NAICOM officially rests TBMSC policy

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*Unveils guidelines for SIPs


Weeks after failing to implement its October 1, 2018 deadline for insurance firms to recapitalize or be categorized into a three-tier operational structure, the National Insurance Commission (NAICOM) has finally announced the withdrawal  of the controversial Tier-Based Solvency Capital (TBMSC)policy for operators in the sector.

The Commission disclosed this, last Friday, through a circular signed by Agboola Pius, Director Policy and Regulation, for Commissioner for Insurance, entitled: ”Withdrawal of Circular on Tier-Based Solvency Capital Policy”

The circular thus read: “Pursuant to the powers conferred by the enabling laws, the Commission hereby withdraws and cancels the Circular dated August 27, 2018 with reference number NAICOM/DAPCIR/14/2018 and titled Tier Based Solvency Capital Policy for Insurance Companies in Nigeria.

It added that the withdrawal and cancellation takes immediate effect.

It would be recalled that NAICOM had on August 2018 announced that the insurance companies Tier-based recapitalisation commencement date to October 1, as against January 1, 2019 it earlier announced in the month of July.

According to the commission the new circular mandated all insurance companies to recapitalise and communicate to NAICOM the tier they intended to play in before October 1.

The commission noted that only companies that meet the respective tier requirements shall lead on new businesses in those categories with effect from October 1.

“Companies shall be assessed, in the first instance, on their approved financial statement for 2017, and audited half year account for 2018.

The TBMSC structure is a complementary measure to the ongoing implementation of the Risk-Based Supervision (RBS) programme. It is a three level model which specifies capital requirement for each tier based on their respective risk classification.

Meanwhile, the Commission, Tuesday, released the guidelines for its newly-introduced State Insurance Producer (SIP) policy.

The guidelines, according to the commission, is also expected to boost premium income generation and the sector’s contribution to the nation’s Gross Domestic Product (GDP).

Commissioner for Insurance, Alhaji Mohammed Kari announced in Ibadan last week that the policy is expected to take off on January 1, 2019.

The 36 States of the federation including the Federal Capital Territory (FCT), Abuja, will be a new alternative insurance distribution channel in the country.

The SIP would be an agency of a state government licensed by NAICOM to provide intermediary services as defined by the guideline issued by the commission and also remunerated as by provision of the operational guideline.

The SIP is expected to facilitate the sale of compulsory classes of insurance within the state jurisdiction and all classes for its principal’s insurances (State Government), while additional insurance products and services would be considered in the future, depending on the success of the initial approach.

While it will also be empowered to penalise defaulters according to the laws of the States, the agency, he added, will equally maintain proper records of individuals and organisations bound by the requirements of the compulsory classes of insurance and monitoring the compliance.

“Once licensed to operate by the commission, the SIP shall enter into Memorandum of Understanding (MoU) as may be sanctioned by NAICOM, with approved insurance companies in its jurisdiction for the purposes of placement and management of insurance business within a state,” he pointed out

The SIP, he stressed, shall only transact insurance business with approved insurers, saying, only insurance companies with branch offices in respective states will be eligible to transact business with SIPs.

To complement the SIP policy, he promised that NAICOM would open 20 new branch offices across the states of the federation for strict management and enhancement of insurance penetration.

This, he said  would also go a long way in meeting government expectations with regards to the Economic Recovery and Growth Plan (ERGP) in the areas of job creation, poverty prevention and confidence in the face of risk.

He disclosed that the initiative would be the answer to the saturation in the Corporate Segment, an opportunity to improve the image of insurance industry and brand building for individual insurance firms.


Similarly, the commission had stated that insurance penetration in the country is expected to increase from 200 to 300 percent in the next two years under the new SIP framework.


Further highlighting more on the benefits accruable from the SIP policy, the Commissioner for Insurance, Mohammed Kari said the new policy he would help to meet the government’s expectations with regards to Economic Recovery and Growth Plan (ERGP) in the area of job creation, poverty prevention and confidence in the face of risks.


He listed answer to the saturation in the corporate segment, improve the image of the insurance industry and brand building for individual insurance institutions as some other benefits of the policy.


The guidelines further reads:” that there will be a signed undertaking signed by an officer of the State Government not below the rank of a Permanent Secretary that the state undertakes and agree that the sum N2,000,000.00 shall be deducted from accrued commission to be earned by the Licensed State Insurance Producer before payment of commission is made to the coffers of the Government.


“The licence will be renewed every two years with the sum of N2 million, adding that the levy chargeable on SIP business shall be 1.00 per cent of gross commission and that the commission to be paid by the insurers to a SIP shall not exceed 75 per cent of the Commission payable to insurance broker.


“If the Commission is satisfied that the applicant has satisfied the requirements as contained herein or such other requirements as may be prescribed, it shall licence the applicant as a State Insurance Producer


“A license issued under this Guidelines shall entitle the holder to act as a State Insurance Producer for the appropriate state government and shall be renewable once every two (2) years by the Commission.

“The Commission may require an applicant to furnish any further information or clarification for the purpose of consideration of the application and also in regard to any other matter as may be deemed necessary by the Commission.

“The State Insurance Producer shall enter into a memorandum of understanding; as may be approved by the Commission; with approved insurance companies established in its jurisdiction for the purpose of the placement and management of insurance business.


“The State Insurance Producer shall only transact insurance business with these approved Insurers, which list shall be approved from time to time by the Commission.”


The commission further listed some key responsibilities of the agent include: “facilitating the enforcement of Compulsory classes of Insurance within the State jurisdiction by ensuring compliance; exercising on defaulters the power to penalise them according to the states laws and maintaining proper records of individuals and organisations bound by the requirements of the compulsory classes of Insurance and monitoring the compliance.



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