Soladoye suggests 5-tier operational model for micro-insurance business

From left: Managing Director Riskguard Africa Nigeria Limited Yemi Soladoye;  Head, Corporate Communications and Brand Management Sovereign Trust Insurance Plc, Segun Bankole; Head, Risk and Compliance, Stanbic IBTC Pension Managers, Idu Okwuosa;   Managing Director Sovereign Trust Insurance Plc, Wale Onaolapo; President Nigerian Council of Registered Insurance Brokers (NCRIB), Ayodapo Shoderu and Director of Corporate Communications, Chartered Insurance Institute of Nigeria (CIIN), Joseph Obah at the event in Lagos.

Chuks Udo Okonta

The Managing Director Riskguard-Africa Nigeria Limited, Soladoye, has suggested the use of 5-tier operational model based on capital requirement to secure widest coverage of Microinsurance in Nigeria.

Soladoye, who spoke at the Inspen’s 2013 Nigerian Insurance and Pension Award in Lagos, suggested that micro-insurers at National level should operate with capital base of N350 million, those at the Regional N90 million; State N40 million; Local Government N10 million and Unit N5 million.

He noted that the unit and regional approach will reduce cost of doing business, adding that lean structure, modest office; appropriate location must all be specified per unit of office outlet by the regulator. 

He warned that micro-insurance should not be used as the landing pad, for weak commercial underwriters.

“How many offices does the regulator expect an operator to open with N350 million? Are we expecting Ajose Adeogun Microinsurance Companies?  Prado Jeep and Ipad MDs, Is Microinsurance going to be the landing pad, for weak commercial underwriters.

“We suggest use of 5-tier operational model based on Capital Requirement to secure widest coverage of Microinsurance in Nigeria. National N350 million, 2003 Insurance Act; Regional N90 million, 1997 Insurance Act; State N40 million, 1997 Insurance Act; LG N10 million, 1991 Insurance Act and Unit N5 million, 1991 Insurance Act. The unit and regional approach will reduce cost of doing business.

“Lean structure, modest office, appropriate location must all be specified per unit of office outlet by the regulator.  Since the existing Insurance operators do not need any new capital requirement to operate Micro-insurance, it is suggested that the Indian model of forced-familiarity and the China model of conditional expansion must be explored. 

"Any foreign player seeking entry into the Nigerian market must be given a mandate on the number and percentage of Microinsurance policies that must form its portfolio over a period of time. The same should apply to the existing underwriters.

"The first set of Mi operators could be generated from the small-sized Insurance brokers, weak MFBs, and experienced Agents of the existing underwriters.  This approach would make room for consolidation and appropriate learning time, putting in place the necessary strategies, Goals and Regulatory Frameworks more so that the immediate past Minister of Finance publicly announced that no new licences would be granted for insurance underwriting,” he said.

Soladoye said microinsurance will grow in Nigeria, but not necessarily by being restricted to the Insurance supervised entities only.  He noted that the Philippines concept of 3-tier Insurance system, the Indian concept of Forced Familiarity, the China concept of conditional urban branch and the Kenya concept of telephone -insuring will help us as guides.