NEED FOR MICROINSURANCE REGULATION

Minimum paid-up share capital requirement
Life Microinsurance business N150,000,000
General Micro-insurance business N200,000,000
2. Statutory deposit
Specialized microinsurer shall maintain with CBN at all times a statutory deposit of 10% of the minimum paid-up capital requirement.

Prudential Standards (cont’d)

3. Reinsurance
A microinsurance operator shall maintain adequate and valid reinsurance arrangement
4. Product bundling
A microinsurer carrying on general insurance business may offer general and life microinsurance products and vice-versa; provided there is an arrangement between the General and Life microinsurers

PRUDENTIAL STANDARD (CONT’D)

whereby the life portion of the business is transferred to the Life microinsurer and vice versa.
It shall be the responsibility of the general microinsurer to settle the claims and subsequently recover the portion of the claims due from the life microinsurer and vice versa.

PRUDENTIAL STANDARDS (CONT’D)

5. Risk Management
All microinsurers shall comply with the "Guidelines for Developing a Risk Management Framework for Insurers and Reinsurers in Nigeria" issued by the Commission
6. Rate of agency commission:
Life insurance business: not more than 10% (single premium policies)

PRUDENTIAL STANDARDS (CONT’D)

And 20% (Non-single premium policies)
Non-life insurance business: not more than 15% of the premium.
7. Premium payment
The receipt of insurance premium shall be a condition precedent to a valid microinsurance contract

Prudent Standards (cont’d)

An insurance premium collected by a service provider in respect of a microinsurance business transacted through the microinsurance service provider shall be deemed to be premium paid to the microinsurer involved in the transaction.
The Service Level Agreement (SLA) shall contain shall contain premium collection notification clause.

PRUDENTIAL STANDARDS (CONT’D)

The notification timeline shall be within 72 hours from the time of receipt of premium.
8. Liquidity Status
A microinsurer shall, in respect of its insurance business in Nigeria, maintain at all times a 50% liquidity margin being the excess of the value of its admissible current assets in Nigeria over its current liabilities in Nigeria.

PRUDENTIAL STANDARDS (CONT’D)

9. Solvency margin
A microinsurer shall, in respect of its Non-life business, maintain at all times a margin of solvency being the excess of the value of its admissible liabilities in Nigeria. The solvency margin shall not be less than 15% of the premium income or the minimum capital requirement whichever is higher.

PRUDENTIAL STANDARDS (CONT’D)

10. General Reserve (Life Funds)
A microinsurer shall, in respect of its life business in Nigeria, maintain a General Reserve Fund which shall be credited with an amount equal to the net Liabilities on policies in force at the time of the actuarial valuation and additional 25% of the Net Premium for every year between valuation dates.

PRUDENTIAL STANDARDS (CONT’D)

11. Contingency Reserve
A microinsurer shall maintain a contingency Reserve Fund which shall be credited with an amount equal to:-
1% of Gross Premium or 10% of the Net Profit (whichever is greater) and the amount shall accumulate until it reaches the amount of the minimum paid-up capital or 50% of the Net Premium (whichever), with respect to its Non- life microinsurance business in Nigeria.

PRUDENTIAL STANDARDS (CONT’D)

12. Actuarial Valuation
A microinsurer transacting life insurance business shall in respect of its life business once in every period of 3 years, cause an investigation to be made into its financial position by an Actuary appointed or secured by the insurer. The investigation shall include –
A valuation of assets and liabilities of the insurer
Prudential Standards (cont’d)
Determination of any excess over those liabilities of the admissible assets representing the funds maintained by the 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.