NAICOM Sets January 1, 2019 As SIP Operational Take Off, Pegs Licensing/Registration Fee At N2 Million

By CLEMENT NWOJI, Abuja

Barring last minutes changes, the National Insurance Commission (NAICOM) has stipulated that operations of State Insurance Producer (SIP) will take off in January 1, 2019, after mandatory payment of N2 Million licensing and registration fee.

According to NAICOM’s State Insurance Producer operational guidelines 2018 released to Media, SIP is a Government agency so licensed by the Commission to provide intermediary services as defined by the guideline and remunerated in accordance with the provisions contained in the guideline.

The main objectives so intended by the introduction of SIP include to enforce operation of compulsory insurances in the States, deepen insurance penetration, boost premium income generation and increase insurance sector’s contribution to Gross Domestic Product (GDP).

The SIP which is expected to carry out insurance business with approved list of Insurance companies by NAICOM in their respective States have the following key responsibilities according to the guidelines: ” Facilitating the enforcement of Compulsory classes of Insurance within the State; jurisdiction by ensuring compliance; Exercising on defaulters the power to penalise them according to the states laws; and Maintaining proper records of individuals and organisations bound by the requirements of the compulsory classes of Insurance and monitoring the compliance.

The guidelines further stated the following terms and conditions under which SIP is licensed to operate: A State Insurance Producer shall maintain a separate insurance unit or department for proper monitoring of the activities of the agency with the Insurance Officer reporting directly to the Chief Executive Officer of the licensed agency.

The State Insurance Producer shall enter into a memorandum of understanding; as may be approved by the Commission; with approved insurance companies established in its jurisdiction for the purpose of the placement and management of insurance business.

However, NAICOM further provided restrictions on the conduct of SIP saying, a State Insurance Producer or its employees shall not:- “Sell insurance products apart from the products contained in the
approved Memorandum of Understanding.

The State Insurance Producer may, however, on behalf of its principal; the State government; process and place other classes of insurance that are beyond the compulsory classes, but with the approved insurers and in compliance with the memorandum of understanding.

It shall not “undertake or engage in the underwriting of risks, settlement of claims, unauthorised insurance functions by the Commission or engage in any other insurance business outside insurance intermediation.

It shall not “give the impression to its customers or imply in any way as to being the actual insurance underwriter of the insurance products. The State Insurance Producer terms shall state that the respective insurer will wholly be liable for underwriting of the risks, assessment, adjustment and payment of claims that may arise from the risks covered.

It shall not “Receive any other commission, fee or gratification in whatever name, from Insurers or any party to the transaction; Fail to keep distinct and separate, the records relating to insurance transactions and that, such records are to be made available to the Commission as and when required; and shall not “Fail to ensure the confidentiality of consumers’ data and information”.