No fewer than three conventional insurance companies have applied for fresh micro-insurance Licence, while about seven fresh investors have equally submitted applications to the National Insurance Commission(NAICOM) seeking to operate micro-insurance outfits in the country, LEADERSHIP investigations reveal.
Further findings revealed that the three insurers had applied for a National Micro-insurance Licence whose capitalisation is put at N600 million for a composite micro-insurance operator.
Royal Exchange Plc, AIICO Insurance Plc, Linkage Assurance Plc, Niger Insurance Plc, African Alliance Plc, Anchor Insurance Company Limited and Mutual Benefits Assurance Plc have been very active in retail market and three of them have now applied for the Licence.
While the existing insurers are bent on applying for national micro-insurance Licence, about seven new investors have, however, applied for state and unit licence es, with most of them targeting Lagos and Abuja markets. While those eyeing state License are to capitalise to the tune of N100 million, investors who want to operate at the local level must have N40 million capital base.
Currently, the regulatory body, NAICOM is vetting their applications and may issue some of them licences in the second quarter of the year. If granted approval, apart from having earmarked a statutory deposit and capital base, they will have to set up new offices across the federation, recruit new staff and train them.
Further LEADERSHIP findings revealed that the remaining 14 insurance companies who are already offering micro-insurance products and services as window operators are already discussing at the board level to examine whether it would be profitable for them to apply for this licence. While some of the concerned firms, investigation revealed, have presented the proposal to their respective board, they are awaiting the approval of their boards to officially apply to NAICOM.
The National Insurance Commission had earlier issued 18 months ultimatum to these companies to acquire fresh micro-insurance licence or suspend the selling of these products. By this directive, investigations revealed that Non-life conventional insurers operating Micro-insurance as a window have been given till June 2019 to wind up this operation while the Life operators has December 2019 as the deadline to do same.
To increase insurance penetration in the grassroots, NAICOM, had, earlier in the year, launched a revised Micro-insurance Guideline to cater for the 80 million low income earners in the country. The current insurance companies have, somehow, restricted the low income earners from the insurance system, running after conglomerates, government and juicy sectors, such as, oil and gas, maritime and aviation.
But with this new guideline, however, micro-insurers are expected to simplify insurance policies, make it affordable for low income earners and the poor, thus, deepening insurance acceptance in the country.
Speaking on this development, Deputy Commissioner for Insurance, Technical, Mr. Sunday Thomas, said, the categorisation and low capital base were meant to ensure influx of investors in this new micro-insurance landscape, while allowing the conventional insurers to concentrate on their core business, thus, leaving micro-insurance operation to these new outfits.
Thomas added that the regulator has the needed capacity to supervise these firms coming up, as there are plans by the commission to float more branches and recruit new staff across the country to have a closer monitoring of not only these micro-insurance outfits, but also the conventional insurance companies.
He said the new arrangement will ensure that innovative Micro-insurance products are designed for the low income market, low valued policies, micro and small scale enterprises in relation to cost, terms, coverage, and delivery mechanism.
He pointed out that the regulatory body is already receiving application from investors in a bid to deepen the insurance penetration, especially, in the grassroots, adding that, the contribution of the insurance industry to the Gross Domestic Product (GDP) will improve significantly as a result of this development.
In the same vein, the Commissioner for Insurance, Alhaji Mohammed Kari, has charged underwriting companies in the country to shift away from corporate to the retail segment of the insurance market. Kari, while speaking at the first annual Insurers’ Committee Retreat in Abeokuta, Ogun State, at the weekend, noted that the growth of the industry lies in embracing financial inclusion products in the country.
According to him “it is this realisation that led the commission into introducing financial inclusion products into the market a few years back. We are glad that Takaful and Micro-insurance is now taking firm root in the industry. It is also noteworthy that insurance companies have started to make good attempts at shifting focus from corporate segment to retail segment of the market.
Earlier, managing director, Universal Assurance PLC, Mr. Ben Ujoatuonu, applauded the categorisation of micro-insurance licencing into Unit, State and National, saying, this will allow investors to play in the micro-insurance market, depending on the level of their capital.
Stating that insurance industry is now serious about penetrating the grassroots through microiinsurance, he noted that the highest percentage of the Nigerian populace lives in the informal sector of the economy, where micro-insurance outfits are expected to play in.
According to him, “the capital base is going to give opportunities for investors to come in, but there must be a defined strategy and products that will reach low income people so that we, as an industry, will reap the benefits of the huge population of this country. This business line will lead to rapid insurance penetration in both rural and urban areas and increases insurance contribution to GDP.”
Advising micro-insurance outfits to make their products simple, seamless, well-articulated and in line with the financial inclusion objectives, he said, doing so will allow people assess them and get good values from these micro products. He believes micro-insurance sub sector of the insurance industry will be a toast for conventional insurers, because it is safer and claim is not as high as in the conventional insurance business.
He said: “If micro-insurance is well articulated and followed, even the conventional insurers may begin to focus in that direction because there would be a lot of revenue from there, cost in the long run would be lower and it would make your balance sheet healthy. The claim is not as huge as in the conventional insurance, which makes it attractive.”
On his part, executive secretary, Nigerian Council Of Registered Insurance Brokers (NCRIB), Mr. Fatai Adegbenro, said the micro insurers are going to take the benefits of insurance to the grassroots, since artisans and low income earners are in the grassroots.
“With this, they (people) won’t have to wait on government to settle them when they suffer insurable loss. It is a laudable initiative. The categorisation is splendid and capital base is okay.” He disclosed that the brokers are already serving the market, but that what will only change now is, the risks classified under micro-insurance will now be for micro-insurance outfits.
However, managing director, Saham Unitrust Insurance Nigeria Limited, Mr. John Ijerheime, believes there is no need for the government to separate micro-insurance from the conventional insurance business, calling on the regulator to restrict micro-insurance operation to conventional insurance system.
To increase insurance penetration in the grassroots, the federal government through NAICOM, had earlier launched a revised Micro-insurance Guideline to cater for the 80 million low income earners in the country. The current insurance companies have, somehow, restricted the low income earners from the insurance system, running after conglomerates, government and juicy sectors, such as, Oil and Gas, Maritime and Aviation.
But with this new guideline, micro insurers are expected to simplify insurance policies, make it affordable for low income earners and the poor, thus, deepening insurance acceptance in the country.