The National Insurance Commission (NAICOM) is now set to licence State Insurance Providers (SIPs) in order to deepen insurance penetration across the 36 States of the federation including the Federal Capital Territory(FCT), Abuja, as a new alternative insurance distribution channel in the country.
The SIP, it was learnt, would be an agency of a state government licensed by NAICOM to provide intermediary services as defined by the guideline issued by the commission and also remunerated as by provision of the operational guideline.
Speaking at a seminar in Ibadan, Oyo State, last week, the Commissioner for Insurance, Alhaji Mohammed Kari said the operational guideline for new distribution channel has already been concluded and will become effective on January 01, 2019.
The SIP, according to him, is expected to facilitate the sale of compulsory classes of insurance within the state jurisdiction and all classes for its principal’s insurances (State Government), while additional insurance products and services would be considered in the future, depending on the success of the initial approach.
While it will also be empowered to penalise defaulters according to the laws of the States, the agency, he added, will equally maintain proper records of individuals and organisations bound by the requirements of the compulsory classes of insurance and monitoring the compliance.
“Once licensed to operate by the commission, the SIP shall enter into Memorandum of Understanding(MoU) as may be sanctioned by NAICOM, with approved insurance companies in its jurisdiction for the purposes of placement and management of insurance business within a state,” he pointed out
The SIP, he stressed, shall only transact insurance business with approved insurers, saying, only insurance companies with branch offices in respective states will be eligible to transact business with SIPs.
To complement the SIP policy, he promised that NAICOM would open 20 new branch offices across the states of the federation for strict management and enhancement of insurance penetration.
This, he added, would also go a long way in meeting government expectations with regards to the Economic Recovery and Growth Plan (ERGP) in the areas of job creation, poverty prevention and confidence in the face of risk.
This initiative, he disclosed, would be the answer to the saturation in the Corporate Segment, an opportunity to improve the image of insurance industry and brand building for individual insurance firms.
Which charging insurance industry players to harness the opportunities in the application of technology to businesses as it contributes to enhanced economic activities through increase in aggregate productivity which ultimately leads to economic growth and development, he called on them to put in place strategies to mitigate and control such risks so that the benefit of the application of technology to the insurance sector can be fully realised.
The industry, he said, needs to pay attention to and invest in inclusive insurance markets by introducing value added products to the market because of its promise for the future and Government expectations that the insurance gap in the country is huge, suggesting a large room for growth.
Kari stressed that insurance industry must, as a matter of priority, reach out to the uninsured, reduce its dependence on corporate clients and develop a retail base of clients, while encouraging insurance entities to consider it a priority to expand their operations and thus, strive to open new branches or outlets across the 36 states of the country.