The National Insurance Commission (NAICOM) has pegged the capital base for State Insurance Producer (SIP) at N2 million as part of plans to lobby the 36 states of the federation, including the FCT to subscribe to insurance products and services in a bid to deepen penetration.
In the SIP operational guidelines released by the regulatory body yesterday, NAICOM said: “A signed undertaking signed by an officer of the State Government not below the rank of a Permanent Secretary that the state undertakes and agree that the sum of Two Million Naira shall be deducted from accrued commission to be earned by the Licensed State Insurance Producer before payment of commission is made to the coffers of the Government.”
The regulatory body said, a license issued under this Guidelines would entitle the holder to act as a State Insurance Producer for the appropriate state government and would be renewable once every two years by the commission.
A State Insurance Producer, according to NAICOM, must maintain a separate insurance unit for proper monitoring of the activities of the agency with the Insurance Officer reporting directly to the Chief Executive Officer of the licensed agency.
It added that, “the State Insurance Producer shall enter into a memorandum of understanding; as may be approved by the Commission; with approved insurance companies established in its jurisdiction for the purpose of the placement and management of insurance business.”
The State Insurance Producer, it stressed, must only transact insurance business with approved Insurers, which list shall be approved from time to time by the commission
To this end, the will become effective on January 01, 2019
The Commissioner for Insurance, Alhaji Mohammed Kari at a seminar in Ibadan, said, SIP would 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.
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.
“We will soon make our position public, we need to gather our facts before we comment on the issue,” he said.