Harmonised market goals to address perceived gaps in micro insurance
The insurance industry 10-year expected market goal being harmonised by KPMG professional services will address perceived challenges in the recently released micro insurance guidelines.
“The harmonised market goal is looking at all facets of market development including market penetration, which micro insurance falls under”.
Eddie Efekoha, outgoing chairman, Nigerian Insurers Association (NIA) who disclosed this during media interaction in Lagos said NAICOM is engaging with operators to get workable model for the micro insurance business.
He said the commission is committed to deepen penetration, which is the objective of micro insurance, hoping that the harmonised goal with streamline the processes.
Efekoha stated the Industry was working with KPMG to developed a 10-year transformation roadmap for the industry. “This roadmap together with similar works by other arms of industry are undergoing harmonisation under the auspices of the Insurers Committee.”
He strongly believes that the implementation of this plan when concluded soon would bring about the much-awaited growth to the insurance industry.
NAICOM had on release of the Revised Microinsurance Guidelines which became effective 1st January, 2018 stated that non-life conventional insurers operating Microinsurance as a window operation are given till June 2018 to wind up this operation, while the life operators has December 2018 as the deadline to do same.
The Guidelines 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 Commission, efforts to make existing insurance companies key into micro insurance products and reach the grassroot was not successful, so the new direction was strategically decided to drive penetration and increase access to insurance services.
Section 10, sub section 1 and 2 of the revised Microinsurance guidelines released recently to the public said “Existing Conventional microinsurers shall wind down their window operations for non-life classes within 18 months from the effective date of this Guidelines and in not later than 24 months transfer the life classes to a dedicated microinsurance company.”
It added that, ‘no policy shall be renewed or new one issued with an expiry date beyond the date stated above.’
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.