The National Insurance Commission has issued licences to 16 firms to commence micro insurance operations in the country, investigation has revealed.
The commission, which stopped the issuance of new operating licences to life and general underwriting companies in 2011, has been encouraging mergers and acquisitions in the sector by welcoming new investors with the required capacity to buy into existing companies.
However, NAICOM expressed its readiness to issue new licences to investors who were interested in starting micro insurance companies after it released the regulatory guidelines to commence the process for the emergence of the firms.
The Commissioner for Insurance, Mr. Fola Daniel, said with the issuance of the micro insurance guideline, NAICOM had provided clear rules for operators as well as consumer protection requirements.
“We have licensed 16micro insurance firms,” he said.
Micro insurance is a financial arrangement aimed at protecting low income earners against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risk involved.
Daniel said the guideline simplified supervisory reporting, underwriting and licensing processes and identification of certain incentives for micro insurance, model selection, fees and commission level for intermediaries.
According to the commission, micro insurance policies cover little risks and, therefore, excludes special risks like motor insurance (except tricycles and motorcycles), professional indemnity and other pecuniary risks, with the sum insured higher than N1m.
NAICOM also clarified that all third party liability risks, with the sum assured above N1m, were excluded from micro insurance business.
The commission pegged the minimum capital to commence life micro insurance and non-life micro insurance business at N150m and N200m, respectively, while firms willing to operate both are expected to have at least N350m capital.
The Group Managing Director, Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, said the firm realised many years back the need to develop micro insurance as part of its growth strategies.
According to him, the firm has a paradigm shift in its market approach and decided to develop micro insurance because it plans to make insurance more relevant, accessible and affordable to more Nigerians.
“We are happy with what we have been able to achieve with our retail approach and we have opened more branches in the rural areas,” he said.
Ogunbiyi said micro insurance was relevant to bridge the insurance gap in the country because it would help to take insurance to the grass roots.
He observed that over the years, insurance was mostly done by the corporate firms that were already enlightened on the need to take cover or were required to have it by statutory regulations.
According to him, retail insurance policies would help to alleviate the sufferings of the low income earners and add value to them.
The Group Executive Director, Royal Exchange Plc, Mr. Auwalu Muktari, said that the firm now had an established micro insurance company.
To get to the grass root, he said that the firm realised that it had to have a robust retail policy on ground.
He said that the company had been able to fine tune the group’s retail programme.