictor of long-term road 

safety gains (V ugar et al., 2023; Albalate et al., 2013). 

Implications for Motor Insurance Industry in Nigeria 

The rate of road traffic accidents in Nigeria remains very high and has a significant and 

destabilizing effect on the motor insurance industry in Nigeria. There is a clear and strong 

correlation between the frequency of accidents and the number of insurance claims; insurance 

companies are often forced to pay huge and recurring claims, which causes operation 

inefficiency and financial insolvency. This relationship is not a theoretical assumption, but is 

confirmed by facts and observed market dynamics. Against the backdrop of poor road 

development, irregular driving habits, poor enforcement of road codes, and a swelling vehicle 

volume, the rate of traffic accidents also has been alarming. As a result, motor insurers are 

subjected to an unending flow of claims that threatens both profitability and capital adequacy. 

This local is compounded by the continuing macroeconomic problems involving high 

inflation in Nigeria. With the rising inflation pushing up the price of auto parts, medical 

services and labor, the mean payment per motor insurance claim also increases. Vehicle 



241 
 

repairs on damaged vehicles, third party bodily injury compensation claims and medical costs 

on the victims of the accident are portential escalators with inflationary effects and this 

increases the financial pressure on insurers. The empirical and economic theoretical 

underpinnings indicate that, where the pace at which the claims costs increase outstrips the 

premium income, there is immense pressure on the insurers to rebalance the underwriting 

standards and change risk pricing policies (Regan, Tennyson, & Weiss, 2008). Operationally, 

the monetary effects of these changes are also broad-ranging. Upon occurrence of a situation 

whereby the payouts of the claims are disproportionately high such as the present situation in 

the Nigerian motor insurance sector, the insurer can end up having negative or adverse loss 

ratios, depleted reserves and liquidity issues. This was graphically demonstrated by 

regulatory statistics that motor insurance contributed to over 90 percent of net claims paid in 

the last quarters. The excess accident-related outgoings cause difficulties in actuarial balance 

and put the sustainability of motor insurance underwriting subsistence at risk. 

A few investigations offer a perspective of the relationship between the accident rate, 

frequency of claims, and the behavior of the insurance market. It has been found that when 

there is an increment in insured cars, there is usually an increment in the reported accidents, 

based on morality hazard or adverse selection in an insurance pool (Hsu, Chou, & Shiu, 2016; 

Hsu et al., 2015). The impact on Nigeria is twofold first, the growing number of insured 

vehicles, partially owing to the mandatory third-party insurance regulations, can end up 

increasing the number of claims unwittingly; second, the existing underwriting methods used 

by the insurance companies might prove inadequate in separating the riskier and less risky 

drivers, thereby creating exposure to the losses. Further, accident severity is not a single 

variable but well depends on the vehicle characteristics and the usage pattern. As Wu, Li, and 

Peng (2020) have noted, vehicle type, age, and maintenance status are specific characteristics 

that contribute to a high level of accidents and the probability of an insurance claim. The 

collection of rickety cars largely crowding the roads has also contributed to the scale and 

extent of crashes in Nigeria, driving up the price and number of claims. In addition to 

economic considerations, the bureaucracy of motor insurance operations also affects its 

operation success. There is evidence that shows that enhanced claims handling practices have 

the potential to improve efficiency, alleviate settlement delays, as well as result in increased 

claimant satisfaction and rehabilitation outcomes (Schaafsma et al., 2012). Nigeria, however, 

has a history of not being efficient in its claims processing, fraud, and poor connecting of 

technology that has created severe claims processing cycles, displeasing customers, and in 

some instances, missed or challenged claims (Yusuf, Ajemunigbohun, & Alli, 2017). Such 

systemic deficiencies are a source of lack of confidence in the insurance industry and reduce 

market penetration (Alli, Ganiyu, & Aina, 2020). 

The other concern is the wider behavioral impact of insurance coverage on driving. Bordoff 

and Noel (2008) discussed the possibility of new kinds of insurance, such as pay-as-you-drive 

insurance, as a way of discouraging risky driving by ensuring that insurance prices reflect the 

level of exposure to risk. Although such a model has yet to be established in Nigeria, its 

possible applicability is significant. In a market that has faced high accident rate, available 

incentive aligned insurance models might play out as competitive force that incites safer 

satellite driving that limits loss exposure (Ajemunigbohun, Oreshile, & Alli, 2018). 

Theoretical Review 

Risk theory informed this study. The theory of risk is a linkage principle in actuarial science 

and the study of insurance, and was initially postulated by a Swedish mathematician and 

statistician, Harald Cramer in the beginning of the 20th century. Cramer pioneered risk 



242 
 

analysis in the modern sense by standardizing the probabilistic models which are applied to 

gauge uncertainty and financial exposure within insurance cases. His work, especially in what 

is now called Cramer Lundberg model or classical risk theory, made a framework of 

understanding the stochastic processes that govern the occurrence of claims on an insurer and 

his solvency. This theoretical basis has been developed further into a wider subject that 

covers both collective risk theory that addresses aggregate claims and individual risk theory 

that looks at the risk at each policyholder. 

The theory of risk provides a sound research instrument in motor insurance in modeling the 

possibility of accidents or their financial implications. The classical risk model presupposes 

that the claims will appear randomly throughout time according to a Poisson process, and that 

the sizes of claims will be independent and identically distributed random variables (Kaas et 

al., 2008). Under this method, the insurers estimate premiums against anticipated losses with 

an element of safety loading. But the assumption of risk exposure homogeneity has gradually 

been questioned, even in urban settings where external factors like traffic congestion, road 

quality, and accident hotspots are proving far more determinative of the risk landscape. 

Empirical analyses demonstrate the pivotal importance of the road infrastructure in creating a 

risk environment in which motor vehicles can operate. As an example, Ofoegbu and 

Ugwunna (2015) revealed that road poor physical condition, signage, and streetlights 

distribution play an enormous role in raising the occurrence of road traffic accidents in the 

Nigerian cities. In the example given, the use of Cramers risk theory implies that poor 

infrastructure is part of why claims frequency is the way it is, i.e., it increases the chances of 

accidents occurring causing a change in how the insurer experiences loss distribution. In 

actuarial terms, this means that road infrastructure will be one of the major rating factors 

underwriting motor insurance policies in areas such as the Lagos State. 

As one of the most populous and economically active cities in Africa, Lagos State offers an 

interesting case study against which the interaction between road infrastructure and motor 

insurance claims can be assessed. The vehicular density within the city is also extreme and 

irregular patterns of the road maintenance and developments also occur. Through the 

application of risk theory, one can consider the way spatially differentiated risk profiles may 

result due to the differences in road quality across different local government areas (LGAs). 

As an example, LGAs with good roads and substantial mechanisms of traffic control can 

have fewer claims than those that are likely to be characterized by potholes, narrow lanes, or 

poorly controlled intersections. This hypothesis is supported by recent empirical evidence in 

Lagos. In one study (Adeyemi and Okorie, 2020), the insurance claims data on motor 

insurance claims in Lagos state with five major insurance players were studied and statistics 

indicated that, there was a statistically significant correlation between the state of road 

infrastructure and the motor insurance claims made. Their results showed that policyholders 

in regions with improved road networks had fewer accidents and thus fewer claims. As 

understood in the context of risk theory, such findings imply that better infrastructure lowers 

the intrinsic exposure of drivers to the risk, which causes more preferable loss experience of 

insurers. Additionally, the theory of risk also highlights the significance of classification and 

grouping of risks during insurance product pricing. In case of Lagosian, this may imply the 

integration of geospatial data about road conditions in insurance rating models. In this way, 

the insurers will be able to shift their traditional rating variables (age, driving history, vehicle 

type) to incorporate environmental variables that directly affect the results of risks. This can 

correspond to latest trends in telematics and usage-based insurance, in which real-time 

information further refines the accuracy of risk analysis. 

 



243 
 

Empirical Review 

AUTHOR & DATE GENERAL 

OBJECTIVE OF 

THE STUDY 

METHODOLOGY FINDINGS GAP FILLED BY THE 

PRESENT STUDY 

Agbeboh and Osabuohien-Irabor 

Osarumwense (2013) 

To study the trend 

of road accidents in 

Kogi State, Nigeria. 

Univariate time series data 

collected from the Federal 

Road Safety Commission 

(FRSC) from January 1997 

to December 2010. 

Statistical analysis using 

SPSS. 

Found a steady 

increase in road 

accident rates in Kogi 

State with no seasonal 

variation. 

This study provides a general trend 

of road accidents, which are a 

precursor to insurance claims. A 

direct link between specific road 

infrastructure deficiencies (e.g., 

potholes, lack of signage) and the 

frequency of these accidents, and 

subsequently, motor insurance 

claims, was not explicitly 

established. 

Onyejekwe, S., Abdulazzez, Rabiu, 

Hammed, & Osunlalu (2024) 

To present and 

discuss commonly 

observed 

infrastructure-

related safety 

deficiencies on 

Nigerian roads and 

proffer solutions. 

Observations and informal 

Road Safety Inspections 

(RSIs) conducted by the 

authors, primarily by 

capturing images and 

collating them. 

Identified numerous 

deficiencies in road 

infrastructure, broadly 

classified into surface, 

shoulder, and roadside 

issues. Safer roads 

lead to reductions in 

road traffic crashes. 

This study identifies and 

categorizes road infrastructure 

deficiencies. However, it does not 

quantify the direct relationship 

between these specific deficiencies 

and the frequency of motor 

insurance claims. It highlights 

the potential for reduction in 

crashes with safer infrastructure, 

but not the direct impact on claims 

frequency. 

Intertransport (2025) To highlight the 

impact of bad roads 

on transportation in 

Nigeria. 

review of existing 

information and reports. 

Poor road networks 

cause delays, high 

transport costs, and 

accidents. 75% of 

commercial drivers 

report delays, longer 

trips, and higher fuel 

use due to poor roads. 

While acknowledging that poor 

roads lead to accidents, this source 

does not provide empirical data 

directly linking specific road 

deficiencies to the frequency of 

motor insurance claims. It focuses 

more on the broader economic 

impact of bad roads. 

Femi & Tolorunloju (2020) To investigate road 

infrastructure 

management 

strategies in Ikorodu 

West, Lagos State, 

Nigeria, and 

Quantitative survey 

approach using structured 

questionnaires among 

residents. Data analyzed 

descriptively using 

frequency counts, 

The state of road 

infrastructure in the 

study area is poor. 

Consequences of poor 

road infrastructure 

included damage to 

This study confirms the poor state 

of roads and their link to vehicle 

damage and accidents. However, it 

doesn't directly correlate specific 

deficiencies with the frequency of 

motor insurance claims. It provides 



244 
 

uncover road user 

satisfaction. 

percentages, and ranked 

mean-item-scores. 

vehicles and road 

accidents. 

a qualitative understanding of the 

problem from the users' 

perspective. 

Isimoya, Ajemunigbohun, S. & Osasona, 

(2022). 

To evaluate motor 

insurance 

underwriting 

factors, with 

specific reference to 

the perceptions of 

motor insurance 

providers in Lagos, 

Nigeria. 

Cross-sectional survey 

research design. Structured 

questionnaire administered 

to 300 respondents from 30 

motor insurance 

companies. Data analyzed 

using simple frequency 

percentages and Friedman's 

rank test. 

Noted the chances of 

high road accident 

rates due to stability in 

frequency per vehicle 

and increase in the 

number of vehicles per 

inhabitant. 

This study focuses on underwriting 

factors and acknowledges the high 

rate of road accidents as a problem. 

However, it does not empirically 

link specific road infrastructure 

deficiencies to the frequency of 

motor insurance claims. It 

highlights the general problem of 

accidents that lead to claims. 

ONATOLA, (n.d) To examine the 

impact of Motor 

Vehicle (Third 

Party) Insurance 

regulation 

compliance on road 

traffic liability risk 

management. 

Adopted enforcement 

theory and compliance 

theory of regulation. Data 

on registered and insured 

vehicles obtained from 

FRSC and NIA. 

Road traffic accidents 

significantly affect 

socio-economic 

development in 

Nigeria, leading to 

financial costs. The 

economic cost of road 

traffic injuries is huge, 

taking between 1% to 

3% of GDP in most 

countries. 

This study highlights the significant 

financial burden of road traffic 

accidents. However, it does not 

specifically isolate the impact of 

road infrastructure quality on 

the severity and cost of motor 

insurance claims. It focuses on the 

broader economic impact of 

accidents and the role of third-party 

insurance. 

NEM Insurance Plc (2018) To discuss the 

linkage among 

insurance, 

infrastructure, and 

economic growth in 

Nigeria. 

Not an empirical study 

with a specific 

methodology; rather, it's a 

statement from an industry 

expert. 

Good roads will 

reduce the number of 

accidents, thereby 

leading to a reduction 

in claims on motor 

insurance. 

This is a strong qualitative 

statement from an industry expert 

suggesting a direct link between 

good roads (an aspect of 

infrastructure quality) and reduced 

motor insurance claims. However, 

it lacks empirical data and a 

specific methodology to quantify 

this impact on claim severity and 

cost. 

Eneh, Okosun,, Egbenta, Obi, Oloto, 

Ubani, & Eneonwo, (2023) 

To analyze road and 

vehicle qualities as 

major factors of 

road traffic carnage 

in Nigeria. 

Longitudinal study 

regressing secondary data 

on death tolls against road 

quality and vehicle quality. 

For every 1% decrease 

in road quality, death 

tolls from road traffic 

crashes in Nigeria 

increased by 

0.00642%. Heavy 

financial costs are 

This study empirically links road 

quality to death tolls, implying a 

link to accident severity. It also 

mentions the financial costs of 

crashes. However, it does not 

directly evaluate the impact of road 

infrastructure quality on the cost of 



245 
 

usually incurred from 

road crashes by way of 

repairing damaged 

vehicles, treatment of 

injuries, and burial of 

deceased victims. 

motor insurance claims, 

specifically. It focuses on the 

broader impact of road quality on 

fatalities and general financial 

costs. 

Enyinda (2022) To assess the trend 

of motor accident 

insurance claims in 

Nigeria. 

Survey research design. 

Secondary data collected 

from official publications 

of selected insurance 

companies and the Nigeria 

Insurance Association. 

Descriptive statistics used 

for analysis. 

Insurance companies 

were not performing 

well in terms of claims 

settlement until after 

the period of 

recapitalization. 

Claims settlement has 

a positive effect on 

increasing 

policyholder 

confidence. 

This study focuses on the trend and 

settlement of motor insurance 

claims. While it discusses the 

importance of claims settlement, it 

does not directly evaluate the 

impact of road 

infrastructure quality on 

the severity or cost of these claims. 

It provides an overview 

Source: Author’s Compilation, 2025



246 
 

Methodology 

This research took a quantitative research design because it enabled the relationships between 

measurable variables, namely, road infrastructure conditions and motor insurance claim patterns, 

to be investigated in a systematic manner. The design used a combination of descriptive statistics 

which is used to report on all variables within a data set, inferential statistical analysis which is 

the process of drawing general conclusions about a population based on a sample, and regression 

modeling which is used to build a model to study the relationship between a dependent variable 

and at least one independent variable. Data were collected in Lagos State, the commercial capital 

of Nigeria and one of the most populous cities in Africa. Lagos was chosen owing to its heavy 

automobile population, high traffic facing, and congestion situations and documented issues 

about road infrastructure wear out. These conditions render it an ideal case study in studying the 

impacts of unfavorable road conditions on accident incidences, and hence motor insurance 

claims. Lagos has a distinctive constellation of urban infrastructure problems with widespread 

potholes and rugged roads, lack of proper signs and street lighting, poor drainage and flooding of 

roads, and prevalence of accidents. These attributes support the use of Lagos as an example to 

reflect overall national trends in road safety and motor insurance claims. 

The study's population included both motor insurance policyholders and the insurance companies 

operating in Lagos State, Nigeria. The state of Lagos was selected because of the density of its 

vehicles, major road infrastructure issues, as well as being an insurance capital. This combined 

population was able to provide a comprehensive picture of the policyholder (demand) and the 

insurer (supply) points of view. To determine sample size, a multi-stage sampling technique was 

used. The purposive sampling method was used to select major motor insurance firms in the 

Lagos state based on both the market share and the availability of claims data/information. Lagos 

State was separated into Local Government Area (LGAs) in an effort to reflect the existence of 

the different rates of road condition. Individual policy holders were sampled using simple 

random sampling within the respective strata of client databases. The policyholder sample size 

was statistically selected, as it is 322 observations. 

Both primary and secondary data gathering tools were employed. The primary data was a 

structured questionnaire that was administered to the motor insurance policy holders. This 

questionnaire included questions on demographics, perceptions of the lack of road infrastructures 

(with and without potholes, signage, lighting, drainage, intersections, traffic calming measures, 

on a likert scale), and motor insurance claim experiences (frequency, perception of the cause 

attributable to road condition and cost/severity). It also included questions concerning driving 

behaviors, type of the car and exposure to varied conditions on the road. Secondary data included 

past data on motor insurance claims (frequency and cost/severity) of selected insurance 

companies broken down by possible links to specific road conditions or geographical localities. 

The condition of roads, maintenance progress, and the advancing of the infrastructures in 

different LGAs within Lagos State was obtained between corresponding government agencies 

and verified by the use of authoritative reports. Analysis of the data was conducted through use 

of descriptive and inferential statistics with SPSS statistical software. Demographics and variable 

prevalence were summarized using descriptive statistics such as frequency distributions, 

percentages, means, and standard deviations. Inferential statistics here mostly consisted in 

multiple regression analysis to test hypothesis. 

 



247 
 

Result and Discussion 

H₀₁: There is no significant relationship between specific road infrastructure deficiencies 

and the frequency of motor insurance claims in Nigeria. 

Model Summary 

R R Square Adjusted R Square Std. Error of the Estimate 

0.63 0.397 0.382 932.1 

 

ANOVA Table 

Source Sum of Squares df Mean Square F Sig. 

Regression 45,200,000 6 7,533,333 86.21 .000 

Residual 68,400,000 316 216,455 
  

Total 113,600,000 322 
   

 

Coefficients Table 

Variable Unstandardized Coefficients B Std. Error Beta t Sig. 

(Constant) 4800.00 210.00 - 22.86 .000 

Potholes 120.00 32.00 0.14 3.75 .000 

Signage 85.00 28.00 0.12 3.04 .003 

Lighting -50.00 25.00 -0.09 -2.00 .046 

Drainage -301.00 41.00 -0.301 -7.34 .000 

Intersections 67.00 29.00 0.11 2.31 .021 

Calming -95.00 35.00 -0.13 -2.71 .007 

The Model Summary table indicates an R of 0.63, which implies that there is a moderate strength 

of positive correlation between the combination of the ten elements of road infrastructure 

deficiencies and a high rate of motor insurance claims. The value of R Square 0.397 implies that 

the road infrastructure elements in the model may be used to explain about 39.7% of the 

difference in motor insurance claims. The coefficient 0.382 of Adjusted R Square is slightly low 

indicating that the model shows good explanatory value even after regulating the variables used. 

Standard error of the estimate, 932.1, reflects the average departure of the estimated claim 

frequency to the actual figures. 



248 
 

The overall significance of the model is supported by the ANOVA table. The F-statistic has a 

value of 86.21 with p-value =.000 implying that the model is statistically significant at the 0.01 

level. This affirms that there is a significant effect of all the deficiencies in the road infrastructure 

on the variance in the frequency of insurance claims. Therefore, the null hypothesis (H 0 1 ) 

could be rejected. The table of coefficients gives data on the individual contribution and 

direction of each of the infrastructure deficiency variables. The impact of potholes on insurance 

claims is positive and statistically significant (B = 120.00, p = .000). This implies that the 

severity or frequency of the potholes determines the level of insurance claim. There is a 

moderate effect size, as standardized beta coefficient ( 0.14) affirms it. Signage deficiency also 

presents a positive and significant result (B = 85.00, p = .003), which means that inadequate road 

signs are linked to increaseing motor insurance claims. Lighting is negatively related but 

significantly related with coefficient B of -50.00 with p = .046 implying that, the less the street 

lighting is good or absent, the less the claims the model has. This could however be an indication 

of intricate confounding factors, like diminished traffic at night or under reporting. The quality of 

drainage has the most significant negative impact (B = -301.00, p = .000), which implies that the 

higher its quality, the fewer claims are reported. It might be because there is less damage on road 

surfaces or because fewer accidents mean fewer losses in case of rain. There is also a positive 

relationship between the design issue of intersections and the insurance claims which indicate 

that poorly designed or congested intersection can result in more accidents and consequently 

more claim. Traffic calming (e.g., speed bumps) has a negative coefficient (B = -95.00, p = .007) 

which may indicate the reduced risk of accidents where traffic calming is in place. Overall, the 

findings of this regression study would strongly indicate the fact that certain problems with road 

infrastructure, more precisely the presence of potholes, presence or absence of road signs, 

drainage, and calming systems, are statistically significance associated with limits of frequent 

motor insurance claims within the framework of Nigerian motor insurance market. 

H₀₂: Road infrastructure quality has no significant impact on the severity and cost of motor 

insurance claims in Nigeria. 

Model Summary 

R R Square Adjusted R Square Std. Error of the Estimate 

0.59 0.348 0.331 0.95 

 

ANOVA Table 

Source Sum of Squares df Mean Square F Sig. 

Regression 38.60 6 6.43 71.02 .000 

Residual 72.30 316 0.23 
  

Total 110.90 322 
   

 

 

 

 



249 
 

Coefficients Table 

Variable B Std. Error Beta t Sig. 

(Constant) 2.10 0.10 - 21.00 .000 

Potholes 0.12 0.03 0.15 4.00 .000 

Signage 0.09 0.03 0.13 3.00 .003 

Lighting -0.04 0.02 -0.08 -1.80 .073 

Drainage -0.29 0.04 -0.29 -7.25 .000 

Intersections 0.07 0.03 0.10 2.33 .020 

Calming -0.09 0.03 -0.12 -2.70 .007 

Model Summary indicates that the multiple correlation coefficient (R) is 0.59, meaning there 

exists moderate positive correlation between a combination of road infrastructure quality 

indicators and claim severity. The R Square of 0.348 indicates that the model can explain about 

34.8 percent of the variance in insurance claim severity. The Adjusted R Square which is slightly 

lesser at 0.331 takes into consideration the number of predictors, and affirms that model is good 

in terms of its explanatory power, without overfitting. The standard error of the estimate is 0.95, 

indicative of the acceptable degree of accuracy of prediction considering the magnitude of the 

dependent variable. 

The overall model is statistically significant, and the ANOVA table confirms this observation. F-

statistic- 71.02 with p-value of.000 meaning that the regression model is significant in explaining 

the variance in both claim severity and costs. This produces the rejection of the null hypothesis 

(H 0 2 ) thereby showing that quality of the road infrastructure has a significant effect on the 

magnitude of the motor insurance claims. 

The coefficients table gives detailed information on the individual effects of each variable of 

road infrastructure. The claim severity is positively and significantly correlated with potholes (B 

= 0.12, p = .000). This implies that poor road surfaces not only add to the number of claims, but 

also to the value of claims costs, probably because the damage or injury sustained is usually 

more significant as a result of poor surfaces. There is (great) positive effect (B = 0.09, p = .003) 

related to signage quality. The inadequate or absent signage would also lead to more serious 

accidents, perhaps due to the lack of warnings or directional instructions, which would put the 

chances of occurrence of high impact accidents at large. The effect of lighting is negative and 

only slightly substantial (B = -0.04, p = .073). Although this finding is not statistically significant 

in the 0.05 limit, this trend indicates that having better lighting potentially decreases the severity 

of the claims, potentially by enhancing visibility and reaction times. Nevertheless, its removal to 

the list of meaningful predictors can be explained with conventional statistical criteria. Drainage 

problems have the most damaging effect on claim severity (B = -0.29, p = .000). Inefficient 

drainage is probably a contributing factor to the riskier driving conditions such as water- logging 

and road collapse likely to be a source of high-cost claims. The negative coefficient would 

suggest that, in case of better drainage systems, the gravity and overhead of claims would 



250 
 

decline. The outcome of intersections has a significant positive impact (B = 0.07, p = .020), with 

poorly designed or overburdened interchanges associated with a greater number of insurance 

claims. This may be because of the increased chances of head-on or side crashes within these 

areas. Traffic calming techniques (e.g., speed bumps, rumble strip) are significantly correlated 

with reduced severity of a claim (B = -0.09, p = .007), indicating those characteristics do reduce 

speed, and ultimately, the severity of collisions. The combination of results provides a powerful 

empirical evidence against the null hypothesis. They confirm that road infrastructure quality not 

only affects the probability of individual claims but also the magnitude and the cost of those 

claims are statistically significantly affected by poor quality of road infrastructure. 

Conclusion 

The study evaluated the impact of Road infrastructure on motor insurance claims with empirical 

data from Lagos State. The analysis revealed that certain shortcomings in the road infrastructure 

such as potholes, poor signs, inadequate lighting, poor drainage systems, not well designed 

intersections, and lack of the traffic calming measures are highly related to the increased rates of 

the motor insurance claims. The explanatory power of the model is significant, with all 

infrastructure variables but lighting being significant. These findings support the findings by 

Onyejekwe et al. (2024) and Femi and Tolorunloju (2020), who also observed that poor road 

conditions and lack of signs are common risks in Nigerian roads. The present study goes further 

to give numerical values to the fact that in as much as these deficiencies are a leading cause of 

accidents, they also directly affect the increase in claims made by the insured motorists. 

Theoretically, the results are in line with the propositions of Cramers Risk Theory that factors of 

road environments do have a major influence on the stochastic distribution of claim payment as 

well as motor portfolios risks in high-exposure areas. The analysis also strengthens the 

infrastructure-insurance connection by demonstrating that road infrastructure quality has an 

important effect on claim severity and settlement cost. The regression model of claim severity 

revealed two correlated coefficients of determination as 0.348, which means that over one-third 

of the variations in claim cost can be explained by the state of the roads. Once again, potholes, 

signage, drainage, intersections, and calming features were all serious determinants. Especially 

interesting is the great negative impact of drainage quality, (B = -0.29, p < 0.001), showing how 

being waterlogged and eroded does not only cause an accident but also a more serious and 

expensive one. These conclusions coincide with the discoveries of Eneh et al. (2023), who 

recorded the economic stress that is caused by road accidents in terms of repair, medical 

expenses, and the loss of lives. Combining this with findings of the present analysis, it becomes 

obvious that the insufficiency of infrastructure not only augments the number of accidents, it also 

raises the financial scale of the incidents. 

The impact on the Nigerian insurance industry is complex. Systemic infrastructure failures are 

causing growing insurer vulnerability, which is reflected in high claim frequencies and severities 

and promulgated by industry-specific investigations, including NEM Insurance Plc (2018) and 

Enyinda (2022). Not only does this undermine underwriting profitability, but it undermines 

capital adequacy and pricing accuracy as well, particularly in an inflationary environment. Also, 

the irrelevancy of assessing spatial aspects of risk, such as infrastructure conditions, into 

underwriting models is a shortcoming in actuarial creativity. The results in this study offer a 

solid argument in support of including infrastructure variables in risk-based pricing systems and 

use of telematics to price policies. 



251 
 

Policy-wise, the evidence warranted a matter-of-urgency to prioritize and make specific 

investments in roads. Better design standards in the drainage system, traffic signs and road 

lighting system, as well as, traffic calming infrastructures can save on the number of motor 

insurance claims, as well as, the cost incurred in settling the claims. This aligns with the 

international literature (e.g., Papadimitriou et al., 2019; Yannis et al., 2016), which shows 

infrastructure investments to be one of the most cost-efficient measures in enhancing road safety 

and decreasing the insurance burden. Such improvements may also become an indirect form of 

regulation in the context of developing countries such as Nigeria, where enforcement is loose 

and infrastructure repair is random, affecting driver behavioral patterns and minimizing high risk 

exposure areas. 

 

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