Simply put, the insurance industry is a risk transfer and management company. As a result of its inherent riskiness, it has prospered in commerce for generations. Nowadays, insurance essentially covers every aspect of life, from business to personal.
A country like Nigeria has several thriving sectors, and one of them is insurance. According to data, the industry’s total written premium as of 2018 was in the billions of naira. The insurance industry in Nigeria is simply described in this article as a whole.
What is the History of Insurance in Nigeria?
Since 1958, when the first company was founded, there has been an insurance industry in Nigeria. Following Nigeria’s independence from the British, The African Insurance Company Limited was established. In 1961, the federal ministry of trade established the Nigerian Department of Insurance.
The Insurance Companies Act of 1961, another recent development, required the mandatory classification of insurance businesses into various classes for registration. Consequently, the office of the Registrar of Insurance was established as a result.
The registrar’s office also handles a variety of other duties, such as monitoring, enforcing registration laws, and overseeing insurance business activities. Their main objective is to oversee the country’s whole insurance industry.
How does Nigerian insurance work?
Financial services are provided by insurance businesses in Nigeria and around the world. In essence, its main purpose is to provide a premium-based assurance for the replacement or monetary reimbursement of assets in the event of damage.
In other words, you buy insurance for your asset, pay premiums occasionally, and the insurance company assumes the risk of that asset.
For instance, if you insure your car for N2 million, the insurance company will ask you to pay a premium in the neighborhood of N150k on set days. The insurance company is also required to pay up to N2 million in compensation if your car is stolen or destroyed. Furthermore, depending on your arrangement, the precise value of your premium may change.
On the other hand, if your premium period finishes and you have no claims, the insurance company will not reimburse you for any portion of your premium. They earn money by insuring the premiums that would follow from the possibility that an asset would not sustain any damages.
Who regulates insurance in Nigeria?
The National Insurance Commission (NAICOM) is currently in charge of policing the insurance industry in Nigeria. The primary duty of this organization is to make sure that all insurance businesses in the country are effectively supervised, managed, regulated, and controlled. The responsibility to safeguard insurance policyholders, subsequent beneficiaries, and other third parties follows as a result.
How do I establish an insurance company in Nigeria?
In order to start an insurance company in Nigeria, you must fulfill certain requirements and take specific actions. The necessary steps are:
- Register your business with the government
- Get registered with insurance regulatory agencies (NAICOM)
- Register with a re-insurance company to protect your company in cases when a claim is too large
- Acquire the required necessary permits and licenses depending on the state you want to operate in
- Plan out the insurance risks your company would cover. Only start with the low-risk profitable ones
- Gather enough money in your reserve (necessary for insurance business registration in Nigeria)
- Finally, decide whether you want to stand alone or become a franchise of an established insurance company
Nigerian insurance companies are successful as long as they employ the correct personnel. The company’s departments all work together to achieve success, therefore never undervalue the role of a risk analyst. You now have a general understanding of the Nigerian insurance industry.