The National Insurance Commission’s (NAICOM’s) plan to reach the grassroots through its microinsurance scheme seems to have hit the rock as investors within and outside the country do not show interest in purchasing the N350 million licence to register a microinsurance firm.
Findings revealed that only registered insurance firms are operating the business on the sideline.
This is coming five years after the NAICOM introduced the guideline on operations of microinsurance and pegged capital requirement for registering a the company at N350 million.
The Commission had wooed both local and international investors but the micro insurance guidelines seemed to have failed leading to the Commission to review the process. It plans to break down the N350 million capital requirement and allow staggered licence of unit, state, regional and national operations.
Like microfinance banks, which have the objective of deepening grassroots banking, NAICOM sought to register microinsurance firms to deepen grassroots insurance in the country. But the objective has not been achieved as investors did not show interest owing to capital issue.
A consultant to NAICOM on Market Development and Restructuring Initiative, Mr Yemi Soladoye, said the capital requirement by the Commission was not unattainable.
In an interview with The Nation, Soladoye said the plan by NAICOM to review the required capital for registering microinsurance in the country is commendable.
He said he had told the commissiom during the administration of former Commissioner for Insurance, Fola Daniel, that N350 million as capital requirement was too high.
He said: “Five years ago, I told them that N350 million cannot work because they won’t get people to register the business. I believe that if they find anybody to register with the current guideline, the person will not do the micro insurance business. Up until now, they did not get anybody to register except for registered insurance companies that only took a window.
“I told them to consider staggering the licence to unit, local government, state and national, give each a licence and different capital. For instance, I recommended N5 million capital for unit licence, which is the capital required for a broking firm, N20 million for operating a local government licence and N350 million for national licence.
“I am happy that the Commissioner, Mohammed Kari has finally in 2016 decided to give it a thought. I am optimistic that if he finally reviews the capitalisation, the objective of ensuring that insurance is downscaled to the grassroots will be achieved,” he added.
NAICOM’s spokesperson, Rasaaq Salami The Nation that the commission has seen that microinsurance might not work with the capitalisation.
He said the commissioner was trying to look at how to operate it successfully.
He explained that it would be different from the conventional insurance business for it reach the grassroots, adding that the commission would soon break down the capital requirement.
“We discovered that capital may be an issue and because of that they chickened out. But if we require a lower capital base, it will enable people operate in their locality.
“The commission is looking at staggered licence like unit, state, regional and national. This means that if you want to operate a unit office, you will not be required to register with the same amount like someone who wants to operate at a national level.
“This is the direction of the commission under the present commissioner. We believe by doing it this way, it will the microinsurance initiative will now work and more people will be interested in having the licence,” he said.
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