NAICOM Pegs State Insurance Producer Licence at N2m
The National Insurance Commission (NAICOM) has released the guidelines for State Insurance Producer (SIP).
The operational licence of the business which is expected to commence January 1, 2019 is pegged at N2 million.
NAICOM in the guidelines stated that there will be 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 N2,000,000.00 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.
It noted that the SIP licence will be renewed every two years with the sum of N2 million, adding that the levy chargeable on SIP business shall be 1.00 per cent of gross commission and that the commission to be paid by the insurers to a SIP shall not exceed 75 per cent of the Commission payable to insurance broker.
“If the Commission is satisfied that the applicant has satisfied the requirements as contained herein or such other requirements as may be prescribed, it shall licence the applicant as a State Insurance Producer
“A license issued under these Guidelines shall entitle the holder to act as a State Insurance Producer for the appropriate state government and shall be renewable once every two (2) years by the Commission.
“The Commission may require an applicant to furnish any further information or clarification for the purpose of consideration of the application and also in regard to any other matter as may be deemed necessary by the Commission,” it said.
NAICOM maintained that the SIP is licensed to operate under the following terms and conditions:- Mode of operations, business conduct and obligations, adding that a SIP shall maintain a separate insurance unit or department for proper monitoring of the activities of the agency with the Insurance Officer reporting directly to the Chief Executive Officer of the licensed agency.
“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 shall only transact insurance business with these approved Insurers, which list shall be approved from time to time by the Commission,” it said.
The insurance industry regulator noted that key responsibilities of the agent include: Facilitating the enforcement of Compulsory classes of Insurance within the State jurisdiction by ensuring compliance; exercising on defaulters the power to penalise them according to the states laws and maintaining proper records of individuals and organisations bound by the requirements of the compulsory classes of Insurance and monitoring the compliance.
The Commissioner for Insurance, Mohammed Kari said the SIP business model will bring about 200 to 300 per cent insurance penetration in two years. He said the initiative will increase the revenue base of state governments and insurance profits.
On the benefits accruable from the SIP initiative, he maintained that it would help to meet the government’s expectations with regards to Economic Recovery and Growth Plan (ERGP) in the area of job creation, poverty prevention and confidence in the face of risks.
Other benefits are, answer to the saturation in the corporate segment, improve the image of the insurance industry and brand building for individual insurance institutions.
He posited that to complement the SIP policy, the commission will be opening 20 new branch offices in the states across the nation with each Geo political zone getting four branches each.
Kari noted that that the SIP will 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 the provisions of the operational guideline.
The Commissioner posited that once licensed, the SIP shall enter into Memorandum of Understanding (MoU) as may be sanctioned by NAICOM with approved insurance companies in its jurisdiction for the purpose of placement and management of insurance business with approved insurers, that have branch offices in the state.
Highlighting more on the benefits accruable from the SIP initiative, he maintained that it would help to meet the government’s expectations with regards to Economic Recovery and Growth Plan (ERGP) in the area of job creation, poverty prevention and confidence in the face of risks.
Other benefits are, answer to the saturation in the corporate segment, improve the image of the insurance industry and brand building for individual insurance institutions.
