Insurers get 18 months to unbundle micro insurance covers, or get license
Insurance companies that were underwriting micro insurance products before the recently released revised guideline on micro insurance scheme by the National Insurance Commission (NAICOM), has been given 18 months to get microinsurance license or unbundle existing covers and transfer to other firms having the new license.
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 nor new one issued with an expiry date beyond the date stated above.’
By this directive, 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 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.
Modestus Anaesoronye