Do you want to set up and Insurtech company in Nigeria? Then this article has detailed the basics that will make that possible for you. Before going deeply into them, we would take a sneak peak to discover what the term "InsurTech" mean.
What Is An InsurTech Company?
InsurTech is a short form of Insurance Technology. It simply refers to the use of technological innovations in deployment of insurance services across diverse sectors.
The massive technology wave in Nigeria has impacted the Insurance sector and tons of InsurTech companies in Nigeria, have emerged in recent times. The insurtech market in Nigeria is at the cusp of transformation, driven by technological advancements, regulatory support.
Also, it is at the height of a growing need for financial inclusion.
Though still nascent compared to more established markets, Nigeria's insurtech sector holds immense potential to revolutionize the insurance landscape, making it more accessible, efficient, and inclusive.
One of the primary drivers of the insurtech market in Nigeria is the rapid increase in digital penetration. With over 100 million internet users and widespread smartphone adoption, digital platforms are becoming viable channels for delivering insurance products.
We shall proceed in the next subheading with examples of Insur-tech companies in Nigeria.
Examples of InsurTech Companies in Nigeria
Tsaron, Insurpass, Gamp Technology Inc. are just few of them. Internationally, we have Zego, Quantee in the UK.
There are several services an Insur-Tech Company could operate. These include setting up as insurance companies, agents, and brokers.
Right now, we shall focus closely on the Nigerian market.
Types of InsurTech Start-ups Suitable for the Nigerian Market
- Car Insurance
- Property Insurance
- Travel Insurance
- Mobile Device and gadget Insurance
- Health Insurance
Hardly would one find these types of insurance as a mobile application readily available to the consumer.
This shows that Nigeria has a long way to go in building the Insurtech ecosystem to meet the demands of an ever evolving world.
That said, we shall go deeply into what it takes to set up an Insurtech company in Nigeria.
Setting Up An InsurTech Company In Nigeria
There is no definite license for Insurtech startups in Nigeria. If you are interested in setting up an Insurtech company in Nigeria, there are different ways to go about it.
However, note these notes we've put together will guide you sufficiently.
Note 1:
- Register an insurance company: This will require registration with CAC with the minimum share capital for insurance companies. It will also require registration with NAICOM. The minimum share capital for insurance companies is as follows:
- Life insurance business: ₦8,000,000,000 (Eight Billion Naira).
- General insurance business: ₦10,000,000,000 (Ten Billion Naira).
- Composite insurance business: ₦18,000,000,000 (Eighteen Billion Naira)
- Reinsurance business: ₦20,000,000,000 (Twenty Billion Naira).
Note 2:
- Obtain a Micro insurer license: Microinsurance products are insurance products to meet the needs of the undeserved populace and the low-income market.
The sum insured under a Microinsurance policy is not to be more than N2,000,000 per person per insurer.
There are different types of Micro insurer licenses issuable by NAICOM.
Types Of Micro-Insurer Licence Isuable By NAICOM
A. Unit Micro-insurer: an insurance company that operates within a local community with minimum share capital of ₦40 million naira. This is further categorized into two thresholds namely: a general insurance class at ₦25 million naira capital base and a Life class at ₦15 million naira capital base.
B. State Micro-insurer: A State Microinsurance company is an insurance company with operation in at least 3 states of the federation with 3 different branches in one state. The minimum capital base is ₦100 million naira. State microinsurance companies can be further categorized into two thresholds namely, a general insurance class at ₦60 million naira capital base and a Life class at ₦40 million naira capital base.
C. National Micro-insurer
A National Microinsurance company is a microinsurance company with operations in six states within at least three geopolitical zones in Nigeria. The minimum capital base for setting up a national microinsurance company is ₦600 million naira which is further categorized into two thresholds namely; a general insurance class at ₦400 million-naira capital base and a Life class at ₦200 million naira capital base.
Note 3:
Web Aggregator License: Where the Insurtech startup only wants to provide third party services, it can consider a web aggregator license. Web Aggregator is a company registered under the Companies and Allied Matters Act (CAMA) and approved by NAICOM, which maintains or owns a website and avails information pertaining to insurance products and price/features comparisons of products of different insurers as well as offer leads to an Insurer.
Note 4:
Takaful Insurance: Takaful is a type of Islamic insurance wherein members contribute money into a pool to guarantee each other against loss or damage. Takaful-branded insurance is based on Sharia or Islamic religious law, which explains how individuals are responsible to cooperate and protect one another. Takaful policies cover health, life, and general insurance needs.
Takaful operators were introduced as an alternative to the commercial insurance industry, which are believed to go against Islamic restrictions on riba (interest), al-maisir (gambling), and al-gharar (uncertainty) principles—all of which are outlawed in Sharia law.
Taking notes of all of the above, the next part of this article details the practical steps to be taken to register an Insurtech company.
Practical Steps in registering an Insurtech company
Step 1
The first step is to register a company in Nigeria with the CAC (Corporate Affairs Commission) and comply with CAC registration requirements such as share capitalization as stated above.
Step 2
After due incorporation with CAC, you would have to be licensed with NAICOM, (National Insurance Commission). To obtain a NAICOM license, you would have to obtain application Form 1 from NAICOM, fill and submit alongside the required documents.
Step 3
Submit some key documents like memorandum and article of association (MEMART) of the INSURTECH company, particulars of directors, Evidence of minimum deposit with CBN where applicable, a declaration of business transaction with sound insurance principles, class of insurance, Evidence of adequate company reinsurance arrangement, etc for the registration.
Finally,
Step 4
InsurTech companies may need to be reinsured with a Reinsurance Corporation in respect of all their reinsurance risks.
There is a flurry of activity in the insurance space in Nigeria and more importantly, newer InsurTech models have sprung up in recent times. Insurtech innovators would find this brief article quite informative.
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Footnotes
1 http://www.commonlii.org/ng/legis/num_act/nrca326/ accessed on March 1 2023
2https://investogist.com/how-to-set-up-insurance-and-re-insurance-business-in-nigeria/amp/ accessed on March 1 2023
3 https://www.f6s.com/companies/insurtech/nigeria/co accessed on March 1 2023
4 Seed Attorneys https://medium.com/@seedsattorneys/how-to-setup-an-insurtech-company-in-nigeria-f90243d478c1/ accessed on 7th August 2024
5 https://businessday.ng/interview/article/technology-will-continue-to-transform-nigerian-insurance-industry-olumide/ Accessed on the 7th of August 2024
6 https://originstamp.com/blog/the-state-of-insuretech-in-nigeria/ Accessed on 7th August, 2024.
7 https://www.ikoliokagbue.com/articles.asp?aid=7
Originally published 29 September 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.