NAICOM Orders Micro-Insurers to deposit a minimum 10% capital with CBN

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By Ayinde Oluseye

Prospective micro-insurers must maintain a statutory deposit of 10 percent of the minimum capital requirement with the Central Bank of Nigeria, CBN according to the revised micro-insurance guideline released last week by the National Insurance Commission, NAICOM.
The guidelines stated, “A micro-insurer shall maintain with the Central Bank of Nigeria a statutory deposit of 10 percent of the minimum capital requirement.
The Commission also stipulated liquidity benchmarks for micro-insurers, saying: “A unit micro-insurer shall, in respect of its insurance business in Nigeria, maintain at all times a 50 percent liquidity margin being the excess of the value of its admissible current assets in Nigeria over its current liabilities in Nigeria.
“A state micro-insurer shall, in respect of its insurance business in Nigeria, maintain at all times a 35 percent liquidity margin being the excess of the value of its admissible current assets in Nigeria over its current liabilities in Nigeria.
“A national micro-insurer shall, in respect of its insurance business in Nigeria, maintain at all times a 25 per cent liquidity margin being the excess of the value of its admissible current assets in Nigeria over its current liabilities in Nigeria.
“A micro-insurer transacting any class of micro-insurance business shall in respect of its life business once in every period of five years cause an investigation to be made into its financial position by an actuary appointed or secured by the micro-insurer.
The investigation shall include: a valuation of assets and liabilities of the micro-insurer; determination of any excess over those liabilities of the admissible assets representing the funds maintained by the micro-insurer; for the purpose of this investigation, the value of any asset and the amount of liability shall be determined in accordance with applicable valuation regulations.”
Also, NAICOM mandated micro-insurers to conduct a Know-Your-Customer, KYC, check on every prospective customer to confront issues of impersonation and other fraudulent acts in the insurance industry even as it gave out standard commission rates that insurance brokers should charge for every class of business to prevent irresponsible and indiscriminate charges.
While stating that the KYC will reduce the risk of frauds, the regulator mandated brokers to charge five per cent for single premium policies and 15 percent for non-single premium policies throughout the premium payment period. For non-life insurance business, fifteen per cent of the premium shall be charged.
“The Commission may in line with extant laws prescribe the rate of commission from time to time”, NAICOM stated.