Provisions Of The Insurance Web Aggregator Guidelines, Registration & Share Capital Of Insurance Companies In Nigeria

Notable Provisions Of The Web Aggregator Operational Guidelines In Nigeria

The Web Aggregator Operational Guidelines as prescribed by the National Insurance Commission (NAICOM) will be the focus of this article and were designed to serve as a working document to register, supervise and monitor web aggregators as Insurance intermediaries who maintain websites for providing information on products of different insurers. 

We will thus be looking at the provisions of these guidelines in detail.

What is the application scope of the guidelines?

– The guidelines shall apply to web aggregators and insurers respectively carrying on insurance business in Nigeria.

What is the procedure for registration and approval under the guidelines?

– Applications and/or No Objections are required in 2 stages as follows :-

1). An appplication for the issuance of “No Objections” by NAICOM to insurance operators (insurers/brokers). 

2). An application for the issuance of an operating license to Web Aggregators by NAICOM.

For applications of issuance of no objections to insurance operators by NAICOM :-

– Any insurer who intends to carry on a web-based insurance business shall make an application to the commission in the prescribed manner .

– An applicant having satisfied the requirements set out under extant laws & these guidelines, the NAICOM will grant a “No Objection” with such conditions as it may deem fit.

– This application shall be accompanied with the following :- 

a). An application letter with a Service Level Agreement (SLA) signed with a web aggregator, whom it intends to partner with.

b). A copy of the appointment letter issued by the insurer to the web aggregator.

c). A board approval or resolution in support of such partnership.

d). A copy of the applicant’s risk management framework on web aggregator operations.

Regarding an application for the issuance of a license by NAICOM to a web aggregator the guidelines state the following :-

– An applicant who intends to register as a web aggregator shall make an application through its legal representative to NAICOM in the prescribed manner outlined by the guidelines.

– The registration of a web aggregator shall be in 3 stages with the following requirements :-

Stage 1

a). A copy of a No Objection/Approval issued by the Nigerian Communications Commission (NCC).

b). A copy of a letter of appointment issued to the web aggregator from its named insurers and brokers.

c). A copy of SLAs with named insurers/brokers.

d). Certified True Copies of the applicant’s Certificate of Incorporation & memorandum and articles of association (MEMART).

e). A copy of the board resolution in support of the partnership with named insurers/brokers.

f). Proof of payment of a non-refundable application fee.

Stage 2

a). An organizational chart showing functional responsibilities.

b). A board resolution to commence a web aggregator operation.

c). Curriculum Vitae (CVs) of directors & principal officers of the applicant.

d). A statement of the principal place of business of the web aggegator & a confirmation of a place of hosting the website.

e). Snap shots of contents of proposed website along with proof of domain name registration.

f). A professional indemnity cover of not less than 20 Million Naira limit of liability.

Stage 3 

– Physical verification of web aggregator’s office address and IT infrastructure to be deployed.

– License Fee payment.

– Issuance of license.

What do the guidelines say on SLAs between web aggregators and insurers/brokers?

– A web aggregator shall enter into an agreement with the insurer and a copy of such agreement shall be filed with the commission within 30 days for ratification.

– The agreement should include but not be limited to the following :-

a). The web aggregator’s website model to be offered.

b). Duties and responsibilities of each of the parties under the agreement during and upon formation of contract.

c). Time frame & mode of transmission of leads to be shared.

d). Responsibilityof complying with regulations and other legal requirements by both parties to the agreement.

What are some of the application and eligibility criteria for the grant of a license under the guidelines?

– An applicant seeking a grant of licensing as a web aggregator shall complete the application form as specified in the guidelines.

– The application shall be made for a web aggregator license, along with the requisite fees as specified in the guidelines. 

– The applicant shall submit the evidence of approval/No Objection letter from the NCC before securing the license to operate as web aggregator from the commission.

– The aggregator shall appear before the commission for personal representation in connection with an application. 

What is the validity tenure of a license under the guidelines?

– A license issued shall be valid for 2 years barring suspension and/or cancellation.

Registration & Share Capital Of Insurance Companies In Nigeria Under The Insurance Act Of Nigeria

The Insurance Act Of Nigeria is the primary piece of regulatory legislation governing the Insurance Sector, particularly in the areas of registration and share capital which will be the focus of this article.

We will be looking at the provisions of the act regarding registration applications, the classification of insurance business in Nigeria, and share capital.

What is the application scope of the Insurance Act?

– This act applies to all insurance business and insurers, other than insurance business carried on by insurers of the following descriptions :- 

a). A friendly society that is an association of persons established with no share for the purposes of aiding its members or their dependants where such association does not employ any person whose main occupation :-

1). Is the canvassing of their persons to become members of the association.

2). Is the collecting of contributions or subscriptions towards the funds of the association.

b). Is a company or any other body (whether appropriate or unincorporated) or person whose business is established outside Nigeria, engaged solely in reinsurance transactions with an insurer authorised or pursuant to the provisions of the Act to carry on a class if insurance business, but not otherwise however.

What are the classifications of insurance business in Nigeria under the act?

The act categorizes Insurance business in Nigeria into :-

1). Life Insurance Business :- Under which we have :

– Individual Life Insurance

– Group Life Insurance & Pension Business

– Health Insurance Business

2). General Insurance Business :- Under which we have :

– Fire Insurance

– General Accident Insurance

– Motor Vehicle Insurance

– Marine & Aviation Insurance Business

– Oil & Gas Insurance Business

– Engineering Insurance Business

– Bonds Credit Guarantee & Suretyship Insurance Business

– Miscellaneous Insurance Business.

It should be noted that for the purposes of this act :

a). Any part of an insurance business may be treated as part of a particular class of insurance business.

b). Reinsurance of liabilities under an insurance policy shall be treated as insurance business of the class to which such policy would have belonged if it has been issued by the reinsurer.

Which persons may commence or carry on insurance business in Nigeria under the act? 

– Companies registered under the Companies and Allied Matters Act (CAMA) 2020.

– A body duly established by or pursuant to any other enactment to transact the business of insurance or reinsurance.

How serious is the requirement for registration as an insurer under the Act?

– Subject to the act, no insurer shall commence business in Nigeria unless the insurer is registered by NAICOM .

– The commission shall not grant a license approval if it is satisfied that it is not in the public interest or the interest of policy holders or persons who may become policy binders for it to be granted.

– Where an insurer is not satisfied with the decision of the commission in this regard,he may appeal to the Minister of Finance within 30 days of the refusal.

– The Minister shall within 60 days after the receipt of an appeal give his decision.

What does the act say about Registration as an insurer?

– The commission shall before registering an insurer be satisfied that –

a). The class of category or insurance shall be conducted in accordance with sound insurance principles.

b). The applicant being one of persons referred to under the act is duly established under the applicable law and has paid-up share capital & statutory deposit as specified in the act for the relevant class of insurance business.

c). The arrangements relating to reinsurance treaties in respect of the class or category of insurance business to be transacted are adequate and valid.

d). The proposal forms, Terms and Conditions of policies are in order and acceptable.

What does the act say regarding the cancellation of registrations?

– If in the case of a registered insurer, the Commission is satisfied that –

a). The class of insurance business of the insurer is not being conducted with sound insurance principles.

b). The insurer has entered into insolvency.

c). The insurer has applied for the cancellation of its registration as an insurer.

d). The insurer is being liquidated.

e). There has been a receipt by the Commission of at least 5 complaints of a failure to promptly pay claims against an insurer;

The Commission will set in motion a series of regulatory actions starting with the sending to the insurer of a notice of an intention to cancel its license. 

What is the minimum share capital for Insurance companies in Nigeria?

– Life Insurance Companies – 8 Billion Naira

– General Insurance Companies – 10 Billion Naira

– Composite Insurance Companies – 18 Billion Naira

– Reinsurance Companies – 20 Billion Naira

This will include a  refundable statutory deposit of 50% of the required share capital with the Central Bank of Nigeria (CBN).