The National Insurance Commission may issue new licences to insurance firms to operate full fledge microinsurance companies just like the microfinance banks are operating in the banking sector, investigations have shown.
In preparation for this, some insurance firms are already putting in place structures to establish strong microinsurance firms so as to enable them to penetrate the retail end of the market instead of focusing just on corporate businesses.
Microinsurance is the protection of low-income people against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risks involved.
The target population typically consists of persons ignored by mainstream commercial and social insurance schemes, as well as persons who have not previously had access to appropriate insurance products.
NAICOM stopped issuing new general and life insurance licences after the last one issued to FBN Life Assurance Limited in 2011.
It was discovered that some of the insurance firms had opened separate offices to effectively operate microinsurance business and are recruiting agents to drive policies to the grass roots.
The Group Managing Director, Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, said the firm was committed to the development of microinsurance in order to penetrate the market.
According to him, the firm has kick-started retail insurance distribution through a microinsurance outfit as one of its growth strategies.
“We have established microinsurance and takaful subsidiaries,” he said.
Ogunbiyi said Mutual Benefits Assurance was supporting the Market Development and Restructuring Initiative of the National Insurance Commission and that optimal utilisation of the MDRI benefits could not be achieved through an ordinary unit, department or distribution outlet.
He said it had to be a standalone outfit with separate funding and management.
The Group Executive Director, Retail, Royal Exchange Plc, Mr. Auwalu Muktari, said the firm now had an established microinsurance firm.
To get to the low income earners in the rural areas, he said the firm realised that it must have a robust retail policy on ground.
“We are focusing on recruiting about 1,000 agents between now and 2015 so that we can be in all parts of the country, providing effective retail services and increasing our visibility by improving the brand of Royal Exchange,” he said.
The Commissioner for Insurance, Mr. Fola Daniel, said microinsurance was a financial arrangement aimed at protecting the low income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.
According to him, the commission has conducted a nationwide microinsurance diagnostic study in conjunction with GIZ.
“The study focused on current and potential policyholders and their families, and the range of different insurance providers and their distribution channels,” he said.
[Punch]
