The National Insurance Commission (NAICOM) has caved in to the demands of the Nigerian Council of Registered Insurance Brokers (NCRIB), cancelling and withdrawing the guidelines on State Insurance Providers (SIP) policy ahead of a committee to be set up to jointly review the guidelines to achieve a set objectives of growing the market.
The withdrawal of the guidelines on the SIP policy, which the umbrella body says could push 80 percent of its current members out of business, is to allow the committee which will draw its membership from the commission and the NCRIB to look into the positives and negatives of the SIP policy with a view to achieving the objectives of deepening insurance penetration and also ensuring that compulsory insurance works.
Other aims of the SIP according to the commission, are to deepen professionalism and also rid the industry of non-professionals that are gradually acquiring brokerage licenses and taking over the market.
The policy, which according to sources in the commission has gotten the buy-in of some state governments like Lagos and Oyo which had made inquiries, was cancelled and withdrawn today by a circular from the commission signed by Agboola Pius, Director, Policy and Regulation at NAICOM
The policy guidelines was issued into the market on November 19 and its withdrawal takes effect today, December 20.
The circular referenced NAICOM/DPR/20/2018 and issued to all insurance institutions with the title, “Withdrawal Of Circular On State Insurance Producers Operational Guidelines”,was the outcome of the parley on Wednesday December 19 in Lagos between the commission led by the Insurance Commissioner, Mohammed Kari and the insurance brokers led by their market association, the NCRIB.
It reads, “Pursuant to the powers conferred by the enabling laws, the commission hereby withdraws and cancels the circular dated November 18, 2018 with reference number NAICOM/DPR/CIR/17/2018 and titled “Operational Guidelines on State Insurance Providers”.
The withdrawal and cancellation take immediate effect” said Agboola in the circular that has now brought relief to the marketing arm of the insurance industry.
An elated Shola Tinubu, President, NCRIB who commented on the development expressed gratitude to the commission, most especially the Commissioner, Mohammed Kari for listening to the prayers of the operators who said could have been pushed out of the market by the policy which implementation was set for January 1, 2019.
“We appreciate NAICOM for the magnanimity in withdrawing the guideline as it will lead to the much desired progress and cohesion required for the industry’s growth”,noted the NCRIB President
The withdrawal of the guidelines by NAICOM will rob it of N74 million it would have generated had the 37 state governments including the Federal Capital Territories (FCT) agreed to set up the SIPs.
The figure is based on the N2 million requested by the commission as the license fee, and renewable every two years for the SIPs from the 36 states and the Federal Capital Territory (FCT)
The cancellation is also seen as setback to state governments like Lagos and Oyo that have geared up to take up the opportunity which is expected to deepen their internally generated revenue (IGR).
InsideBusiness findings showed that Oyo state was in a pole position to implement the SIP policy having finalised plans to set up a micro insurance scheme in its efforts at furthering the financial inclusion policy in the financial services sector.
The withdrawn guidelines require state governments to enact a law to create the SIPs, with a chief executive whose qualification is not defined for the agencies that will undertake professional operation.
The commission in the guidelines also provides for an Insurance officer who must have a diploma of the Chartered Insurance Institute of Nigeria (CIIN). The officer will report to the chief executive whose qualification and experience are not defined.
The anticipated 37 agencies, under the guidelines are to sign Memorandum of Understanding (MoUs) with insurance underwriters in their jurisdictions through which they will place insurance businesses they secured, with the approval of NAICOM from time to time.
Key responsibilities of the SIPs as outlined by the Commission include facilitating and ensuring the compliance with compulsory insurance and punishing defaulters in line with the states’ laws.
They are also to keep records of individuals and organisations and ensure their compliance with the compulsory classes of insurance business.
They are however among others, outlawed from underwriting, claims settlements and selling insurance outside those contained in the MoUs but may on behalf of the state governments place other insurance businesses with the underwriters.
They are also to observe other guidelines that guide private insurance brokers such as the No premium, No cover.
The SIPs under the guidelines, are authorised to facilitate sale of the compulsory classes of insurance and can handle all classes for their principals, the state governments.
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