By Bukola Adetoye
Lagos – In a bid to improve financial inclusion in Nigeria, the National Insurance Commission (NAICOM) has reviewed the Micro-insurance Guidelines of 2013 and released the revised edition.
The revised guidelines were released on Tuesday in Abuja and became effective from Jan. 1, 2018, a statement by the commission’s Head of Corporate Affairs, Mr Rasak Salami, said.
Salami said that the guidelines were reviewed to accomodate the underserved and excluded segment of the population.
Investopedia defines Micro-insurance as a mechanism to protect low-income people against risk, such as accident, illness, and natural disasters.
This is in exchange for insurance premium payments tailored to their needs, income and level of risk.
The spokesman said that the guidelines were aimed at moving insurance penetration from 0.6 per cent to two per cent and increasing the premium income of the industry to one trillion naira by year 2020.
He said the approved rates in the guidelines for life insurance and non-life insurance policy were five per cent and 15 per cent, respectively.
“The approved rates for non-life insurance stands at 15 per cent according to the guidelines.
“All operators are mandated to comply with the Code of Good Corporate Governance.
“The operational license of any operator that refuses to conduct business according to micro-insurance principles will be withdrawn,’’ Salami quoted the document as specifying.
He said that all micro-insurance products were to be presented to consumers in simplified marketing and technical procedures which would be different from conventional insurance.
This, he said, was to ensure that micro-insurance terms, coverage, delivery mechanism and services were unambiguous and universally clearly understood.
According to the spokesman, the capital base for unit operations are now N40 million, state operations N100 million and national N600 million.
He said that the document specified that a national insurer who sought composite micro-insurance license was expected to be capitalised to the tune of N600 million.
“A unit micro-insurer must have N25 million for general business and N15 million for life, with operation in one location within a local community.
“At the national level, N400 million minimum capital is needed for a general micro-insurer and N200 million for a life operator.
“At state level, the minimum capital base is pegged at NI00 million, broken into N60 million for general and N40 million for life operators.’’ It said.
Salami said that national operators were allowed to have presence in at least six states within the three geopolitical zones of the federation.