Insurance Firms Get Regulator’s Nod for Microinsurance

The National Insurance Commission has said Nigerian insurance firms can now run a microinsurance business window as the regulator seeks to expand penetration in the country.

The commission said this on Tuesday in a circular seen by THE WHISTLER.

The development comes amid rising insurance claims arising from the COVID-19 related business delays and the #EndSARS crisis, which affected both large and small businesses.

NAICOM said, “As part of the ongoing pursuit to support financial inclusion and increase insurance penetration in Nigeria, the commission hereby permits microinsurance window operations for conventional insurance companies.

“Henceforth, in order for a window operation to be granted to a conventional insurance company, the commencement date of this circular shall be 1st December, 2020.”

The commission disclosed that prior to approval, insurers must seek and obtain approval of the commission to transact microinsurance business.

The regulator further noted that the intending company’s board must in a resolution approve the establishment of a microinsurance department.

NAICOM explained that intending applicants must also apply for Window Microinsurance National Operation Licence before it could be granted the right to operate the business.

The regulator maintained that the department carved out for the purpose would be headed by an experienced insurance officer not below the rank of an Assistant General Manager.

The insurance officer is also expected to have a minimum of seven years post Associate of Chartered Insurance Institute of Nigeria qualification or a minimum of 10 years working experience in a technical department of an insurance institution.

NAICOM pointed out that the window operators must segregate the financial records of its microinsurance business from that of the conventional business.

The regulator added in its guideline that appropriate reinsurance arrangement must be put in place by the window operator, prior to commencement of the microinsurance business.

Reacting to the development, a professor of economics and business analyst at the Ahmadu Bello University, Zaria, Peter Njiforti, told THE WHISTLER that the development would take insurance nearer to the people.

He said, “The coverage of insurance on small and medium scale business has been very low and even the level of awareness of these SMEs by risk mitigation agencies is very low.

“If insurance firms can operate on a micro scale, they will be closer to some of the businesses and help reduce risks.”