Custom Materials were re-introduced along with some enhancements in Lumion 2023.1.0.  See section 2.1.3: Custom Materials:

• Knowledge Base:  Lumion 2023: Update to 23.1.0 - Release Notes

The thumbnail of the material may not suit when you add it to your Custom Materials Library.

Here's a way to improve that.

1. New Custom Material and Thumbnail:

1.1:  The camera used for the thumbnail is the current camera in the Scene. 

1.2:  To create a flat rectangle thumbnail, simply move your camera to face the surface where the material is in use, before adding it as a Custom Material.  If you move the camera close to the surface you will get a better look for the thumbnail:

Then click on the Save OK button.

2. Existing Custom Material and Thumbnail:

If you have already created the Custom Material and want to update the thumbnail then use the following steps.

2.1:  Select a surface and click on the Custom Material thumbnail to apply it to the surface.

2.2:  Delete the current Custom Material:

2.3:  Then from the Material Settings tab click on the Custom Material icon to save a new Custom Material:

2.4:  Save the Custom Material.

The new Custom Material thumbnail: