Nigeria’s National Insurance Commission sets N600m capital base for national micro-insurance licence.

Nigeria’s National Insurance Commission, NAICOM, yesterday unveiled the revised guidelines for micro-insurance operations, which stipulates N600 million minimum capital base for national micro-insurance license.
The Commission defined micro-insurance 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. “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 guidelines stated: “For a National Microinsurer, minimum capital base is N600 million,  while general business will have N400 million, the life business will have N200 million. “Its operation is nationwide with presence in at least six states within three 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,” NAICOM stated.
According to the guideline, a Unit Microinsurer must have minimum capital base of N40 million, hence while the general business arm will operate with N25 million, the life arm will operate with N15 million. “It is to operate only in any one 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,” NAICOM said. “For a State Microinsurer, minimum capital base is N100 million, while the general business will have N60 million, the life arm will have N40. “It is to operate only in any one state of the federation (for this purpose Abuja is regarded as a state) with at least three 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 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,” NAICOM said. The regulator said that it issued the new guideline to the industry as part of the financial inclusion strategy to stimulate growth in the sector especially the retail end of the market, drive insurance penetration and service the lower income earners who hitherto have been excluded from insurance.

This post was earlier published here

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