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Chuks Udo Okonta
The National Insurance Commission (NAICOM) today released a revised guideline on Microinsurance operations which classified the business into Unit having N40 million capital base, State, N100 million and National, N600 million.
A statement by its Head Corporate Affairs, Rasaaq Salami, said the guideline is parts 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.
He noted that the revised Microinsurance Guideline took effect from January 1, 2018.
According to guideline for a National Insurer, who seek composite microinsurance licence, is expected to be capitalised to the tune of N600 million, while N400 million minimum capital base is needed from a General microinsurance and N200 million for a Life operations
It noted that national operators are allowed to have presence in at least six states within the three geopolitical zones of the federation.
For a State Microinsurer, the minimum capital base is pegged at NI00 million, broken into N60 million for general and N40 million for life operators. The regulator also expects such underwriter to operate only in one State of federation with at least three branches or office locations, each in a different Local Government Area.
A Unit Microinsurer investor, must be capitalised to the tune of N40 million, N25 for general business and N15 million for life, with operation in one location within a local community.
The regulator, has therefore made it mandatory for these microinsurance outfits to make themselves visible and must be seen to be serving the low income earners grassroots.
The new move, is aimed at increasing insurance penetration from 0.6 per cent it is currently to over two per cent in the near future, as well as increase the annual premium income of insurance industry to N1 trillion by Year 2020.
The commission had warned these outfit to stick to their civic responsibilities, while failure would lead to appropriate sanction.
Microinsurance is an insurance developed for low income populations, low valued policies, micro and small scale enterprises provided by licensed institutions, the 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.