NAICOM Releases Insurance Web Aggregators Operational Guidelines….*Pegs Minimum Share Capital At N5 Million

The Nigerian insurance industry primary regulator, the National Insurance Commission (NAICOM) has yesterday February 2, 2022, released Web Aggregators operational guidelines.

According to NAICOM, “This Operational Guidelines shall serve as a working document to register, supervise and monitor web aggregators as Insurance Intermediary who maintain a website for providing information on products of different Insurers.

“In exercise of the powers conferred by the National Insurance Commission Act 1997, the Commission hereby issues Insurance Web Aggregators Operational Guidelines.

“iThis Guidelines comes into effect on the date of release to the insurance industry and the public

“This Guidelines shall apply to all Web Aggregators and Insurers respectively carrying on insurance business in Nigeria.

“This Guidelines shall be read in conjunction with other relevant Legislation, Guidelines and Circulars as determined to be applicable to the newly inclusive distribution channels approved by the Commission”

It is the responsibility of Web Aggregators, according to the guideline, to obtain any clarification required on the applicability of this Guidelines, and any other Regulations from the Commission.”

The web aggregator is expected to have a minimum share capital not less than N5 miliion as at the date of application and shall continue to maintain same throughout the license period, even as they are required to submit to the commission, a financial position duly certified by an External Auditor every year after finalisation of books of Accounts.

The regulatory body has equally pegged Web Agregator’s license fee at N3 million, while intending investor is to pay N500,000 non-refundable application fee, after which such investor will pay N2.5 million as licensing fees, even as license renewal will cost N1million.

The guideline stated that Insurance levy payable by Web Aggregator shall be one per cent of the gross commission income or minimum of N200, 000, whichever is higher, that the commission to be paid by the insurer partner to Web Aggregator shall not exceed 30 per cent of the brokers commission as stated in Section 53 of the Insurance Act, 2003.

“A Web Aggregators shall put in place a robust LMS and transmit leads at no extra cost to the insurers. The insurer shall keep adequate records of commission paid to a Web Aggregator,” it pointed out.

NAICOM In the guideline explained that payment of premium under web Aggregation operation shall be guided by Section 50(1) of the Insurance Act 2003 which provides for receipt of an insurance premium as condition precedent to a valid contract of insurance and highlighted further that there shall be no cover in respect of an insurance risk, unless the premium is paid in advance i.e. ‘No premium, No cover.’

The commission in the guideline said that insurance intermediary who maintain a website for providing information on products of different Insurers is covered by this guideline.

It stated that it is the responsibility of Web Aggregators to obtain any clarification required on the applicability of this Guidelines, and any other Regulations from the commission.

The guidelines said that approval and/or No Objection are required in two phases/stages as follows:Application for issuance of No Objection by NAICOM to Insurance Operators (Insurers/Brokers) and Application for issuance of Licence to Web Aggregator by NAICOM.

On application for issuance of No Objection by NAICOM, “any Insurer who intends to carry on a Web based Insurance business shall make an application to the Commission in the prescribed manner in line with NAICOM’s Guidelines on Web Aggregator’s model of business.

“An applicant having satisfied the requirements set out under Extant Laws and this Guidelines, the Commission will grant No Objection with such conditions as it may deem fit.

The application shall be accompanied with the following: Application letter with Service Level Agreement (SLA) signed with a Web Aggregator, which it intends to partner with.

A copy of the Appointment letter issued by the insurer to the Web Aggregator. iii. Board approvals or resolutions in support of such partnership.

A copy of Risk Management framework on web aggregator operations.
4.3. APPLICATION FOR ISSUANCE OF LICENCE BY NAICOM TO WEB AGGREGATOR:
An applicant who intends to register as a web Aggregator shall make an application to the Commission in the prescribed manner in line with NAICOM Guidelines on Web Aggregator.

The registration of a web aggregator shall be in Three (3) stages: Stage 1: Copy of No Objection/approval issued by Nigerian Communications Commission (NCC); Copy of letter of appointment issued to the Web Aggregator from named Insurer( s)/Broker( s)

Payment of non-refundable application fee; Copy of SLAs with named Insurers/Brokers; Copy of Certificate of incorporation issued by Corporate Affairs Commission (CAC);Certified True Copy of Memorandum and Articles of Association of the Applicant and Copy of Board resolution in support of partnership with named Insurers/Brokers

For Stage 2, the followings are required: Organisational chart showing functional responsibilities; Board Resolution to commence a Web Aggregator operation; Curriculum Vitae (CV) and Credentials of Principal Officers and Directors; Principal place of business of the Web Aggregator and confirmation of place of hosting the website; Snapshots of contents of proposed website along with proof of domain name registration; Details of infrastructure including IT infrastructures available.
vii.Detaiis and experience of the platform authorised Verifiers viii. Copy of the Risk Management Framework.

Others are: List of persons who have control over or responsibility for the website contents in relation to insurance web aggregation; A user 1.D. and temporary password (with only view permission) to verify the aggregator’s website; Business plan with five years financials projection; Sworn declaration of non-disqualification by the proposed directors in line with Section 12(1) of the Insurance Act 2003; Professional Indemnity Cover of not less than N20 Million limit of liability and Copy of Letter of appointment and acceptance of same of the proposed MD/CEO.

Under Stage 3 there will be Physical verification of web aggregator head office address and IT infrastructure to be deployed; Payment of Licence fee and Issuance of licence.