The National Insurance Commission (NAICOM) has released guidelines for licensing and the operations of an insurance agency, known as State Insurance Producer (SIP).
The Commissioner for Insurance (CFI), Mohammed Kari, while unveiling the guidelines in Abuja said that the new guidelines issued pursuant to the powers conferred on it by section 49(1) of NAICOM 1997 Act, would align the activities of SIPs.
The SIP is a newly developed channel for insurance distribution introduced by the commission and is to become effective from January 1, 2019.
The NAICOM boss explained that the SIP was developed to ensure effective distribution of compulsory insurances, thereby deepening insurance penetration in the country.
According to the guidelines, a SIP shall maintain a separate insurance unit for proper monitoring with the insurer reporting directly to the CEO of the licensed agency.
In addition, by the provisions of the guidelines, the SIP is mandated to only transact insurance business with the approved insurers whose list would be approved from time to time by the regulatory commission.
The key responsibilities of SIP include the enforcement of compulsory classes of Insurance within the state’s jurisdiction by ensuring compliance and exercising on defaulters the power to penalise them according to the state laws.
The guidelines provide that once licensed, the SIP would enter into a Memorandum of Understanding (MOU) with NAICOM and the approved insurance companies.
The guidelines also require insurance companies to operate within the SIP’s jurisdiction for the purposes of placement and management of insurance business.
The commission stated that a SIP would be required to pay N2 million as licensing and registration fee and N1million renewal fee every two years.
Also, the regulatory guidelines indicate that on payment of premium for insurance businesses, “businesses conducted will be subject to the provisions of Section 50 (1) of Insurance Act 2003 (No-Premium, No-Cover).
In addition, it provides that “businesses will be subjected to the various guidelines issued by the commission where appropriate and premium payment shall be made directly to the Insurer or Lead Insurer as the case may be.’’
