The National Insurance Commission (NAICOM) has released a new operational guideline that will enable telecommunication companies and other agents to partner with insurance companies for product distribution.
This is in line with the efforts of the commission to enhance insurance product distribution across the nation’s population, which is expected will help deepen penetration.
Insurance penetration in Nigeria, Africa’s most populace nation is estimated at 0.3 percent, far below South Africa’s 12.4 percent and Kenya’s 2.83 percent.
NAICOM in the operational guidelines released Wednesday called ‘Insurance Web Aggregators’, said it shall serve as a working document to register, supervise and monitor web aggregators as insurance intermediary who maintains a website for providing information on products of different insurers.
It said ‘In exercise of the powers conferred by the National Insurance Commission Act 1997, the Commission hereby issues Insurance Web Aggregators Operational Guidelines.
According to the commission, the guideline which becomes effective February 1, 2021, shall apply to all Web Aggregators and Insurers respectively carrying on insurance business in Nigeria.
“This guideline shall be read in conjunction with other relevant legislation, guidelines and circulars as determined to be applicable to the newly inclusive distribution channels approved by the commission.”
NAICOM said an applicant who intends to register as a web aggregator shall make an application to the commission in the prescribed manner in line with NAICOM guidelines on web aggregator, including a copy of No Objection/Approval issued by the Nigerian Communications Commission (NCC).
Joshua Ogbeifun of Leadway Assurance speaking on the topic “Driving Insurance Penetration in Nigeria” at a training for journalists in Lagos last week said low penetration was a major challenge facing the industry, and underscore why stakeholders must work together to increase uptake of insurance across the population.
Read also: Insurance penetration will grow on improved financial inclusion, access to credit
Ogbeifun while advocating for simplification and personalising of insurance products and services to meet the yearnings of the insuring public, charged the regulators to put an adequate regulatory framework in place to strategically drive penetration.
Ogbeifun expressed worries that a situation where there are about 12 million cars on the road in Nigeria and only about 3 million have valid insurance policies is not the best for the industry and the nation at large.
Ogbeifun, who called on the government to put in place regulations to help distribution, said this was one of the internal factors affecting penetration.
On internal factors to drive insurance penetration, he said increasing access through digital and wider distribution, targeting unique customer segments and needs, and leveraging the power of partnerships will increase penetration.
According to him, a country with low insurance penetration shows that people of that country do not take insurance as a risk management tool, noting that lesser growth in the insurance industry also means lesser growth for the economy.
“Nigeria as a supposed giant of Africa should not be at 0.3 percent, so players in the market and stakeholders should think on how to drive insurance penetration,” Ogbeifun added.
Further details of the guideline show that web aggregator is expected to have a minimum share capital not less than N5 million as of the date of application and shall continue to maintain the same throughout the license period, even as the web aggregator shall submit to the commission, a financial position duly certified by an external auditor every year after finalisation of books of accounts.
The intending investor is to pay N500,000 non-refundable application fee, after which such the investor will pay N2.5 million as licensing fees, even as license renewal will cost N1million.
On payment of premium under web aggregation, operation, it said, shall be guided by Section 50(1) of the Insurance Act 2003 which provides for receipt of an insurance premium as a condition precedent to a valid contract of insurance and highlighted further that there shall be no cover in respect of an insurance risk, unless the premium is paid in advance i.e. ‘No premium, No cover.’
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