NATIONAL INSURANCECOMMISSION} - …

1 01 NATIONALINSURANCECOMMISSION}GUIDELINESFO R MICROINSURANCEOPERATIONIN NIGERIA1st CONTENTSC ontentSECTION1:OVERVIEWI ntroductionObjectivesConceptofM;cro;nsur anceScopeofM;cro;nsuranceSECTION2:MICROI NSURANCEMARKETSTRUCTUREC lassificationofMicroinsuranceUnderwriter sMicroinsuranceDistributionChannelsServi celevelAgreementSECTION3:REGISTRATIONREQ UIREMENTSECTION4:PRUDENTIALSTANDARDSM inimumCapitalRequirementStatutoryDeposit LiquidityStatusSolvencyMarginGeneralRese rve(LifeFunds)ContingencyReserveInvestme ntsReinsuranceActuarialValuationPricingP remiumPaymentRateofCommissionRiskManagem entPage333445566667777888999 IIPagel ..'SECTION5: CORPORATEGOVERNANCESECTION6: MARKETCONDUCTP roductsClaimsAdministrationConflictResol utionComplaintManagementConsumerProtecti onKnowYourClientRequirements(KYC)SECTION 7: SUPERVISORYREQUIREMENTSP roductPerformanceStatutoryReturnsandAcco untsInspectionCapacityBuildingAdvertisem entSECTION8: EXITISUSPENSION/CANCELLATIONC ancellation/SuspensionWindingUpMergersan dAcquisitionsSECTION9: FINESANDPENALTIESF inesandPenaltiesSECTION10.

2 TRANSITIONA ppendix1-Glossary0/TermsAppendix/I - Scope0/MicroinsuranceAppendix111-Registr ationRequirementsAppendixIV - Categorization0/MicroinsurersAppendixV - exerciseof the powersconferredby the NationalInsuranceCommissionAct 1997and the InsuranceAct 2003,the NationalInsuranceCommission(hereinafterr eferredto as theCommission)herebyestablishesuniformse t of rules,regulationsandstandardsfor conductof Microinsurancebusinessin shall commenceor carry on any class ofMicroinsurancebusinesswithoutbeingregi steredor authorizedby the ~~ )ry .~ the Guidelines:The mainobjectivesof this Guidelinesare to:i. Provideminimumstandardsfor the conductof Microinsurancebusinessin Establishgeneralfeaturesof Establishdutiesandresponsibilitiesof Establishconditionsfor entryand exit fromthe Microinsurance:i.

3 For the purposeof this Guidelines,Microinsuranceis definedas "insurancedevelopedfor lowincomepopulations,low valuedpolicies,microandsmallscaleenterpr isesprovidedby licensedinstitutions,runin accordancewithgenerallyacceptedinsurance principles,and fundedby premiums".ii. Microinsuranceproductsare insuranceproductsthatare designedto be appropriatefor the low incomemarket,low valuedpolicies,microand smallscaleenterprisesinrelationto cost,terms,coverage,and , ,conditions, Theproducts/servicesrisk, Microinsuranceproductsmustbeaffordablean daccessibletothetargetmarketintermsofpur chase, Microinsuranceproductsorservicesshallbed esignedtomeettheneedsofclients,bebenefic ial,fairin particularrisk, Microinsuranceoperatorwhoneglectsorfails toseektheclarificationreferredtoaboveand thusinsuressuchrisksnotwithinthescopeofM icroinsurance,shallbedeemedtohavetransac tedbusinessforwhichit is notlicensedtotransactandshallbepenalized inaccordancewiththeprovisionsof MicroinsuranceUnderwriters.

4 Forthepurposeof thisguidelines, (RefertoappendixIVfordefinitions)_____ (J _4lpa~ :Thiscomprisesdistributorsof eligibledistributorsmaybe utilizedto reachpotentialMicroinsuranceConsumersupo nthe grantof licenseby the Brokers/LossAdjuster:All licensedInsuranceBrokers/Loss-adjustersb y theCommissionare qualifiedto provideinsurancebroking/lossadjustmentse rvicesfor MicroinsuranceAgentsshallbe appointedby a Microinsurerandmustprovideevidencein theformof Letterof Appointmentor CorporateandReferralAgentsincludes:i. :A Microinsurershallpriorto appointinga MicroinsuranceIntermediaryexecuteaServic eLevelAgreementwhichshallcontainthe followingminimumstandardsandsubmitsameto the Commissionfor approval:____~_~._Right:_~~~~~li~~~~~:_~ _~ ~_~=r!)

5 Ar_~__~.5lpage~b. PremiumCollectionNotificationClausec. PremiumRemittanceClaused. ClaimsAdministrationClausee. Commissionpaymentf. Recordsmanagementg. KnowYourCustomer(KYC)clauseh. Anyotherrequirementas the Commissionmayfromtimeto personswhowishto operateas a Microinsurermustmeetthe registrationrequirementsin operateas a Microinsurermustbe a LimitedLiabilityCompanyduly registeredby CorporateAffairs Commission, section4 for the differentcategories,structureand :AnyMicroinsurerintendingto commenceMicroinsurancebusinessshallhavea minimumcapitalas stipulatedin appendixIV or as maybe issuedby the Commissionfromtimeto Microinsurershallmaintainwiththe CentralBankof Nigeriaa statutorydepositof10%of the A UnitMicroinsurershall,in respectof its Insurancebusinessin Nigeria,maintainat alltimesa 50%LiquidityMarginbeingthe excessof the valueof its admissiblecurrentassetsin Nigeriaoverits currentliabilitiesin A StateMicroinsurershall,in respectof its Insurancebusinessin Nigeria,maintainatall timesa 35%LiquidityMarginbeingthe excessof the valueof its admissiblecurrentassetsin Nigeriaoverits currentliabilitiesin A NationalMicroinsurershall,in respectof its Insurancebusinessin Nigeria.

6 Maintainat all timesa 25%LiquidityMarginbeingthe excessof the valueof its ~.c:rrentasse~in:.erlaoveri~ curren~iiabn~esInNigeri~. -l--61 Page, Microinsurershall,inrespectofitsNon-life business,maintainatalltimesa (LifeFunds)AMicroinsurershall,inrespecto fitslifebusinessinNigeria,maintaina GeneralReserveFundwhichshallbecreditedwi thanamountequaltotheNetLiabilitiesonpoli ciesinforceatthetimeoftheactuarialvaluat ionandadditional25% Microinsurershallmaintaina ContingencyReserveFundwhichshallbecredit edwithanamountequalto:2%ofGrossPremiumWr ittenor10%oftheNetProfit(whicheverisgrea ter)andtheamountshallaccumulateuntilitre achestheamountoftheminimumpaid-upcapital ,withrespecttoitslifeMicroinsurancebusin essinNigeria,or3%oftheTotalPremiumor20%o fNetProfits(whicheveris greater)andtheamountshallaccumulateuntil it reachestheamountoftheminimumpaid-upcapit alor50%oftheNetPremium(whicheverisgreate r), Microinsurershall at all times, inrespectof the insurancebusinesstransactedby it inNigeria,invest and hold investedinNigeriaassets equivalentto not lessthan the amountofpolicyholders'funds insuch accountsfor the 'Fundsshallnotbeinvestedin, , ~Microinsu~er~ransactingeitherGeneralorL ifebusinessinNigeriashallno~mvestormamta m:---'''<.

7 ~----------~-~~-------------------~-~-~- -----------~--~---~ of the Policyholders'Fundsin 'Fundsin 'Fundsin 'Fundsin 'Fundsin its copyofthe reinsurancetreatyarrangementshallbe submittedto the Commissionon or before15thDecemberof the precedingyear(15 daysbeforethe effectiverenewaldatefor thosewhosetreatyrenewaldatesdo not fall on 1st of January). A Microinsurertransactingany class ofMicroinsurancebusinessshallin respectof itslife businessoncein everyperiodof 5 yearscausean investigationto be madeintoitsfinancialpositionby an Actuaryappointedor securedby valuationof assetsandliabilitiesof the anyexcessoverthoseliabilitiesof theadmissibleassetsrepresentingthe fundsmaintainedby the For the purposeof thisinvestigation,the valueof anyassetandthe amountof liabilityshallbe determinedin Microinsuranceproductpricingmodelshallbe signedoff by a representativeof anactuaryfirmbasedon A Microinsurershall obtain the Commission'sapprovalfor any proposedchangeson existingproductsprior to WhereGroupunderwritingis applied.

8 No pricediscriminationwillbe allowedbetweenindividualswithina groupotherthanon the basisof ageat entryor levelof Wherethe ageprofileof the groupchanges,the Microinsurermayre-priceat renewalfor the groupas a whole,butnot for Forbundledproducts, :te~with_ea_ch~lscrete_:e:en:~fcovert~th epOliCY:~ .. microinsuranceintermediary(includingbrok ersandagents) :5%(singlepremiumpolicies)andsumof15%(No n-singlepremiumpolicies) :15% "GuidelinesforDevelopinga RiskManagementFrameworkforInsurersandRei nsurersinNigeria" ,theprincipleofproportionalityshallapply wherenecessary, (b)oftheRiskManagementFramework, , , ,theterms,coverage,deliverymechanismands ervicesmustbe~_::m~igU_o:San_d_s_h_O=C_I _e:under~tood.,,,__,,~ :All Microinsuranceproducts,brochure/flyers,t ermsand conditionsas wellas claimsformsshallbe submittedby the microinsurerfor the Commission'sapprovalbeforeintroduction/s ellingto the Thetermsandconditionsof a Microinsurancecontractshallcontaina Theclauseshallprovidethe maximumperiodwithinwhichclaimsmustbe Theclaimmustbe settledwithina maximumof 48 hoursafterthe microinsurerhadreceivedall the requisitedocumentationand issuanceof Claimspaymentsmaybe settledthroughan intermediary.

9 It shallbethe responsibilityof the Microinsurerto put in placea mechanismfor ensuringthattheclaimsare promptlyremittedto the Evidenceof premiumpaymentmaybe consideredas evidenceof Microinsurershallhavean internalconflictresolutionmechanismin placeforaddressingdisputesand All unresolvedcasesof disagreementinvolvingthestakeholdersin respectof aMicroinsurancepolicyshouldbe referredto the Commission' It shallbe the responsibilityof the Microinsurerto put in placepoliciesand proceduresfor quickresolutionof clients' TheMicroinsurershallsubmita quarterlyreportto the Commissionin respectof itshandlingof complaints/grievancesagainsttheMicroinsu rer,broker(s),serviceprovider(s)andagent (s).Wherethereareno complaints,a nil returnshallbesubmittedto the Microinsurersshallhavemechanismin placeto remindclientsof premiumdue datesto preventlapseof I P clientwhentherulefailtodeliverfairoutcom e(exgratiacompensation).

10 Declarationthatthetermsandconditionsofth econtracthavebeenexplainedandunderstoodb ytheproposerafterwhichhe/ ,thereshallbea ,theNationalIdentityCard,Driver'sLicense ,voter'scardoranyotherrecognizedmeansof (s) , ,paid, (ifany) (ifany) AccountsA Microinsurershall, Commissionmaycausean inspectionof the officeand recordsof any Microinsureror intermediaryat any timeif it is deemednecessaryby the EveryMicroinsurershallconducta minimumof three(3) daystrainingper annumforeachnewMicroinsuranceintermediar iesand agentsinvolvedin Microinsurancesalesand suchtrainingand list of traineesfor the previousyear,shallbe submittedto the Commissionnot laterthan31stMarchof the The Commissionmayfromtimeto timeprescribeminimumcontentsof the Conventionalagentsand brokerscan alsotransactMicroinsurancewithoutadditio nalrequirementshowever,the contracttermsmustbe in line :i.