Micro insurance guideline and concerns

by | January 23, 2018 11:18 am



The National Insurance Commission (NAICOM) last week released the revised guideline for take-off of micro insurance business in Nigeria, setting minimum capital requirement for licensing.

Analysts concern on new licensing is whether this will not increase the number of operating companies beyond manageable size?, Is this not likely to bring more fragmentation in the industry? Does the required capitals big enough to set up quality offices, with the right technology, manpower for quality service delivery? Does NAICOM have the required capacity in terms of manpower, technology to monitor and supervise the activities of the emerging micro insurance companies, alongside existing 61 underwriting firms? What happens to existing companies that are doing micro insurance, do they need a new license? These are a few posers that will require clarifications as NAICOM interpret guidelines.

Micro insurance is the big deal being expected to deepen penetration of insurance in Nigeria, by reaching the grass root in line with NAICOM’s Market Development and Restructuring Initiative (MDRI) project.

In the guideline released by the Commission, the document said “as part of the Commission’s determination to improve financial inclusion in Nigeria, particularly to the underserved and excluded segment of the populace, the Commission has reviewed the Microinsurance Guidelines of 2013, and hereby releases a revised guidelines.

The Revised Microinsurance Guidelines which becomes effective from 1st January, 2018 further stated that, “No person shall commence or carry on any class of Microinsurance business without being registered or authorized by the Commission.

According to the guideline, the following capital requirement shall obtain for the different business structures:

Unit Microinsurer:  The Company’s Minimum Capital Base is N40 million (General: N2S million & Life: NIS million). It is to operate only in anyone (1) location within a local community and the Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the location within a reasonable time frame.

The Commission shall grant a state microinsurer licence to a unit microinsurer upon application following 36 months of successful business operation and approval by the Commission.

State Microinsurer: The Company’s Minimum Capital Base is NI00 million (General: N60 million & Life: N40 million). It is to operate only in anyone (1) State of the federation (for this purpose Abuja is regarded as a State) with at least 3 branches or office locations, each in a different Local Government Area. The Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the state within a reasonable time frame.

The Commission shall grant a national microinsurer licence to a state microinsurer upon application following 60 months of successful business operation and approval by the Commission.

National Microinsurer: The Company Minimum Capital Base is N600 million (General: N400 million & Life: N200 million). Its operation is nationwide with presence in at least 6 states within 3 geopolitical zones of the federation. The Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the country within a reasonable time frame. Registered Insurance Companies shall be granted national microinsurer licence upon application.

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