*Says It’s To Maintain Standards, Deepen Penetration
In efforts towards deepening insurance penetration nationwide, the National Insurance Commission(NAICOM) has released Guidelines for Micro Insurance operation in Nigeria.
The guidelines which is coming after many years of waiting, NAICOM explained, establishes uniform set of rules, regulations and standards for conduct of micro insurance business in Nigeria effective, January 1st, 2018.
NAICOM in a letter to all heads of trade associations and all Managing Directors/Chief Executive Officers of insurance companies operating in Nigeria, explained that the release of the revised microinstruction guidelines 2018, constitute part of the Commission’s determination to improve financial inclusion in Nigeria, particularly to the underserved and excluded segment of the populace.
In a statement to insurance industry operators, NAICOM said: “In exercise of the powers conferred by the National Insurance Commission Act 1997 and the Insurance Act 2003, the National Insurance Commission (hereinafter referred to as the Commission) hereby establishes uniform set of rules, regulations and standards for conduct of Microinsurance business in Nigeria.
Part of the guidelines reads: “No person shall commence or carry on any class of Microinsurance business without being registered or authorised by the Commission. This Guidelines supersedes all other microinsurance guidelines and shall take effect from January 1st, 2018”.
According to the Commission, the objectives of the guidelines include to provide minimum standards for the conduct of Microinsurance business in Nigeria, ensure consumer protection, establish general features of Microinsurance, establish duties and responsibilities of Microinsurance operators and insurance intermediaries as well as establish conditions for entry and exit from the Microinsurance market.
The commission, defined Microinsurance as insurance developed for low income populations, low valued policies, micro and small scale enterprises provided by licensed institutions, run in accordance with generally accepted insurance principles, and funded by premiums, adding that Microinsurance products are insurance products that are designed to be appropriate for the low income market, low valued policies, micro and small scale enterprises in relation to cost, terms, coverage, and delivery mechanism.
The commission, defined scope of microinsurance for the operators, saying the sum insured under a Microinsurance policy(ies) shall not be more than N2,OOO,OOO per person per insurer.
However, the Commission may review this provision subject to the nature of the low income earners.
It further said Microinsurance policies shall exclude special risks insurance, motor insurance (except tricycles and motorcycles), professional indemnity and other pecuniary risks with sum insured higher than N2,OOO,OOO
“Third party liability risks and all other classes of risks with sum insured above N2,OOO,OOO are also excluded, all compulsory insurances on third party liability risks excluded from microinsurance”, the commission stated.
It listed features of Microinsurance operation, saying
it should be simple in nature, its policies, conditions, procedures and marketing must be simple and the documentation must be presented in plain language.
The products/services risk, procedures and coverage must be unambiguous and easily understood, Microinsurance products must be affordable and accessible to the target market in terms of purchase, premium payments and claims.
The products or services shall be designed to meet the needs of clients, be beneficial, fair in price and coverage just as the delivery/distribution channels must be efficient to both the insurer and the policy holders.
The commission, in the guidelines said the Microinsurance underwriters are classified into unit, state and national operators.
On the distribution channels, NAICOM, said all eligible distributors may be utilised to reach potential Microinsurance Consumers upon the grant of license by the commission.
It said all licensed insurance brokers/loss-adjusters by the commission are qualified to provide insurance broking/loss adjustment services for microinsurance operators.
In addition to these, NAICOM, said Microinsurance agents shall be appointed by a Microinsurer and must provide evidence in the form of letter of appointment or service Level agreement.
It further said the Microinsurance agents are further classified as individual agents and corporate/referral agents, adding that the corporate and referral agents include cooperative societies, mutual benefits associations, microfinance banks,trade organisations, health maintenance organization.
Faith Based Organisations, postal agents, non-governmental organisations, esusu/adashi group, age grade group, telecommunications and others listed by the commission as micro insurance distribution channels include Mobile payment system, and any other registered associations.