The National Insurance Commission has reduced the minimum capital base for microinsurance companies from N150m to N40m.
This was contained in the new microinsurance guideline that was released by the commission and obtained by our correspondent on Monday.
“As part of the commission’s determination to improve financial inclusion in Nigeria, particularly to the underserved and excluded segment of the populace, the commission has reviewed the microinsurance guidelines of 2013, and hereby releases a revised guideline,” NAICOM stated.
The commission added that the implementation of the guideline had commenced.
Under the old guideline, the commission pegged the minimum capital to commence life microinsurance and non-life microinsurance at N150m and N200m, respectively, while firms willing to operate both were expected to have at least N350m capital.
Appendix IV of the new regulation states that to operate as a unit micro insurer, “The company’s minimum capital bases is N40m (general, N25m and life, N15m). It is to operate only in any one location within the local community and the company shall prove to the commission through their business plan that they are going to access the low income earners spread across the location within a reasonable time frame.”
It added that the commission shall grant a state microinsurance licence to a unit micro insurer upon application following 36 months of successful business operations and approval by NAICOM.
Section 2 under appendix IV states that to operate as a state micro insurer, “The company’s minimum capital base is N100m (general, N60m and life, N40m). It is to operate only in any one state of the federation (for this purpose Abuja is regarded as a state) with at least three branches or office locations, each in a different local government area.
“The company shall prove to the commission through their business plan that they are going to access the low income earners spread across the state within a reasonable time frame.”
It added that the commission shall grant a national micro insurer licence to a state micro insurer upon application following 60 months of successful business operation and approval by the commission.
For a national micro insurer operator, the commission added in section three of appendix IV, “The company’s minimum capital base is N600m (general, N400m and life, N200m). Its operation is nationwide with presence in at least six states within three geographical zones of the federation. The company shall prove to the commission through their business plan that they are going to access the low-income earners spread across the country within a reasonable time frame.”
The guidelines added that registered insurance companies shall be granted national micro insurer licences upon application.
In recent years, NAICOM had stopped the issuance of new operating licences to general and life insurance companies.
New investors were left with the option to either acquire existing insurance companies or purchase microinsurance firms if they must register their presence in the Nigerian insurance market.