Insurance technology (insurtech) companies will be limited from participating in businesses in the oil and gas, marine, aviation sectors, among others, and engaging in cryptocurrency transactions.
This is part of new guidelines published by the industry’s regulator, National Insurance Commission (NAICOM) effective from August 1.
According to the guidelines for insurtech operations in Nigeria, issued on Wednesday via its website, NAICOM noted that these cannot be carried out without its approval, noting that insurance businesses like “oil and gas insurance, marine and aviation insurance, retirement life annuity, and insurance of government assets and liabilities for ministries, departments, and agencies. Launching products or using dynamic pricing without actuarial support or prior approval from the Commission, and complete reliance on artificial intelligence systems to decline claims without human intervention.
“Crypto-based transactions: Acceptance of premiums or settlement of claims in cryptocurrency without prior approval of the Commission. Data privacy violations: Sharing of personal data without explicit consent, in breach of NDPR or related frameworks. Manipulative platform design (Dark Patterns): Interface design tactics that mislead users into purchasing or renewing an insurance policy. Cross-border digital sales without approval: Offering insurance to foreign jurisdictions without prior approval of the Commission.”
They are also barred from physical marketing of insurance products as done by conventional insurance operators.
In terms of the minimum capital threshold, NAICOM said that for standalone insurtech, it will be the higher of “a. N1.5m per category of general or non-life insurance business or risk-based capital determined from time to time by the Commission. b. N1,000,000,000 per category of life insurance business or risk-based capital determined from time to time by the Commission; or c. Such other amount as may be prescribed by the commission from time to time.”
For insurtech partnering with insurance institutions, the regulator pegged the minimum capital requirement at N10 million as of the date of application and shall continue to maintain the same throughout the license period.
It added a professional indemnity of not less than N100 million or as may be prescribed by the Commission from time to time.
The commission warned that it may increase from time to time the minimum capital requirement.
Also, players in this sector would be required to submit to the commission audited annual financial statements not later than the first quarter of the subsequent year.
NAICOM has warned that once the guidelines become effective on Friday, all insurance institutions and insurtech firms operating under any agreement, whether called insurtech business or otherwise, shall comply with the provisions of these guidelines within 30 days of their coming into effect.