m

LEADWAY ASSURANCE
COMPANY LIMITED-
TECHNICAL MANUAL

HP
Table of Contents
Preamble...................................................................................................................................................................... 1-2
Underwriting Manual ................................................................................................................................................ 3-21
General Insurance ............................................................................................................................................... 22-63
Life Insurance ....................................................................................................................................................... 64-82
Claims Manual ......................................................................................................................................................... 83-88
General Insurance ................................................................................................................................................ 89-96
Life Insurance ..................................................................................................................................................... 97-100
Reinsurance Manual................................................................................................................................................... 101
APPENDIX 1- APPROVAL LIMITS
APPENDIX 2- REINSURANCE TREATY LIMITS
APPENDIX 3- REINSURANCE OPERATIONAL GUIDE
APPENDIX 4- UNDERWRITING SHORT TERM CANCELLATION TABLE
APPENDIX 5- NAICOM REVISED MARKET CONFUCT GUIDELINES AND BUSINESS PRACTICE GUIDELINES FOR
INSURANCE INSTITUTIONS, 2021
APPENDIX 6- NAICOM PRUDENTIAL GUIDELINES FOR INSURERS AND REINSURERS IN NIGERIA,2015
Approvals

This document requires the following approvals

Title Signature Date of

Update

Head, Technical Division 24-01-2022

Head, Legal Services 24-01-2022

Chief Compliance Officer 24-01-2022

Managing Director 24-01-2022

Technical Approval Limits

As stated in Appendix 1
PREAMBLE

BRIEF HISTORY OF LEADWAY ASSURANCE COMPANY LIMITED

Leadway was established in 1970 and commenced business in 1971 and started out as a direct Motor Insurer
with a passion for customer service. The business expanded into other areas of general business until it
became a composite company underwriting both life and general insurance business. From a modest capital
base, the company’s financial capacity grew over time and now, it can boast of an ability to underwrite risks
of very high magnitude as regards heavy industries, such as Oil and Gas and big manufacturing concerns. It
also offers subsidiary financial services like Bond, Secured Credit, Miscellaneous financial losses and
Fund/Portfolio management. Presently, it is an active player in providing good local security under the local
content arrangement of the Oil and Gas Industry.
For over 5 decades, LEADWAY has honored its underwriting commitments and has earned its reputation of
excellence in claims handling. The reputation enjoyed today by LEADWAY has been attained by the
continuing pursuit of improvements, as regards its financial, underwriting and service profiles. The evolution
of LEADWAY since 1970 has mirrored the dramatic expansion of indigenous insurance service providers, with
LEADWAY remaining in the forefront as an insurer of repute. Our core values are iSCORE meaning; integrity,
service, costumer-focus, Openness, respect-for-the-individual and excellence. The reputation enjoyed by
LEADWAY has been attained by the continuing pursuit of improvements to maintain competitive advantage.
Presently, LEADWAY has a Shareholders Fund of N79 billion. To reposition and take advantage of
opportunities in the changing environment, LEADWAY has a policy of increasing its paid-up capital steadily.
Over the years, the company has recorded steady growth in its business operations. As at 31st December
2021 the company had a total asset base of over N501 billion and a premium income of about N70 billion. It
has no loan stock and internally generates funds for capital projects. The Company holds a sizeable number
of blue chip stocks spread across banking, insurance, manufacturing, finance etc. Its total investment
portfolio at December 31, 2021 was N373 billion. Within the money market, it has an average of N34billion
deposit placement in Investment grade rated banks. Leadway also has a remarkable claims paid record of
over N213billion naira claims paid in 6 years, with N48.3billion paid in 2021 alone, one of the highest figures
of claims paid in the industry.
LEADWAY is aware of its customers’ financial security. It ensures that its insurance risks are carefully backed
up with world-class reinsurance arrangements. For over two decades, the company has maintained a good
business relationship with Swiss Reinsurance Company and Munich Reinsurance Company. These two widely
known international reinsurance companies lead on the company’s major Treaties. Other participating
companies are Africa Reinsurance Corporation, Continental Reinsurance Company Limited, GIC Reinsurance
and Scor Reinsurance Company Limited

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The Company has a highly computerized work environment with major offices on-line. This enables a timely
dissemination of information to clients on any risk assumed. The Company’s decision to invest heavily on
computerization is part of its corporate strategy to take advantage of the benefits offered by technology as
a service enhancement tool and the Company’s preparedness to follow the trails of e-commerce into the
next century.
LEADWAY’s Registered and Corporate Offices are located in Kaduna and Lagos respectively with 24 Branches
spread all over the country. Gen. Martin Luther Agwai is the Chairman of the current Board of Directors while
Mr. Tunde Hassan-Odukale is the Managing Director of the company.

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UNDERWRITING MANUAL

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GLOSSARY

CLAUSE
A proviso incorporated in, or affixed to, a policy or endorsement.

ESTIMATED MAXIMUM LOSS (EML)

The extent of the Fire likely to occur in the normal conditions of activity, occupancy and Fire-Fighting of the
range of building’s concerned.

EXCESS OR DEDUCTIBLE
The first portion or percentage of a loss specified in a policy, which the insured has to bear himself. If a claim
comes to less than this amount, no payment is made by the insurers.

INDEMNITY
The legal principle which assures that a policyholder shall be put in the financial position after a loss as he was
before the loss occurred.

PREMIUM
A sum of money paid to an insurer in return for which the insurer guarantees to compensate for any loss
incurred under the terms of the insurance policy.

Premium should be:-

(I) Reasonable
(ii) Adequate
(iii) Competitive

Composition of Premium (Office Premium)

Risk Premium
(i) Loss ratio (Claims) 50.00%
(ii) Catastrophe/Reserve/Contingency loading 2.00%
(iii) Expenses Loading 2.00%
(iv) Office Expenses 21.00%.
(v) Commission 20.00%
(vi) Profit Margin 5.00%
100.00%

MATERIAL FACT
Every circumstance is material which would influence the judgment of a prudent underwriter in fixing the
premium or determining whether he will take the risk.

FACTS WHICH MUST BE DISCLOSED

- Endogenous factors of the subject matter of insurance.

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 - Exogenous factors of the subject matter of insurance.
- Previous losses and claims.
- Facts restricting subrogation.
- Existence of other contracts or insurance on the subject matter.

FACTS WHICH NEED NOT BE DISCLOSED

- Facts of common knowledge.

- Facts of law.
- Facts which lessen the risk.
- Facts about which the insurer has been put on inquiry.
- Facts which the insurer’s Survey should have noted.
- Facts not known to the proposer.

MAXIMUM POSSIBLE LOSS (MPL)

The maximum possible loss (MPL) is that which may occur when the most unfavourable circumstances are
more or less exceptionally combined and when, as a consequence, the fire is not or unsatisfactorily fought
against and therefore is only stopped by impassable obstacles or by lack of combustible material.

UNDERINSURANCE
Applies when the sum insured is lower than the actual market value of the property insured. Any claim payable
on the property is thereby scaled down to the percentage that the sum insured bears to the value at risk i.e.

Claim payable = Actual Loss x Sum Insured

Value at Risk

This is to ensure that the principle of indemnity is upheld by the application of the AVERAGE condition. The
insured is not allowed to be compensated for that part of the value of the property on which he had not paid
premium.

WARRANTY
An unconditional statement that a certain state of affairs exists or will exist, or an undertaking by the Insured
to do or refrain from doing a particular act.

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 Table of Contents
1 GENERAL INFORMATION
1.1 Introduction
1.2 How Insurance Operates
1.3 Operational Theory of Insurance
1.4 Insurance Contracts
1.5 Basic Principles
1.6 Underwriting Philosophy of Leadway
1.7 Service Delivery
2 UNDERWRITING
2.1 Co-Insurance
2.2 Who to Give Business To
2.3 Cooling-Off Period
2.4 No Premium No Cover Rule
2.5 Short Term Rate/Short Term Calculation
2.6 NAICOM Relationship Officer
3 INSURANCE OPERATIONS
3.1 Policy Document
3.2 Issuance of Endorsement
3.3 General Principles of Drafting Endorsements
3.4 Checklist When Examining An Endorsement
4 OFFICE ADMINISTRATION
4.1 Record Keeping

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1 BASIC INFORMATION

1.1 INTRODUCTION:

Insurance is a means of sharing financial loss. The possibility of such an event exists for any individual, but the timing
and occurrence is generally unpredictable. Insurance is the means by which individuals can protect themselves against
such unpredictable financial losses.

Risk is the term used to describe the likelihood that the insured event will occur, thus resulting in a claim being paid.

An underwriting manual is a reference book stipulating rules applicable for accepting a line of Insurance, how the risks
are classified and how the rates are arrived at.

The underwriter is the person who protects the Company’s balance sheet by evaluating proposed risks, accepts or
declines insurance applications and determines the appropriate premium amount to charge for acceptable risks.

This Underwriting guide applies to the Underwriting of General Insurance Business in Nigeria as regulated in the
Country. There are various regulatory guidelines and relevant laws guiding Insurance business in Nigeria some of which
are listed below:

1. Motor Vehicle (Third Party Liability Insurance ECOWAS Brown Card Scheme) Decree 1986.
2. Insurance (Special Provisions) Decree 1988.
3. Insurance Decree 1991.
4. The Chartered Insurance Institute of Nigeria Decree 1993.
5. Insurance Decree No. 2 of 1997.
6. NAICOM Act 1997.
7. Insurance Act No. 1 of 2003.
8. NCRIB Act No. 21 of 2003.
9. Oil and Gas Guidelines in Nigeria
10. Aviation Circular for placement and Returns
11. NAICOM Prudential Guidelines for Insurers and Reinsurers in Nigeria, 2015.
12. NAICOM Revised Market Conduct and Business Practice Guidelines for Insurance Institutions, 2021.
13. Regulation on Annuity (Jointly issued by the National Pension Commission (PENCOM) and National
14. Pension Reform Act 2014
15. Guidelines for Life Insurance policy for Employees (Jointly issued by PENCOM and NAICOM.
16. Circular on Insurance Premium Collection and Remittance (by NAICOM on 12/12/12)

This Manual is meant to convey basic information necessary for the day to day running of our underwriting operations.
While we shall endeavor to update the manual regularly, the users are in a better position to assess the adequacy and
suggest lines of improvement. It is therefore expected that the manual shall continually be critically reviewed with the
hope of updating it to meet current needs.

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1.2 HOW INSURANCE OPERATES

Insurance is a social device which developed as a result of man’s effort to find solution to the uncertainty of daily living.
All human activities are characterized by risks (pure) which are capable of discouraging man from making an effort to
improve himself and constantly living in fear of losing the little he has. It is the uneconomical effect of the above and
the disasters that follow such occurrence that forced man to invent a risk reducing/spreading/sharing technique.

Insurance is a device by which man accepts deliberately the certainty of a small loss in exchange for the freedom from
risk of devastating catastrophic loss which is already in existence and not within his power to avoid.

Insurance therefore is a device by which the losses of some unfortunate few individuals are spread over many people
within a given period of time. It offers a plan (the policy) that enables a person (the policy holder) to join a large group
of people (through the Insurance Company) which undertakes to pay a sum of money to him, his family or other (the
beneficiaries) upon the happening of a specified event (death, fire etc.) or upon a stated date. In return, the policy
holder invests a sum of money (the premium) with the Insurance Company.

The first act of parliament regulating insurance in England 1601 described it as follows: - ‘...... by means of which
policies of assurance it cometh to pass on the perishing of any ship, there followed not the undoing of any man; but
the loss lighteth rather easily upon many than heavily upon few, and rather upon them that adventure not than those
that do adventure, whereby all merchants, especially the younger sort are allured to adventure more willingly and
more freely’.

The subject matter of Insurance is property, life/health or potential liability. Insurance works because the Insurer can
collect premiums from a group of people in similar circumstances, not all of whom will suffer losses in any one year.
These premiums are then pooled together and used by the Insurer to pay losses.

Losses are thus shared out among all the policyholders to balance out the loss book. Insurance is often described as
a triangular satisfier.

Satisfaction

Security Saving

Satisfaction - release from anxiety of the unknown

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 Security - from devastating consequences of the unknown

Saving - eliminate the need for reserves for the unexpected and also create wealth for the
society.

1.3 OPERATIONAL THEORY OF INSURANCE

When similar risks of many individuals, uncertain in so far as each one is concerned, are combined into a large group
of risk of more certain occurrence, the individuals can be protected. The probability of loss can be calculated and the
larger the group of risks, the higher the chances that the predicted result shall be achieved.

1.4. INSURANCE CONTRACT

A Contract is a legally binding agreement between two or more parties. A simple contract can either be by conduct by
words of mouth or in writing. Insurance is a specified contract (or Deed) and must be in writing, signed, sealed and
delivered.

Elements of a Contract:

1. There must be an unrevoked offer

2. There must be an unqualified acceptance
3. The parties to the contract must have capacity to contract.
4. There must be consideration
5. There must be agreement of minds
6. The contract must be capable of fulfillment - possibility and legality
7. There must be intention to create legal obligations
An Insurance Contract is distinguished by:-

(a) The necessity for insurable interest.

(b) The possibility of loss if the peril occurs.
(c) The Insurers’ promise to assume risk.
(d) Such assumption being part of a general scheme to distribute actual losses among a large group of
persons bearing similar risks.
(e) The making by the insured of a rateable contribution called a premium to the general insurance fund
as consideration for insurers’ promises.

1.5 BASIC PRINCIPLES

These are principles guiding the practice of insurance and consist of the following:

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 INSURABLE INTEREST: - The Insured must stand in relationship to the subject matter of insurance that he is
better off with it than without it (property, life/health) or better off without it than with it (liability). Also, the
relationship must be measurable in monetary terms.

 UTMOST GOOD FAITH: - ‘UBERRIMA FIDES’ (rather than ‘CAVEAT EMPTOR’ let the buyer beware). Both parties
are expected to observe good business ethics, honor, fairness, decency and disclosure of all material
information in all aspects of the commercial relationship.

 PROXIMATE CAUSE:

“The active and efficient cause that sets in motion a train of events which brings about a result without the
intervention of any force started and working actively from a new and independent source”.

 INDEMNITY:

To place the insured in exactly the same pecuniary position after the loss as he would have been had the loss
not occurred. (Exceptions are Life Contracts).
- The Insured must show that he has suffered a loss
- The loss must be measurable in monetary terms.

 SUBROGATION:

Substitution of one creditor for another. Transfer of rights and remedies of the Insured to Insurer after
payment of a loss.

 CONTRIBUTION:

Applicable when there is double insurance. An Insurer who has paid the loss has the right to recover
proportional amount from other Insurers. For Contribution to apply; the two parties must:-
(a) Cover same subject matter
(b) Cover same peril
(c) Cover same insurable interest
(d) Be on risk (cover) on the date of loss
(e) Have conditions for contribution.

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1.6 UNDERWRITING PHILOSOPHY OF LEADWAY ASSURANCE COMPANY

Leadway Assurance is licensed to underwrite all classes of insurance in the Life and Non-Life areas. Our Underwriting
team consists of seasoned professionals trained both locally and internationally to underwrite in line with drawn
guidelines; subject to review as soon as they become necessary.

Leadway’s underwriting philosophy is to offer insurance coverage at a price and subject to terms that ensures its ability
to meet its claims and insurance services obligations; leaning on its investments and reserves during soft market cycles
to provide competitive pricing without compromising the integrity of its basic underwriting principles. Overall, Leadway
is reactive to market cash flow underwriting practices and is non-aggressive in pricing. The underwriting philosophy is
largely conservative.

It is the objective of the underwriting team to always and consistently view the underwriting job from a risk
management perspective in order to ensure a continuous beneficial relationship knowing fully well that the prosperity
of our client will bring freedom to our business. As such, referrals will continue to be a major source of business
acquisition for us.

In terms of risk and insurance structure, underwriters at Leadway generally evaluate many aspects of risk placements
but rely principally on the risk rating system subject to adjustment for risk quality, pool and placers fundamental risk
management capabilities, which enables the Company to maintain a good profitable balance on its underwriting
portfolio and ensure good performance.

Examining the characteristics of the risk, Leadway focuses on the proposed insured’s risk management practices, the
ability to effect it (especially within an environment with poor infrastructure), and the assets of liabilities being
proposed for insurance. Where applicable, the work factors such as discounts and graduated risk rating/pricing models
are used to ensure that such accounts are kept in the Company books.

To this extent, our risk management focus will be that risks presented for insurance purposes will be thoroughly
assessed and recommendations will be made as to limit insurance premium only to those risks that are unavoidable
while risk improvement recommendations will be made on those that can be averted.

Thirst for Quality Underwriting

Quality underwriting is the best foundation for a seamless claims process and with this background experience, it is
our philosophy to ensure that detailed and professional underwriting process is carried out in respect of the risks we
underwrite while terms and conditions are clearly spelt out to ensure that we continue to be the reference point as
an underwriter of repute and a reliable security to our numerous customers.

Mostly our pricing is guided by the following:

1. Market potential/size of the product on offer

2. The Risk Management Attitude/Practices of the Client

3. Quality of the Risk Brought into the Pool

4. Post Underwriting Review of Claims or Loss History

5. Market Underwriting Ratio/Expenses

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Our Commitment

Our market remains a competitive environment and as such we intend to be a fair player in the insurance market in
the pricing and packaging of our products while taking into cognizance that we must continue to deliver value to our
shareholders and employees as well. We implore our present and prospective customers that good risk management
is the result of efforts between the client and the underwriter as well as the insurance brokers and efforts in this
direction should be regarded as a priority by all parties.

Underwriting Guidelines

We shall continue to monitor market performance and deploy our technical experience to improve performance in
every area that we operate in to the benefit of our clients. We shall maintain a discreet approach into new areas of
underwriting and ensure thorough market benchmark to safeguard the capital of our shareholders as well as
policyholders fund.

1.7 SERVICE DELIVERY

The critical factor in our business is service delivery. We are a customer-centric organization and our clients are
accorded a prime position in our operations. We are structured towards giving the clients our prompt and efficient
service at all times.

We continually strive to differentiate our business by our service delivery in terms of speed and quality leveraging on
our Integrated Information Technology System that is almost second to none in the industry which enables us to share
information and documents speedily within our network of offices.

Our prompt claims settlement records over the years has endeared us to Customers, Brokers and Agents. We are to
ensure that we sustain this reputation and even surpass it by our courteous approach to business and customers. It is
also expected that all staff will work in a manner consistent with the existing Services level Agreements and as may be
reviewed from time to time.

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2. INSURANCE UNDERWRITING

Historically, the term underwriting developed giving the nature of Marine Insurance, because the insurance of
ships (hulls and cargoes) emerged slowly as the part time occupation of a large and disorganized group of
private individuals most of whom only common characteristic was that they had capital to speculate, who in
the gambling spirit of the 18th century, were willing to PUT THEIR SIGNATURE TO A LIST OF PEOPLE SHARING
A RISK (Sign/Write under as partaker in the risk).

Today, an Underwriter is not a risk bearer (Insurer) but the eye of the Insurer. An underwriter assesses the risk
introduced to the company and decides whether to accept the risk or not, if to accept at what terms and
conditions?

The implication of the above is that to be an efficient underwriter you must be:

(i) Familiar with various types of risks and the inherent dangers/hazards.
(ii) Able to ensure that the company is not selected against; that the company makes technical profit from
his activities. An underwriter must carry out the following:

(a) secure adequate volume of business to ensure the expected probable result.
(b) Ensure that the rates are adequate
(c) Ensure that the risks must are well spread to avoid accumulation.
(d) Ensure that adequate reinsurance is in place to protect the assets of the company.

(iii) Able to give full information as to the suitable scope and limitations of any insurance contract under
negotiation.
(iv) Able to educate the public or clients based on his experience on risk analysis i.e. identification,
elimination/transfer, prevention and/or reduction.
(v) Able to present his documentation comprehensively, clearly and without ambiguity, expecting that
they may turn out to become court exhibits. Insurance is a legal contract; therefore any ambiguity in
a contract wordings is construed against the author/draftee.
The Quality of an Underwriting officer and the risk to accept is determined by:-
(a) The technical expertise of the underwriting staff.
(b) The efficiency of the sales staff.

Good Technical skills consist of:-

1. A good background of commercial and industrial practice

2. A good knowledge of the business
3. Specialist knowledge of the work of the Manager’s own limit
4. Ability to organize and control resources
5. Ability to select and use management techniques.
6. Ability to propose suitable insurance to satisfy the customer’s needs or create ingenious solutions for
the client’s risks.
7. Good analytical skills
8. Maths and statistical skills
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9. Ability to pay attention to detail
10. Negotiation and interpersonal skills

We can also coin a four (4) Way Test for an Underwriter. For businesses in consideration, the following
questions should be asked:-

1. Is it worth your time in terms of cost, paperwork and profit?

2. Is it in line with professional ethics?
3. Can we buy adequate reinsurance cover for it?
4. Will it improve the good image of our company/industry?

Generally speaking the activities of an Underwriting department could be sub-divided into three (3):-
1. Technical
2. Statistical
3. Administrative

TECHNICAL

(a) Assessment of Insurance proposals

(b) Collecting background information and assessment of risk
(c ) Analysing statistical data
(d) Writing quotes and negotiating the terms with brokers and clients
(e ) Determining premiums
(f) Deciding the wording of policies
(g) Preparing insurance policy terms and conditions
(h) Surveys
(i) Updating Technical know-how.

Achieving the above entails:-

1. Auto- Allocation of Quotes reference and Policy Numbers.

2. Authorization of policy after which the underwriter must assign to operations.
3. Issuance of Endorsements.

Endorsements are issued for one of the following reasons:-

- Renewal of policy for another one year or less period
- Increasing or decreasing (Addition or Deletion) the existing schedule of items or sums insured or
benefits.
- Reinstatement of Cover
- Complete Revision of Schedule
- Deleting, Addition or Amendment of Description, Items Insured.
- When following as a coinsurer on a risk (Book entry for record purpose)

PERIOD FOR DELIVERY OF POLICY DOCUMENT

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 Upon the Insured meeting with the required underwriting requirements to enable analyze the risk
presented and payment made thereof, our policy document will be released to the policyholder
maximum of five working days.

2.1 CO-INSURANCE

On a regular basis we will be required to participate on an account as a Co-insurer i.e. a situation in

which 2 or more Insurance Companies insure a risk jointly and concurrently. If the account is
handled by a broker, it is usually easier to handle, but if by an agent or direct we have to pay extra
attention to ensure careful handling since we have to play the role of a broker at the same time.

If Leadway is leading on an account the following is put in place:-

(i) Issue policy documents and further endorsements to all co-insurers
(ii) Arrange for medical examination and send copies to co-insurers while debiting them for
their share of the expense
(iii) Ensure that we debit for administrative expenses on all accounts.
(iv) Call for renewal on behalf of all co-insurers.
(v) Where the premium is paid directly to Leadway for and on behalf of co-insurers, we have to
ensure prompt distribution to co-insurers within 30days of receipt in accordance with
NAICOM guidelines.
(vi) Ensure that our records reflect our production correctly i.e. our share of the business not
total payment.

In addition to the above, if we are leading on the account, we:-

(i) Carry out an assessment of coinsurers financials to determine capacity for the risk
(ii) Allow the reinsurer to arrange for placement of risk beyond their capacity in the local
reinsurance market or cede to retrocessionnaire as they deem fit.

Usually, we do not object to the leadership of any Insurance company, but since our fortune as a co-
insurer may depend on the competence of the leader, if we do not feel comfortable with the lead
underwriter (of course this being strictly internal information) we have to monitor the account
closely.

On the other hand, when we are leading other insurers are watching us to determine our level of
competence.

2.2 WHO TO GIVE BUSINESS TO?

We rarely have cause to co-insure account directly, but we have cause to do same especially when
we have an account directly and do not feel comfortable with the nature of the risk or for reciprocal
patronage. Our primary consideration of who to give are:-

(i) Perceived ability of the company to respond promptly to claims call. We prefer an
organization where the Chief Executive is personally known to us.
(ii) The current fortune (or misfortune) of the company, the Insurance Industry is very small and

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 we usually get to know about companies having problem generally.
(iii) Business gain or advantage from the organization.

2.3 COOLING OFF PERIOD FOR INSURANCE

Cooling off Period is a period the Policyholder is to re-affirm his acceptance or otherwise if he is not
satisfied with the terms and conditions of the insurance contract. If the Policyholder decides to cancel
the policy within the cooling off period of Fourteen days (14), a full refund of the premium paid is
expected to the Policyholder.

2.4 NO PREMIUM, NO COVER RULE

All insurance covers shall only be provided on a strict 'No Premium No Cover' basis.
Consequently, only cover for which full payment has been received, directly by the Insurer or indirectly
through a duly licensed insurance broker, shall be recognizable as income in the books of the insurer
in line with section 3.5.2. of NAICOM’s Market Conduct and Business Practice Guidelines for Insurance
Institutions, 2016 and section 50 of the 2003 Insurance Act.

2.5 Short Term Rate/ Short Term Cancellation Table

Refer to Appendix 2.

2.6 NAICOM RELATIONSHIP OFFICER

In line with section 3.6.0 of NAICOM’s Revised Market conduct and business practice guidelines for
insurance institutions. The legal and compliance unit of Leadway has been appointed to interface
directly between NAICOM and Leadway.

2.7 UNDERWRITING RISK

RISK EVENT RISK DESCRIPTION
Operational Risk This is the risk that might affect achieving the objective of the company as a
result of failed/inadequacy of system, process, people or external factors

Market Competition Underwriters are forced by pressure of market to reduce rates below tariff or
accept ridiculous terms

Counter party Risk This is the risk that parties to insurance underwriting may fail to honour their
financial obligations to Leadway.

Default Risk The risk that the insured /broker may deliberately undermine important
information like declarations of figures required for premium determination.

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 Assessment Risk Underwriter does not sight or physically assess all large risks in question e.g.
fleet of vehicles/vessels or hull to confirm the existence and condition of risk
before underwriting

Portfolio Excess Risk The risk that Leadway may exceed its retention capacity by not aligning
adequacy of capital requirements to risks assumed.

Premium Gap Risk of loss of premium due to omission to charge additional premium
associated with increased risk exposure.

Reinsurance Risk This is the risk of financial loss arising from failure to cede out risk acceptances
that are above the company's retention capacity and risks that are diametrically
heterogeneous to the specific portfolio.

Operational Risk This is the risk that might affect achieving the objective of the company as a
result of failed/inadequacy of system, process, people or external factors

Risk Assessment

Leadway Assurance Company Limited has committed to a systematic risk assessment process as a means of
achieving best practice in recognizing the risk inherent to its business. We adopt the American National Standard
(ISO31000) for risk assessment which involves the overall process of;

 Risk Identification
 Risk Analysis
 Risk Evaluation

The purpose of risk assessment is to identify and analyze threats/hazards, and assess their risks so that management
can properly avoid, mitigate and manage these risks. We adopt a bi-annual process, assessment should be carried
out in the last month of every half of the year and the result should be escalated to the risk owner/management
which will be subject to the next phase of risk control.

General Requirements for Risk Assessment process

Below is a guide to how risk assessment should be carried out in every business unit within the company.

i. Nomination of Risk Champion and Risk Owner.

 Business units will nominate a minimum of one staff and two staff in the case of technical units who will
act as their risk champion/s and will be responsible for its risk management activities.
 The risk champion will report all risk management matters to his H.O.D who will automatically inherit the
risk owner title.

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  The risk champion and risk owner will work seamlessly with the ERM department on all risk management
issues.
 Business units will have a risk register which will act as a repository of its risk and will be updated and
reviewed frequently as new risk emerge.
 Copies of the risk register will reside in the ERM department, risk owners office and rick champions desk.

ii. Risk Identification

 A Risk Based Approach methodology will be used to identify threats within each business units
 The identified threats will be logged in the risk register and will be called risk events
 A risk description will be tied to every event for the purpose of describing the nature of the event.
 The consequences of the identified event should be summarized to provide information on the exposure
of the risk event to the business.

iii. Risk Analysis.

A quantitative method is adopted for our risk analysis. This is measured against probability and impact of
occurrence of the risk item identified which will form the basis for our risk classification and rating. Both will
be measured on the scale of 1 to 5, with 1 being the lowest and 5, the highest.
 The probability is the likelihood that identified risk-event will occur
 The impact is the potential financial or non-financial consequence of an event/risk occurring

iv. Risk Evaluation

This is the process of comparing the results of risk analysis with risk criteria to determine whether the risk
and/or its magnitude is acceptable or tolerable. In the long run, risk evaluation will assist in making decisions
about which risks need treatment and the priority for treatment implementation.

Risk Control Activity/Mitigation

Risk control/mitigation activity involves selecting one or more options for modifying risk, and implementing those
options. LAC risk control process is to
 Identify the best option that will either reduce, transfer or eliminate the identified threats and log same
in the risk register.
 Implementation of the controls options by the Risk Owner.
 Evaluate the effectiveness of the control option over a period of time by using a quantitative approach
rating.
 The result of the control evaluation should form the residual risk

Risk Monitoring
Risk Monitoring is a planned part of the risk management process and involve regular checking or surveillance. The
organization’s monitoring process encompasses all aspect of risk management process for the purpose of:

18
  Ensuring that controls are effective and efficient in both design and operation
 Obtaining further information to improve risk assessment
 Analysing and learning lessons from events (including near-misses) changes, trends, successes and
failures
 Detecting changes in the external and internal environment, including changes to risk criteria and the
risk itself which can require revision of risk control and priorities
 Identifying emerging risks.
 Risk heat map should be designed to show each risk status

Risk Reporting
The ERM department is saddled with the responsibility to generate a report that includes a high-level summary of top
risks of the company as whole, and its operating units; a periodic overview of management’s methodologies used to
assess, prioritize and measure risk; and a summary of emerging risks that warrant board attention which is presented
on a monthly basis to its executive management while a Board report is presented every quarter to the Board.

19
3. INSURANCE OPERATIONS

3.1 POLICY DOCUMENT

In line with the provisions of the Insurance Act, the policy document being evidence of the insurance contract must
be delivered to the insured within 60 (sixty days) of receipt of the application (proposal form) and premium. Where
there are reasons for delay in issuing the policy documents, such must be communicated to the proposer and the
deposit premium should be refunded where the proposal cannot be accepted. In the case where excess premium
has been paid by the insured the excess would be refunded by the insurer.

3.2 ISSUANCE OF ENDORSEMENT

Endorsements are approved amendments to a policy arising mainly from client’s request. This can arise from any of
the following

- Renewal of policy
- Review of benefits/sums assured (or insured), limits on policy
- Reinstatement of Lapsed Policies
- Amendment of details on insured e.g. change of name and/or address
- Complete Revision of Schedule
- Deleting, Addition or Amendment of Description, Items Insured.
The contents of an Endorsement include, but not limited to:
(a) Policy Number
(b) Endorsement Number - All endorsements on a particular policy must be serial.
(c) Effective Date and Period of Operation e.g. Effective from 6th September, 2014 up to 31st
December, 2015 etc.
(d) The Current Sum Assured/Insured.
(e) The Additional or Return premium due and the Next Renewal Premium. Items (d) and (e) are
applicable if there is a change in sum insured and/or Premium.

3.3 GENERAL PRINCIPLES OF DRAFTING ENDORSEMENTS:

(i) The wordings must be clear, simple and straight forward.

(ii) It must have a relationship to the policy or previous endorsement and if the endorsement is to be attached to
the policy at inception, it must be stated on the policy. To ensure this, recital clauses are used to start
endorsements. “Notwithstanding anything contained in the policy to the contrary, it is hereby understood and
agreed that.......”
(iii) It must be stamped, signed and dated by an official of the Company.
(iv) Effective period of an endorsement must not be back dated as a rule.

3.4 CHECKLIST WHEN EXAMINING AN ENDORSEMENT:

(i) Credit note and/or renewal instruction from client, agent or broker.
(ii) Payment receipt (or if credit agent the Debit Note issued).
(iii) Confirm that the following are correctly stated:-
(a) Sum Insured,
20
 (b) Premium Due/Paid,
(c) Renewal Date/Period.
(iv) Reinsurance Advice - (depending on Sum Insured)

4 OFFICE ADMINISTRATION

4.1 RECORD KEEPING

Record keeping is a very essential part of our work. It enables us to continue to assess ourselves as we go along in our
operations on a weekly, monthly, quarterly, half-yearly and annual basis. Our integrated Information Technology
system affords us the opportunity of having a consolidated database which is quite relevant for the generation of
various records and reports as required by section 17 (1) of the Insurance Act Number 58 of 2003 and NAICOM’s
Market Revised Conduct and Business Practice Guidelines for Insurance Institutions, 2021 section 3.42 .

Aside the information stored in the system, we keep the following records:

(i) TECHNICAL INFORMATION/CIRCULAR FILES

Instructions/Circulars are passed indicating current situations in the market. As such, various technical offices
keep records of such circular from Fire Offices Committee, Marine Offices Committee and Accident Office
Committee, Motor Technical Committee.

(ii) RATE MONITORING TOOL

To keep tabs of the market trend, we keep a record of rates by our competitors to compare with our rates so
we are able to improve on our rates to make us more competitive.

(iii) CORRESPONDENCE

Copies of all letters and memos going out are distributed as follows:-
(a) Original goes to the recipients
(b) Source file copy.

(v) SECURITY DOCUMENTS

Our security documents are auto generated in essence they are secured because their activation goes through
various levels of approval. These documents are:

1. Certificates (Motor and Marine)

2. Receipts

21
UNDERWRITING- GENERAL INSURANCE

22
 TABLE OF CONTENTS

1. Classes of Business We Underwrite

1.1 Property Insurance

1.2 Financial Risk
1.3 Casualty & Liability

2. Rates of Commission

3. General Insurance Underwriting Documentation for major classes of business

23
 1.1 PROPERTY INSURANCE
CONSTRUCTION AND PROPERTY (INDUSTRIAL AND NON-INDUSTRIAL)

(i) FIRE INSURANCE

A. Basic Cover: This policy covers material damage caused by fire, lightning and limited explosion to your facilities
and all equipment while in your premises. The policy also extends to cover some extraneous perils of flood,
bursting and overflowing of water pipes, riot, strikes and civil commotion, storm and tempest, earthquake as
well as malicious damage to property insured.

B. Territorial Limit: Nigeria

C. Acceptable Risks: Fire, Lightning, Explosion, Aircraft, Riot, Strikes & Lock Out (Excluding Religious and
Communal Disturbances), Malicious Damage, Earthquake or Volcanic Eruption, Storm, Tempest & Flood, Bush
Fire, Escape of water from any tank, apparatus or burst pipes, impact by any road vehicle or animal.

D. Rating: Rating guide based on the occupation of insured, standard perils rate is 0.075% except with additional
peril.

E. Applicable Discounts: Long Term Agreement, Fire Extinguisher Appliance, First Loss discount.

F. Exclusions: Riot, Civil commotion, strikes, war, invasion, act of foreign enemy, hostilities or warlike operations,
mutiny, insurrection, military or usurped power.

(ii) BURGLARY AND HOUSEBREAKING

A. Basic Cover: This policy provides cover for the contents against loss or damage to property by theft
accompanied by forcible and violent breaking into or out of the insured’s premise. It can be written on first
loss basis, which is an indication of your maximum exposure to loss/ theft.

B. Territorial Limit: Nigeria

C. Applicable Discounts: First Loss Discount, Long Term Agreement

D. Exclusions: Larceny, moral hazard of insured/employees

E. Rating: (0.275%-0.45%)

(iii) CONSEQUENTIAL LOSS

A. Basic Cover: The policy covers loss of profit, wages and auditor’s fee following machinery breakdown
consequently causing business interruption or interference in the insured’s day to day activities

B. Territorial Limit: Nigeria

C. Indemnity Period: Variable

D. Necessary Risk information: Details of Sum Insured, Values for Gross Profit, Auditor’s Fees Multiplier (Subject
to indemnity period) e.g. 12 months
24
  Gross Profit - 150%

 Auditor’s Fees - 125%

 Wages - 94% (100% of this for the first 13weeks and 25% for the remainder)

E. Exclusions: Riot, Civil commotion, strikes, war, invasion, act of foreign enemy, hostilities or warlike operations,
mutiny, insurrection, military or usurped power.

F. Applicable Discounts: Long Term Agreement (LTA), Fire Extinguisher Appliance, First Loss Discount

(iv) HOUSEHOLDER INSURANCE POLICY

A. Description of Cover: It covers loss or damage to the properties of the policy holder occasioned by actual
forcible or violent breaking into or out of the building or any attempt threat. Essentially, the policy could be
said to be a combination of Fire & Burglary policy in one single document.

There are five major sections under the policy as follows;

 Section 1 : - Loss or damage to the building

 Section II : - Loss or damage to the contents whilst contained in the building caused by an insured peril.

 Section III : - Additional expense of alternative accommodation and loss of rent.

 Section IV : - Liability to the public.

 Section V: - Compensation for death of the insured.

B. Territorial Limit: NIGERIA

C. Acceptable Risk/Caution Zone: Building and Contents. Most often larceny might be accommodated but on
special terms; it is generally excluded.

D. Necessary Risk Information:

 Name and address of proposer/insured

 Occupation of the proposer

 Location of risk

 Description of items/ comprehensive inventory

 Period of cover

 Type of cover required i. e. Owner or Holder

25
  Loss experience (last three years)

It is important that the value of contents should be fully declared. It might however be difficult to list out all
properties, in such cases, the highly priced items should be highlighted for our records. A lump sum figure is
acceptable bit it is subjected to a Single Article Limit.

E. Basic Rating/Minimum Premium

Building: 0.20% - 0.25%

Contents: 0.85% - 1%

Minimum Premium: N10,000.00

G. Applicable Excess

A fixed amount (N---------) or 10% of Claim whichever is higher (Negotiable)

H. Limit of Acceptance

This is subject to our treaty limit

I. Applicable Discount/Deductible

Negotiable or subject to value at risk LTA

J. Extensions:-

All risks Extensions: Jewellery and personal effects.

K. Possible Endorsements

 Exclusion Clause

 Electrical Clause

 No Premium No Cover

 Insured’s Household Warranty

 Single Article Limit – Contents Only

 Temporary Removal Clause - Contents Only

 Automatic Reinstatement of sum insured after loss.

L. What To Look For During Inspection.

 Location of building

26
  Construction

 Burglary/Theft precautions

 Fire Precautions

(v) ALL RISKS INSURANCE

A. Basic Cover
Basically, the cover granted under this policy is similar to that of Householder policy except that All risks
insurance has a wider scope. The covers include; fire burglary, housebreaking, theft, larceny, accidental loss,
damage or destruction from any cause, which is not excluded from the insured perils.

B. Basic Rating/Minimum Premium

Under an All risks policy rate is determined by the nature of the items to be covered, e.g. Jewelries & Mobile
Phone have been found to be susceptible to theft and or accidental and as such attracts high rate which range
between 2.5% - 10%. Other personal effects could attract a much lower rate like 1.5%.

Minimum Premium: N10,000.00

C. Territorial Limit: NIGERIA or Worldwide

D. Necessary Risk Information:-

 Name and address of proposer/insured

 Occupation of the proposer

 Location of risk

 Description of items/ comprehensive inventory

 Period of cover

 Loss experience (last three years)

E. Applicable Excess/ Deductible: Negotiable - depending value at risk

F. Limit of Acceptance

This is subject to our treaty limit

G. Applicable Discount/

27
 Negotiable or subject to value at risk

LTA

H. Extensions: None

I. Endorsements

Exclusion Clause

Electrical Clause

No Premium No Cover

Insured’s Household Warranty

Single Article Limit – Contents Only

Temporary Removal Clause - Contents Only

Automatic Reinstatement of sum insured after loss.

J. What To Look For During Inspection

 Moral hazard

 Mode of construction

 Previous loss experience

 Location of risk

 Age of items

(v) INDUSTRIAL ALL RISKS/PACKAGE/COMBINED POLICY

This is basically a combination of all Policies under one to allow the client to enjoy a package discount.

(vi) ENGINEERING POLICIES

 Contractors’ All Risks (CAR)

The purpose is to offer comprehensive and adequate financial protection against loss or damage in respect of the
contract works, construction plant & equipment/machinery, as well as claims from third parties in respect of property
damage or bodily injury arising in connection with the execution of a contract.

Insured

28
A CAR policy may be effected by the Principal or by the Contractor including all Sub-Contractors engaged in a project.
It is advisable to effect the policy in the joint names of all parties to the contract to prevent gap or overlap in cover
provided.

Subject Matter Insured

CAR Insurance can be taken out for all Building and Civil Engineering Project, such as:

Residential and Office Building, Hospitals, Schools, Theaters, Stadiums, Factories, Power Plants, Roads and Railway
facilities, Airports, Bridges, Dams, Tunnels, Water Supply and Drainage Systems, Canals, Harbors.

Scope of Cover

CAR Insurance provides an “All Risks” cover - every risk not specifically excluded is covered. It means that almost all
sudden and unforeseen loss or damage occurring during the period of insurance to the property insured on the
construction site will be indemnified. The most common causes of losses indemnifiable under CAR insurance are: Fire,
Lighting, Explosion, Flood, Inundation, Earthquake, Theft/Burglary, Bad workmanship, Lack of skill, Negligence, Human
error, Willful and Malicious acts and Short-circuiting.

CAR insurance can also cover loss of or damage to building materials, Construction Machinery, Plants and Equipment
occurring during on site construction and storage.

Period of Cover

The property insured here is usually in the course of construction or erection. Hence, the Period of Insurance or cover
is tied to the construction period as stated in the contract documents plus the maintenance period. So, it is not a
renewable policy but cover can however be extended if project is not completed within the insurance period.

Sum Insured/Rate

The sum insured on each item insured is assessed and rated separately. It is important to note that rate for contract
works is for the period of construction, denominated as per mille while rate for construction machinery/equipment is
per annum and is dominated in percentage.

Note that there is established rate as every building or project is rated on its merits. But the following must be
considered.

 Condition and exposure of site e.g. possibility of Flood, Earthquake etc.

 Design features and materials

 Safety measures put in place

 Construction period/time schedule

 Construction techniques = experience of the Contractor.

 Erection All Risks (EAR)

29
Erection All Risks Insurance is like Contractors’ All Risks insurance in that the covers are basically the same. While CAR
covers risk involving construction of building and civil engineering projects, EAR deals with erection or installation of
mechanical or electrical plants.

As a general rule where there are both civil and erection works in a project the predominant work in value determines
the type of policy to be issued. That is, if values of facilities to be erected exceed that of civil works, it is EAR if the other
way round it is CAR.

Insured

An EAR policy may be effected by anybody who assumes a risk due to the erection of a project. It could be the
manufacturer or suppliers of machinery or plant if they are responsible to carry out the erection work. It could also be
the firm commissioned with the erection work or the purchaser of the machinery or plant to be erected. It is however
advisable to effect the policy in the joint names of parties as insured.

Subject Matter Insured

It could be individual machines like, Generators, Steam Boilers, Compressors, Transformers, Switchgear, Elevators,
Cranes, Conveyor Belts or Complete production plant such as Power Stations, Steel Works, Chemical Plant, Paper and
Textile Machinery, Furnace or Plants producing consumer goods that is being erected. Civil engineering work necessary
for the project to be erected may be included.

The Scope of Cover and Period of Cover are same as in CAR.

Sum Insured/Rate

The sum insured is usually the value of machinery or plant to be erected in accordance with the contract. Each risk is
rated on its merit as it is not practicable to get a fixed rate for every kind of erection project.

 Machinery Breakdown (MB)

Machinery Breakdown Insurance was developed to grant Industries an effective insurance cover for plant, machinery
and mechanical equipment at work, at rest or during maintenance operations. It is a material damage policy, which
cover accidental breakdown to mechanical, lifting, and electrical machinery.

Insured

Machinery insurance is important for everyone who operates machinery i.e. both large and small enterprises where a
machinery failure may have serious financial and economic consequence.

Scope of Cover:

30
Machinery insurance is “accident” insurance on machinery. It covers unforeseen and sudden physical loss of or damage
to the insured items. Typical causes for loss or damage to machinery are: Faulty design, Human failure (faulty operation
lack of skill, negligence), Short circuit and other electrical causes, Shortage of water in boilers.

Period of Cover
Policy is issued on an annual basis.

Sum Insured:
The sum insured should always be the new replacement cost of the insured machinery (i.e. value of new item plus
custom duties, transportation and installation charges).

Rates

The rates on machinery insurance are calculated separately for each type of machine. This depends on the frequency
of losses recorded over a period of time. Because of the frequency of losses the rates are usually high compared to
other classes of insurance.

 Plant All Risks (PAR)

This is an insurance on Contractor's Plant and Machinery on annual basis. It is a material damage All Risks policy
covering Construction Equipment and Heavy Mobile Plant against any loss or damage from any cause whatsoever
occurring at work, at rest or during maintenance operations or even in transit by road, rail or inland waterways. Hence
cover is not limited to a specific site.

Insured

These equipment are normally owned, leased or hired by Contractors and they are usually the insured.

Subject Matter Insured

Could be moveable and non-moveable plant, which may include, Bulldozers, Scrappers, Cranes, Hoist etc.

Scope of Cover

The standard policy covers the insured construction equipment and plant against unforeseen or accidental damage
from a number of risks, which include; innocent operation, negligent or malicious acts of employees, fire, lightning and
explosion, burglary and theft, collision, overturning and derailment, forces of nature such as storm, flood, landslide,
earthquake and volcanic eruption.

Period of Cover

Policy is issued on an annual basis

Sum Insured

The sum insured on each plant item should always be the new replacement cost (i.e. value of new item plus custom
duties, transportation and installation charges).

 Boiler And Pressure Vessel (BPA)

31
This is a combined material damage and Third Party Liability Policy, which covers material damage to the insured’s
Boiler and the surrounding property, as well as liability to the Public for personal injuries and property damage arising
out of the Boiler explosion. Before granting cover there has to be a satisfactory inspection of the boiler.

Items Insured

Steam boilers, economizers, super heaters, steam/feed pipes, steam pressure vessels, air receivers, autoclaves, hot
water heating boilers, steam ovens and presses, piping and radiators.

Insured

The insured is usually the owner of the Plant.

Scope of Cover

The policy covers the results of explosion or collapse of the insured’s boiler or vessel such as damage to the insured
item itself and to other property of the insured, damage to property belonging to third parties for which the insured
is liable, and liability to third parties for personal injuries. Basically, the risks of explosion or collapse are the covers
available, therefore it is not an All Risks policy but rather a named perils policy.

Period of Cover

Policy is issued on an annual basis.

 Electronics Equipment (EE)

Electronics Equipment is a material damage All Risks policy specifically covering all types of Electronic Equipment e.g.
Computer Installations and Data Media, Telecommunications, Medical, Security, Process Control etc. Additional Cost
of Working (for continuation of operation after loss) is also available.

Insured

The insured can be the owner or the hirer of the electronics equipment.

Scope of Cover

Electronic equipment insurance is an “accident” insurance on “All Risks” basis covering losses which arise suddenly
and unforeseeable and materially affects the subject matter insured.

Period of Cover

Policy is issued on an annual basis

Sum Insured

32
The sum insured must always be the replacement value of the insured electronic equipment (value of new item plus
customs duties, transportation and installations charges).

Rate

Due to the special hazards and unusual designs and newly introduced types of equipment, each is individually rated
according to their attendant hazard.

(viii) ENERGY OPERATIONS

A. BASIC DESCRIPTION OF COVER

The risks exposure characterizing the Energy Industry falls into any of the following categories:

Exploration risks

 Production risks

 Construction risks

 Marketing risks

Their attendant insurances are summarized below:

Risk Exposure Insurance

Physical Loss or Physical Damage Property Damage Insurance

Death, Bodily Injury, Personal Injury General Third Party Liability

or third party property damage Insurance

Seepage and Pollution, Clean up, Operators Extra Expenses

extra expenses, extended Control of Well/Blowout
Containment Re-drilling,
Removal of wreckage or debris

Terrorism, Sabotage, Civil Commotion etc. Political Violence Insurance

Consequential Loss Business Interruption or Loss of Production Income

Floating, Towage & Marina Hazards Marine (Hull & Machinery & cargo)

Construction/Erection Contractors/Erections all risks

B. TERRITORIAL LIMIT - Worldwide

C. ACCEPTABLE RISKS

33
 We accept both Onshore and Offshore risks based on risks profile available for assessment.

D. CAUTION ZONE

The caution zone is based on the international market agreement. As a result of Gulf Hurricanes, Hurricane
Katrina and Rita & Wilma incidents, underwriters in the international market are conscious of accepting
businesses from these areas.

E. RISK INFORMATION

Information is required according to the type of business the proposer is doing.

E.1 OIL MARKETERS

* Location of their offices, plants, premises, station anywhere in Nigeria.

* Trade description such as petroleum product manufactured, distribution and marketing network.

* Extensions whether to cover food poisoning, fire explosion, first aid or lift and crane etc.

* Full description of all the insured’s operation

* Number of refineries, petroleum plants and petrol station

* Storage capacities

* Details of surrounding TP at major locations

* Details of Assured’s protection at major locations

* Confirmation that all storage tanks are bonded to 100% capacity

* Loss recorded last 5 years.

- Total from ground up split Public and Product

- Details of the large losses

E.2 OIL PROSPECTING COMPANY

Details of the Operator

* Nationality

34
 * Experience

* Previous Loss history

* Man power - Engineers, Geologist

Extra Information Required

* Annual Report

* Revenue

* Total wage roll

* Number of employees

E.3 OFFSHORE CONSTRUCTION PROJECT

* Name of project

* Estimated Contract Value

* Location

* Type of Project

* Name of Contractor

* Period of Contract

* Maintenance

* Depth of Water

* Distance to the terminal

* Existing surrounding platform

E.4 INFORMATION ON PIPELINES

* Oil or Gas

* Diameter
35
 * Method of laying

* Pipe coating, if so, nature of coating and when coating is to be applied

* Whether pipe steel, coflexip or other

* Details of any crossing of other pipeline during laying

* Pipe trenching

* Details of tonnage and installation and hoop-up costs

* Water depth and route

* From where are materials being shipped?

E.5 INFORMATION ON WELLS

* No. and type of Well

* Authorised Financial Expenditure (AFE)

* Projected period of time until certain depth is achieved

* Area of drilling-is it farmland or wetland (swamp)

* Is it a populated area?

* Which drilling Contractors is likely to be used?

* Schedule of Equipment with their values.

F. BASIS OF RATING

Rating of the risks is usually based on the assessment of information required and successful supply of such
requirements. It is rated at the international market by the lead reinsurer. At the local market our reinsurance
companies like Africa Re also provide rates for the Oil and Gas businesses.

G. DEDUCTIBLES

36
 The deductibles are subject of sum insured or limit of liability. The insured may decide to choose a high
deductible for a big risk for a reduction in premium. The insured can thereafter buy deductible insurance to
protect the huge excess.

(x) AGRICULTURE INSURANCE

Description of Cover

Agricultural Insurance provides financial protection for agricultural investors in respect of their property against any
fortuitous loss arising from Acts of God, fire, windstorm, lightening, accident, flood, outbreak of diseases and pests,
hail, and animal encroachments.

Available Cover

1. Poultry Farm Insurance

2. Livestock Insurance

3. Multiperils crop Insurance

4. Fishery and Fish Farm

5. Farm Properties and Produce Insurance

Territorial Limit: Nigeria

Consideration for Risk Acceptance:

1. Standard of practice

2. Availability of risk mitigation tools

3. Technical know-how

4. Location and localization of the risk

Necessary Underwriting requirements:

1. Farm records that show daily farm activities, production details, mortality and loss records and financial
expenses.

2. Completion of appropriate Proposal Forms

3. Pre-inception survey and post-inception inspections

4. Compliance with recommended risk management tips

37
Basis for rating:

1. Type or size/volume of production

2. Loss history
3. System of production- if crop, is it mechanized or subsistence; If livestock or poultry, extensive or intensive
system of production. In case of fish production, is it earthen or concrete ponds?
4. Age of the stock
5. Scope of cover
6. Availability of technical know-how and experience in term of how long has the farmer been practicing
7. Geographical location of the risk
8. Period of cover

Applicable Excess and Deductibles:

The acceptable excess for poultry is 5-10% of each and every claim whichever is higher

1. Fishery is 10-15% of each and every claim whichever is higher

2. Others 10% of each and every loss whichever is higher

Extensions:

1. Transit extension for poultry, livestock and fishery

2. Burglary extension also for poultry, livestock and fishery
3. Yield guarantee extension for crop
4. Liability extension for livestock

Available Discount:
1. Volume discount: Negotiable
2. LTA: 7.5%
3. Good features discount: 5%
4. No Claim Discount: 5%

Limit of Acceptance:
1. Poultry: N10 Million
2. Livestock: N7.5 Million
3. Fishery: N5 Million
4. Crop: N3.5 Million

TRANSPORTATION, MARINE AND AVIATION

(I) MOTOR

38
 A. Our Motor Policy provides the following types of cover:
 Comprehensive cover

 Third Party Fire & Theft

 Third Party

Basic description of cover

1. Comprehensive: covers (i). damage to the insured's vehicle as a result of accidental collision or over-
turning, fire and theft; (ii). Legal liability to Third Parties for death, bodily injury or damage to their
Property; (iii). Limited medical expenses.

2. Third Party Fire & Theft: This covers the insured's Legal liability to Third Parties for death, bodily injury
or damage to their Property and also the insured's vehicle if stolen or damaged by fire.

3. Third Party Only: This covers the insured Legal liability to Third Parties for death, bodily injury or
damage to their Property up to the limit of N1,000,000.00 and bodily injury (Unlimited).

B. Classification of Vehicles

1. Private Vehicle

2. Commercial Vehicle

 Own Goods

 General Cartage (carriage of goods for hire or reward)

 Buses

3. Motor Cycle/Tri-cycle

C. Territorial limit
Within Nigeria; but could extend to within the ECOWAS sub-region (On Third
Party basis only) with the purchase of Ecowas Brown Card.

D. Basis of Rating
1. Private Motor: 3% of sum insured
2. Commercial Vehicle: 4.5% (Own Goods).
3. Commercial Vehicle: 5% - 7.5% (General Cartage & Buses)
4. Motorcycle : 5% - 7%
39
 5. Third Party Fire & Theft: 60% of comprehensive premium.

E. Minimum Premium
1.a Private Motor Third Party = N5, 000.00
1.b Comprehensive basis; minimum value/premium N1,000,000.00/N30,000.00
2.a Commercial Vehicle Third Party =N7, 500.00
2.b Comprehensive basis; minimum value/premium N1,000,000.00/ N45,000.00
Comprehensive basis; minimum value/premium N1,000,000.00/ N45,000.00

4. Motorcycle = N 1,500.00

F. Applicable Excess. (The amount is graduated according to the sum insured) But usually it is a fixed
amount or 10% of claim whichever is higher.

G. Applicable Discounts/Deductibles
1. Fleet Discount in an event where two or more vehicles are insured under one policy, the following
rebate is allowed off the premium.

 Private Vehicle and Commercial Vehicle 10% - 20%

2. No Claim Discount. In the event of no claim being made under the policy during a period of insurance
immediately preceding renewal of the policy, a discount of 5% - 10% is allowed on the renewal
premium by the Company.

3. Special Discount. Negotiable.

H. Extensions
1. Strike Riot & Civil Commotion
2. Flood
3. Excess Buy Back
4. Increase of TPPD limit beyond the statutory N1m

I. What to look for during Inspection

The condition of the vehicle comparing it with the proposed value and the market value.

(ii) MARINE (HULL)

A. Basic description of cover: This is to indemnify the assured for loss or damage by any accident or misfortune
to the vessel (hull & machinery) insured under the policy. Cover may be arranged for operational risk (while
the vessel is being used) or to cover the voyage risk (while the vessel is in transit from one location to another
i.e. Europe – Lagos).
40
B. Territorial limit: Worldwide from the port of commencement of transit to destination port (for voyage cover)
and within the Nigerian territorial waters and sometimes beyond - up to West coast and Eastern African waters
(for operational cover).

C. Acceptable Risk: Vessels such as yacht, speed-boat, house boat, barges, fishing trawlers, oil tankers, dredgers.

D. Necessary risk information:

a. Name and address of the Proposer/insured
b. Occupation of the Proposer
c. Type of vessel
d. Age of vessel
e. Current Certificate of seaworthiness
f. Current Certificate of survey
g. Purchase receipt/invoice - (in case of a new vessel)
h. Usage and area of use
i. Current survey and valuation report
j. Insured value
k. Tonnage/Weight
l. Period of cover
m. Type of cover required i. e. All Risks, TLO, etc.
n. Loss experience (in the last three years)
o. Photograph(s) of the vessel(s)

E. Basis of Rating: The rating after assessing the risk information made available as stated above is based on the
value of the vessel (hull and machinery).

F. Applicable Excess: Determined by the level of sum assured and risk exposure but minimum of N 250,000.00 or
10% of claim whichever is higher.

G. Limit of acceptance: As per annual re-insurance treaty arrangement which is currently N1.560 billion with a
retention limit of N120m.

H. Applicable discounts: 7.5% LTA Discount, Special or Fleet Discount.

I. Possible Extension: War, Riot, Strike, Malicious Damage, Protection & Indemnity (Liability to Third Party)
excluding terrorism, political risk and religious/communal clashes at additional rate.

2. MARINE CARGO (SINGLE COVER & OPEN COVER)

A. Basic description of cover: This is to indemnify the assured for loss or damage to the goods insured during the
course of voyage from the overseas point of loading and while in transit up to delivery at the destination final

41
 warehouse. Cover can be arranged on open cover basis for importers that ship in goods on regular basis or
single transit/one-off cover for small time importers.

B. Territorial limit: World-wide from port of loading to final warehouse in the country of destination. The policy
is usually issued on warehouse to warehouse basis except when advised otherwise.

C. Acceptable risk: Goods of every description except contrabands.

D. Necessary risk information:

a. Name and address of the proposer/assured

b. Occupation of the proposer
c. Proforma invoice
d. Approved Form M/Exchange rate
e. Basis of Valuation
f. Voyage i. e. Port of Shipment and final destination
point/warehouse
g. Nature of cargo
h. Mode of packing
i. Type of cover required i. e ICC (A), ICC (B), ICC (C), TLO etc
j. Loss experience (in the last three years)

E. Basis of Rating: The rating after assessing the risk information made available is based on the sum
assured/value of goods which is ordinarily the cost and freight amount on the supplier invoice plus incidental
expenses (as may be declared by the assured).

F. Applicable Excess: Also determined by the sum assured and level or risk exposure involved but minimum of
N100,000.00 or 10% of claim whichever is higher.

G. Limit of acceptance: Please refer to Appendix 3 for minimum and maximum reinsurance contract capacity.

H. Applicable discounts: None. Except gradual reduction in premium rate based on the loss ratio of the policy.

I. Possible Extension: The risk of War, Riot & Strikes at the additional rate of 0.075% presently world-wide

(iii) GOODS IN TRANSIT

A. Basic description of cover: This covers the insured goods against loss or damage by any accident or misfortune
while in transit, or while in the course of loading and on to or un-loading from the conveyance or while
temporarily housed in the ordinary course of transit as stated in the schedule of the policy.

B. Territorial Limit: Anywhere within Nigeria. However, cover can be extended to beyond Nigeria (i. e. Ghana,
Togo, Benin Republic etc.)
42
C. Acceptable Risk: Goods of all nature inclusive of Petroleum Products except Fragile, Perishable, Inflammable
Goods and Explosives. The Delicate Goods Exclusion Clause takes care of this in the schedule of the policy.
However, Fragile and Perishable goods can be accepted on accommodation basis but on special terms to be
agreed with the Proposer.

D. Necessary risk information:

a. Name and address of Proposer/Insured
b. Occupation of the Proposer
c. Nature of goods to be carried
d. Limit per carrying & number of trips per month per vehicle
e. Estimated annual carrying
f. Mode of conveyance i.e. owned or hired vehicles, if owned vehicles, detailed
particulars of such vehicles are to be submitted. If hired vehicles, detailed particulars of the
Transporter, evidence of motor vehicle & goods-in transit insurance covers, name and particulars of
driver with copy of the executed Transporter’s Agreement are to be submitted
g. Period of cover
h. Type of cover required i. e. All Risks or Restricted cover
I. Loading and off-loading points
j. Loss experience (at least in the last three years)

E. Basis of Rating: The rating after assessing the risk information made available by the Proposer as stated above
is based on the Estimated Annual Carrying which is determined by value of total transits for one year (for
annual policies) or value/sum insured of goods (for single transit policies).

F. Applicable Excess: This is determined by the level of the limit per carrying and also the level of risk exposure
but minimum of N 1000,000.00 or 10% of claim whichever is higher.

G. Limit of acceptance: As per annual re-insurance Excess of Loss treaty arrangement which is currently N280m
with deductible of N100m

H. Applicable discounts: Usually 7.5% LTA Discount and sometimes Special discount as may be agreed.

I. Possible Extensions: Riot, Strike, Civil Commotion, Malicious damage & Hold-up Extensions at additional
premium of usually between 5% - 10% of the basic premium.

(iv) PROTECTION AND INDEMNITY COVER (P & I)

This insurance, usually referred to as "P&I," provides cover to ship-owners, operators, and charterers for third-party
liabilities encountered in the commercial operation of vessels. The main risks covered are liabilities, expenses, and
costs for:

43
  Loss of life, injury and illness of crew, passengers and other persons

 Cargo loss, shortage or damage

 Collision

 Damage to docks, buoys and other fixed and floating objects

 Wreck removal

 Pollution

 Fines and penalties

 Mutiny and misconduct by crew

 Crew repatriation and substitution

*Note that P&I Clubs exist for convention liabilities in excess of available insurance capacity.

(v) AVIATION
Aviation Insurance comprises the following covers.

 HULL ALL RISK INSURANCE AND LIABILITY

We adopt AVN1C London Insurance Market policy, which is mainly used for general aviation business. It covers both
the hull risks and the passengers and insured’s liability to third parties.

There are four main sections under the policy.

Section I: Loss of or damage to aircraft

Section II: Legal liability to third parties (other than passengers)
Section III: Legal liability to passengers
Section IV: General exclusions applicable to all sections
Conditions precedent applicable to all sections
General conditions applicable to all sections
Definitions

Section I - Loss of or damage to aircraft:

Insurers will pay for, replace or repair accidental loss of or damage to the aircraft described in the schedule under the
policy for the risks covered (generally being flight, taxiing and ground risks).

Spares coverage is often included within Section I at an additional premium, rated against 'values at risk'.

Section II - Legal Liability to third parties (other than passengers):

44
Insurers will indemnify the insured for all sums that the insured becomes legally liable to pay as damages (including
costs) in respect of accidental bodily injury or property damage caused by the aircraft or by any person or object falling
therefrom.

Section III: Legal Liability to passengers:

Insurers will indemnify the insured for all sums the insured becomes legally liable to pay as damages (including costs)
in respect of accidental bodily injury to passengers whilst entering, on board or alighting from the aircraft and for loss
of or damage to baggage/personal effects arising out of an accident to the aircraft.

 HULL WAR COVER

It covers confiscation, extortion and hijack expenses and may be purchased independently of Hull Insurance or
combined. It important to note that confiscation by Government is excluded.

 HULL DEDUCTIBLE

This depends on the quote given and the underwriting consideration at the disposal of the foreign Underwriter. The
deductible is a function of information available to Reinsurers

 AVIATION REFUELLING

Insurers will indemnify the insured for all sums that the insured becomes legally liable to pay as damages arising out
of or in connection with their business as suppliers of aviation petroleum products and the fuelling, refuelling,
defuelling, lubrication of aircraft within Nigeria and all other services and operations in connection therewith with
regards to their aviation operations.

The scope of cover include:

I. Products Liability (Bodily Injury/Property Damage)

II. Grounding Liability

III. Legal Costs and Expenses

1.7 IMPORTANCE OF SURVEY FOR PROPERTY RISKS

Most of the time, risks are placed with the underwriters through the completion of the requisite proposal form or
brokers slip which gives the underwriters their first feel of the risk being undertaken.

It is however impossible for the proposal form or slip to give comprehensive details of the risk in question particularly
in respect of large and complex risks. It is therefore important that surveys be carried out in respect of all large and
45
complex risks to have a further feel of the risk. Surveyors who are regarded as the eyes and ears of the underwriters
both in-house and external are usually engaged to carry out these underwriting surveys principally with the aim of
achieving the following:-

To have timely information that will assist in drafting the policy and this includes technical warranties and conditions
to ensure that risks are not altered or increased during the period of insurance without the underwriters’
knowledge/consent.

To appreciate the various hazards (either inherent or introduced) present at the risk location and have the necessary
requirements to prevent or at least mitigate the loss effects of such hazards.

To ensure that insurance is effected for full value so that adequate premium is charged. Where the sums insured are
inadequate, the insured will be his own insurer for the differentials.

To ascertain the Estimated Probable Loss to which the insured may be exposed in a single occurrence. The underwriter
will be able to fix his retention and retain a reasonable proportion of his premium.

Making risk improvement recommendations and monitoring implementation of such recommendations with the view
of improving the risk.

We maintain a full-fledged Risk Management Services Department at the Corporate Office which has the responsibility
among others of carrying out surveys and inspections where you have such large and complex risks. The Risk
Management Department should be contacted, who either carries out the survey or advices a reputable professional
survey firm to handle it.

As the saying goes that prevention is better than cure, we believe in spending a relatively small amount of the premium
income to have the risk surveyed rather than ending up paying a huge claim that would have been avoided. We usually
do carry out Fire and Burglary surveys, Industrial All Risk surveys, Engineering inspections (not statutory) and
occasionally Liability surveys particularly where limits of liability are high.

46
1.2 FINANCIAL RISK

(i) MONEY

A. Basic Description of Cover: The policy indemnifies the insured against loss of money whether in transit, in safe,
on premises or as otherwise stated in the policy. Most common cause of loss is theft or armed robbery. There
are five major covers granted under this policy and they are briefly explained below:

1. Transit cover: This provides cover for the movement of money from one location to the other e.g. from
the insured’s premises to the bank and vice versa. The cover begins from the point of loading the
money into the insured’s vehicle or a bullion van and terminates when the vehicle reaches its
destination and the money is safely delivered to the recipient.

2. Money in safe cover: This provides cover for the loss of money in the safe or strong room whilst in the
insured’s premises and during business hours and after business hours.

3. Money on premises cover: This provides cover for the loss of money not in the insured’s safe but on
the premises. It is required that money not paid out same day is returned to the safe or strong room.

4. Damage to safe cover: This provides cover for the damage or destruction of safe in consequence of a
theft or attempted theft. It should be known that damage to safe must be physical.

5. Money in personal custody cover: This provides cover for the loss or theft of money in the personal
custody of the insured’s employees for business transactions or kept in their homes. For this type of
cover, it is required that names of such employees or their position be stated.

B. Territorial Limit: NIGERIA

C. Acceptable Risk/Caution Zone: CIT, CIS, COP, DTS & COPC . Limit must be agreed with location.

D. Necessary Risk Information:-

 Name and address of proposer/insured

 Occupation of the proposer

 Location of risk

 Description of items/ comprehensive inventory

 Period of cover

 Loss experience (last three years)

E. Basic Rating/Minimum Premium

47
 NON BANKS CIT 0.085 - 0.045%
CIS 1% - 0.55%
COP 1% - 0.55%
COPC 2.5% - 0.85%
DTS 0.85% - 0.35%

Minimum Premium - N10,000.00

F. Applicable Excess
Negotiable or subject to value at risk
LTA

G. Applicable Discount/ Deductibles

Negotiable or subject

H. Limit Acceptable
Subject to treaty agreement - N40m

I. Extensions:-
SRCC 5% – 10%
Holdup 5% – 10%

J. Endorsements
Cash in safe clause
Key clause
No Premium No Cover
Safe Warranty
Escort Warranty
Unattended Vehicle Clause
Automatic Reinstatement of sum insured after loss.

K. What To Look Out For

 Moral hazard

 Previous loss experience

 Necessary precaution

48
(ii) FIDELITY GUARANTEE

A. Basic Description of Cover. Fidelity Guarantee Insurance Policy indemnifies the insured employer against losses
sustained through any act or acts of fraud committed by the insured’s employees. That is, the risk of
employee’s infidelity is being transferred to the insurance company.

B. Territorial Limit: NIGERIA

C. Acceptable Risk/Caution Zone: fraud/embezzlement

D. Necessary Risk Information:-

 Name and address of proposer/insured

 Occupation of the proposer

 Period of cover

 Loss experience (last three years)

 Aggregate limit

 Limit per occurrence

E. Basic Rating/Minimum Premium

BANK - PRAN Guidelines
NON BANKS - 1% - 3%
Minimum Premium - N10,000.00

F. Applicable Excess
Negotiable or subject to value at risk
LTA

G. Applicable Discount/ Deductibles

Negotiable or subject

H. Limit Acceptable
Subject to treaty agreement N80m

I. Endorsements
Character Reference Clause
Excess Clause
Prosecution Clause
Remuneration Clause

49
 Proof of Loss Clause
Collusion Exclusion Clause
Aggregate Limit Clause
Automatic Reinstatement Of Sum Insured After Loss.

J. What To Look Out For

 Moral hazard

 Previous loss experience

 Necessary precaution

 Record keeping

(iii) BONDS.

Bond is a document, which is signed and sealed which contains such an agreement that has force in the face of the
law and it involves three parties. So, Bond is not a simple contract like other classes of insurance. Strictly speaking,
bond is not insurance per se but a guarantee.

PARTIES TO A BOND
There are three parties to a bond namely:

1. The Contractor (Insured) - He is responsible to carry out the work for which the bond is issued i.e. for the
fulfillment of the obligation set forth in the bond.

2. The Obligee (Employer) - He is the beneficiary under the terms of the bond.

3. Surety or Guarantor (Insurer) - He prepares, signs and seals the bond together with the Contractor before
delivery to the Obligee i.e. he joins the Contractor for the purpose of guaranteeing to the Obligee the
fulfillment of the obligation.

OBLIGATION UNDER A BOND

Obligation of the Contractor/Insured

1. Fulfills the contractual obligation of execution

2. Pays the premium for issuing the Bond

3. Indemnifies the Surety for any payment made in connection with the bond

4. Provides the Surety with all necessary information in issuing the bond.

50
Obligation of the Surety/Guarantor/Insurer

1. Pays to the Obligee with reasonable speed if a loss clearly falls within the purview of the bond.
2. Resist making payments that are not clearly due if the Contractor has a valid defence.

Obligation of the Employer/Obligee

1. Fulfils his contractual obligation of making payments to the Contractor

2. Clearly defines what is to be done or left undone by the Contractor

3. Informs the Surety about every essential change in the underlying agreement.

4. Informs the Surety about progress and performance of the contract (especially if problems arises).

5. Discharges the Surety after fulfillment of the contract.

IMPORTANT ELEMENTS OF BONDING.

It is an accessory instrument – it is needed as an underlying obligation. A legal contact/agreement between the

Contractor and Employer must exist.

- Surety’s liability is limited up to the bond amount. In fact the liability is never more than the Employer’s actual
loss.

- When the Contractor fails and the Surety has to step in, the Law generally provides that the Surety inherits
the rights which the Employer had against the Contractor. Hence, it is necessary that the Surety insists that
the Contractor signs an Indemnity Agreement, undertaking to reimburse the Surety for any and all monies
paid as a result of the Bond being called.

- Bond as a rule is a non-cancellable instrument. Once issued, it remains in force until the Contractor’s obligation
therein has been fulfilled. Hence Bond is treated on “Cash and Carry” basis.

- Generally, bond is not renewable because the period of cover is related to the construction period. Once the
contractual obligation of execution has been fulfilled, it means that the bond has run its course and would
then naturally expire.

THE DIFFERENT TYPES OF BOND

There are many possible forms of Bond with obligations, which can be guaranteed. The following are the main
categories that are available.

Contract Bond

51
The different types of Contract Bond, which are common, are: Bid Bond (Tender Guarantee), Advance Payment Bond,
Performance Bond, Retention Bond and Credit Bond.

Bid Bond (Tender Guarantee)

Bid bonds are required in connection with the submission of tenders for contracts. The objective is to guarantee that
the bidder (Contractor) if awarded the contract will enter into the contract to perform and to furnish the required
performance bond. If the Contractor fails to do any of these, the Surety will be liable up to the amount stated in the
bid bond but much lesser than the amount bidded for. Apart from being a guarantee, it also qualifies the Contractor
to bid for a contract. In effect it satisfies two purposes.

Performance Bond

A Performance Bond is required of a Contractor to guarantee the full and due performance of the contract according
to plans and specification. Amount guaranteed is usually not higher than 20% of the contract price. But occasionally
it could be more depending on the request of the Employer and the terms of the contract.

Advance Payment Bond

In cases where the Obligee (Employer) is pre-financing a Contractor by advance payments on the contract (payment
of mobilization fee), the Employer would want to secure the advance payment by means of a bond. That is to guarantee
due utilization of the money advanced for the purpose it was advanced. Amount recoverable is however reduced in
accordance with the portion of work done.

Retention/Maintenance Bond

Usually under a contract, the Employer retains up to 5% of the contract price and this is paid to the Contractor after
successful completion of contract i.e. after commissioning and handover. But the Contractor could require this money
up front for use as working capital. So the Employer would require a Retention or Maintenance Bond before effecting
payment i.e. to guarantee that any defective workmanship or materials discovered after completion but before the
expiry of the maintenance period, would be rectified at no extra cost to the Employer.

Credit Bond

Rarely do we provide credit bonds unless in exceptional cases. It basically covers defaults which may arise as result
of failure on the part Borrowers to make good their payment as at when due as agreed with the Lender.

Underwriting Consideration:

- Terms of agreement between the Borrower and the Lender

- Credit Level/Sum

52
- Tenure of the facility

- The repayment plan/structure

- Available collateral/security

- Default prevention measures put in place by Borrower

- Possible recovery measures put in place

Customs/Excise Bond

The objective is to indemnify loss of revenue arising from improper use of dutiable articles or goods and or the non-
payment of duties thereof.

Customs is the duties or taxes which are imposed on goods either, imported or exported to a Country.

Excise is the duties or taxes that are imposed on manufacturers of goods produced and consumed locally i.e. within a
Country.

There are many varieties of Administrative Bond but the Customs/Excise Bond is the one that is commonly in demand.

BOND UNDERWRITING

Because a bond is not like the ordinary insurance policy, a lot of investigations are usually made concerning the
Contractor with a view to determining his viability, financial solvency and ability to perform amongst others. Our
culture, environment, climate and background of the Contractor must all be considered. Bond must not be issued on
sentimental basis.

So, it is very important that while considering proposal for a bond, the under noted factors should be considered. This
is referred to as the 3 Cs – Character, Capability and Capital.

Character: The Contractor must be well known and held in high respect, highly established and have good reputation
i.e. honesty and reliability of the Contractor is very important. In effect, moral hazard should first be given
consideration over and above all other factors.

Capability: The ability of the Contractor to perform. Evidence of past performance of similar contract will serve as a
guide and it is important to ascertain that they do not have a large number of outstanding contractual obligations.

Capital Base: Very close to ability to perform is the issue of capital base of the Contractor. That is, if the Contractor
has sufficient resources to finance the project.

53
For one to ensure that a Contractor or a Prospect has satisfied the above 3 Cs, one needs information and these can
best be obtained from documentation. It is therefore essential that documentation of a Bond is complete before
issuance is considered.

DOCUMENTATION / REQUIREMENTS

The following documents are usually required for proper assessment before a Bond is issued.

1. Completed Proposal Form

2. Details of the Tender – for Bid Bonds

3. Letter of award of Contract

4. Financial Statement – Last 3 years Audited Account / Satisfactory Bank reference

5. Certificate of Incorporation / Registration

6. Memorandum/Articles of Association

7. Evidence of past performance of similar contract

8. Indemnity Agreement to be executed and sealed by the Company.

9. Personal Indemnity/Guarantee executed by at least two Directors of the Company. Where the Contractor is
not strong enough, a Counter Indemnity executed by a Third Party is required.

10. Where these are not satisfactory, adequate collateral security in form of C of O of a landed property or
valuables worth the value of the Bond would be required.

11. Passport Photographs of the two Directors that signs the Personal Indemnity.

12. Immediate payment of premium charged (Preferably cash payment).

Note that items 1 – 7 above are required for proper assessment while 8 – 11 are securities that would assist in seeking
reimbursement when the bond is called as mentioned under elements of bonding.

(iv) Trade Credit

Trade credit is typically insurance of traders of goods (e.g. flour, cement) and services (e.g. airline tickets) against
default by their customers to whom they have sold goods and services. This default is usually the customer’s inability
to remit the sales proceeds from the goods and services sold during a prequalified billing period.

Depending on the type of trade credit, the following may be required for subrogation:

 Indemnity Agreement form: To be printed and filled on company’s letterhead, sealed & signed where
appropriate.

54
  Security Options: (100%)

 3rd Party Counter Indemnity form is to be filled by surety:

- For Individual surety; Attach along with Surety’s 6months bank statement, Passport data
page, while surety signs 2nd page of individual indemnitor with a brief Biography of surety &
Utility bill.

- For Corporate Surety; Print form on surety’s company’s letter-head and attach 2 years
Audited Account Report of Surety along with 6 Months Statement a Board Resolution while
Director signs 2nd page of corporate indemnitor & attach CAC 7&2,/MEMART forms,
Company profile, with Utility bill.

 Lien on Cash Deposit: LIP (Kindly attach form filled as informed earlier to advise further. Form & brochure is
attached herewith)

 BG in favor of Leadway Assurance Comp. Ltd

 Title Document: C OF O with Valuation Report. (The Memo of deposit of title, Negative Pledge to be executed
for property option).

1.3 CASUALTY & LIABILITY

(i) EMPLOYERS LIABILITY & EMPLOYEES BENEFIT

A. Basic Description of Cover This policy indemnifies the insured against his legal liability to pay compensation to
an employee or a workman who may sustain accidental bodily injury or die following such injury arising out of
and in the course of his employment.

The policy is divided into two sections thus:

Section I – Employers Liability – It covers legal liability of the Employers towards their employees.

Section II – The section covers employees occupational risks or perils only (occupational diseases or hazards)
and the under listed universal scale of benefits are available under the policy:
 Death - 42 months earning (3 1/2 years)

 PD - 54 months earnings (4 1/2 years)

 TTD - Graduated up to 2 years (104 weeks) thus:

1st 6 months full monthly salary

55
 Next 3 months 50% of employee’s monthly salary
Next 15 months 25% of employee’s monthly salary
 Medical (Local) - Usually unlimited but has to be reasonable.

It is important to note that multiple of the benefits can be increased and the policy may be extended to cover
overseas medical treatment subject to a limit. However, you are to be notified and approval given before the
trip overseas commences.

B. Territorial Limit: NIGERIA

C. Acceptable Risk/Caution Zone: Occupational Injuries/ Diseases

D. Necessary Risk Information:

 Name and address of proposer/insured

 Occupation of the proposer

 Period of cover

 Loss experience (last three years)

 Category of Staff

 No. of Staff in each category

 Estimated Annual Earnings per category e.g.

Category of Employees No of Employees Annual Earnings

Admin/Clerical
Engineer/Technical Others

E. Basic Rating/Minimum Premium - the range of applicable rates are:

Admin/Clerical - 0.075% - 0.09% for PD and Death

Engineer/Tech - 0.1% - 0.15% for PD and Death
Others - 0.1% - 0.15% for PD and death
TTD - 10% - 15%
Plus 15% - 25% loading for Medical
Minimum Premium - N10,000.00

F. Applicable Excess. Nil

G. Applicable Discount/ Deductibles. Apart from LTA which is even not encouraged, any other form(s) of discount
is at the discretion of Mgt.
56
 Deductible not applicable except on agreement/ arrangement basis

H. Limit Acceptable. Subject to treaty agreement (60/40 basis – Liability Pool/ Leadway)

I Endorsements. Employment Clause, Prescribed Diseases Extension Clause, No Premium No Cover

J. What To Look For During Inspection

 Existing risk

 Compliance level

 Exposure level

 Previous loss experience

 Any risk management in place

(v) PUBLIC LIABILITY

A. Basic Description of Cover; Covers the Insured’s legal liability for death or bodily injury to Third Parties or loss
of or damage to their property where such injury or damage occurs in connection with the Insured’s business.

B. Territorial limit. NIGERIA

C. Acceptable Risks/Caution Zone. No restriction but policy is concerned only with ACCIDENTAL injury or damage.
Injury or damage which is inevitable is not covered.

D. Necessary Risk information; An Insured may incur liability in many ways, some of which are through the
following
 Negligence

 Nuisance

 Trespass

 Under Contract

 Statutory liability

 Strict liability

E. Basis of Rating/Minimum Premium Depends on the nature of risk exposure presented. But is usually a rate
percent on Sum Insured or on annual turnover if liability is made unlimited. Minimum Premium is N10,000.00.

F. Applicable Excess. A fixed amount or 5% of loss whichever is greater.

57
G. Limit of Acceptance. As per Treaty limit.

H. Applicable Discounts/Deductibles. None

I. Possible Extensions. Food and Drink Poisoning Clause, Fire and Explosion, Plants, Hoists, Crane and Forklifts,
Car Park Clause, First Aid Clause, Temporary Visits Overseas, Defective Drains, Sewers and Sanitation, Loading
and Unloading Vehicles, Works Fire Brigade, Riot & Strike Extension, Flood Extension, Plant Hire Extension,
Cross Liability, Trade Fairs and Exhibition Clause, Work-away from Premises, Residential Building, Employee
Personal Effects Clause, Visitors (Guest) Effects, Unlicensed Vehicle Clause, Products Liability, Liability for
Teachers, Pupil to Pupil Liability, Personal Liability Extension.

J. Endorsements. Absolute Pollution Exclusion, Professional Liability Exclusion, Absolute Asbestos Exclusion,
Aircraft, Products and Grounding Exclusion, Underground Services Clause

K. Underwriting submission/requirements
 Location of risk

 Safety measures in place

 Previous loss experience

 Type of Business / Occupation of premises

 Revenue/turnover/fees

(vi) PRODUCT LIABILITY

A. Basic Description of Cover; Covers the Insured’s legal liability to pay damages for accidental bodily injuries
(including Death or Disease) to any person or accidental loss of or damage to Third Party Property caused by
any defect in the use of or in the harmful nature of goods or products sold or supplied by the insured.

B. Territorial limit. NIGERIA

C. Acceptable Risks/Caution Zone. As applicable to Public Liability Policy. Often issued as an extension to a Public
Liability Policy.

D. Necessary Risk information. Same information as with Public Liability applies.

E Basis of Rating/Minimum Premium. As applicable with Public Liability

F Applicable Excess. Same terms and conditions as with PL.

G. Limit of acceptance. As per Treaty limit

58
H. Applicable Discounts/Deductibles. None.

I Possible Extensions, As with Public Liability.

J Endorsements; As above stated.

K Underwriting submission/requirements
 Location of risk

 Safety measures in place

 Previous loss experience

 Type of Business / Occupation of premises

 Quality Control in place

 Revenue/turnover

(vii) PROFESSIONAL INDEMNITY.

A. Basic Description of Cover. To indemnify the Insured in respect of loss arising from any claim for breach of duty
which may be made against him by reason of any acts of negligence, error or omission committed by the Insured
or by any person in the employment of the Insured, in the discharge of his Professional conduct.

B. Territorial Limit. Nigeria.

C. Acceptable Risks/Caution Zone; No restriction. Though meant for all Professions but it is for Practitioners, i.e.
Lawyers, Doctors, Accountants, Insurers, Brokers, etc.

D. Necessary Risk information; Policy usually excludes the following

 Libel or slander

 Claims brought about or contributed to by the dishonesty, fraudulent, criminal malicious act or omission
of the Insured, their partners, directors or employees.

 Insolvency of the Insured

E. Basis of Rating/Minimum Premium; Depends on the hazards of the Profession but minimum is N10,000.00.

F. Applicable Excess; 10% of any loss but subject to a minimum of a fixed amount

G. Limit of acceptance; As per Treaty limit and subject to agreed limit of Indemnity

H. Applicable Discounts/Deductibles; None but negotiable.

59
I. Possible Extensions, Usually none but can be agreed.

J. Endorsements; Depends on agreed extensions.

K. Underwriting submission/requirements
 Location of risk

 Safety measures in place

 Previous loss experience

 Type of Business

 Moral Hazard of Insured.

 Employer/Employee relation

 Revenue/turnover

(viii) GROUP/PERSONAL ACCIDENT

A. Basic Description of Cover: The policy covers bodily injury solely and independently of any other cause by
accidental, violent, external and visible means resulting in death or permanent disablement or temporary total
disablement as well as medical expenses.

B. Territorial Limit: WORLD WIDE – 24 HOURS

C. Acceptable Risk/Caution Zone Accidental death/ Injury

E. Basic Rating/Minimum Premium

Category 1 Death PD TTD ME
Professional, Admin, Clerical, Desk Officers 0.75% 0.75% 10% 1%
Category II
Light manual workers (commercial traveler, driver) 0.1% 0.1% 15% 1.25%
Category III
Heavy manual workers (Engineers) 0.125% .125% 20% 1.5%
Minimum Premium N10,000.00

F. Applicable Excess. Nil

G. Applicable Discount/ Deductibles. Group Discount – this is subject to number of Staff/Group LTA, Special
Discount/ Package Discount - Negotiable.
Deductible not applicable except on agreement/ arrangement basis

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H. Limit Acceptable. Subject to treaty agreement

I. Extensions: Motorcycling, Riot Strike & Civil Commotion

J. Endorsements. Age Limit, Aggregate Travel Limit/ Conveyance Limit

No Premium No Cover, Disappearance Clause
Non Occupational Hazard Discount Clause

K. What To Look For During Inspection

 Existing risk

 Exposure level

 Previous loss experience

 Any risk management in place

2. RATES OF COMMISSION

Our rates of Commission to registered Brokers are as stipulated in section 53 of the Insurance Act 2003 which
is restated hereunder:

1. All Motor Insurance Business 12.50%

2. All other non-specialty Business 20.00%

Commission to Insurance Agents is 50% of the rate stated in item no 2 above

61
3. Underwriting Authority Limit

As referred to in appendix 1

4. General Insurance Underwriting Documentation for major classes of business

Motor
 Completed proposal & KYC forms

 Value of the Vehicle and Pre-Loss Inspection Report

 Vehicle Particulars

 Evidence of payment

Fire
 Name of Proposer

 Description of Assets with corresponding values i.e. building, stock, contents etc.

 Location of assets

 Any fire-fighting device

 The need for a mandatory survey/inspection (where applicable)

 Completed proposal & KYC forms

 Evidence of payment

Marine Cargo

 Name and address of the proposer/assured

 Occupation of the proposer

 Proforma invoice with details of transit

 Approved Form M/Exchange rate

 Basis of Valuation: Cost, Freight plus 10% Loading (covert to Naira using current exchange rate)

 Voyage i. e. Port of Shipment and final destination point/warehouse

 Nature of consignment

 Bottom Limit

62
  Mode of packing

 Type of cover required i. e ICC (A), ICC (B), ICC (C), TLO etc

 Loss experience (in the last three years)

General Accident

 The numbers of staff to be covered

 Limit per occurrence (i.e. maximum liability exposure in any single occurrence)

 Single Aggregate limit (i.e. maximum exposure in any occurrence)

 Aggregate limit (i.e. maximum exposure in a year)

 Occupation of proposer

 Loss Experience

 Estimated Annual Earnings per category of staff e.g.

Category of Employees No of Employees Annual Earnings

Admin/Clerical
Engineer/Technical
Others

63
UNDERWRITING- LIFE INSURANCE

64
 TABLE OF CONTENTS

1. General Information Required To Incept a Life Insurance Policy

2. Classes of Insurance We Underwrite (LIFE)

65
1. GENERAL INFORMATION REQUIRED TO INCEPT A LIFE INSURANCE POLICY

a. Full name of the assured person – this is the owner of the policy (policy holder) who may or may not
be the life assured. For instance, for an employment Group Life policy, the Employer is the assured
(policy owner) but the Employees are the lives assured.
b. Address and telephone number of the assured
c. Occupation
d. Gender
e. Date of Birth
f. As part of the KYC and Anti-money Laundering regulation, proof of address and identity are usually
required (especially for individual lives)

The procedure for accepting a life proposed for insurance includes:

 Capturing of information relating to the life to be insured.

 Administering questionnaires (financial and non-medical).
 Referral for pre-insurance medical examination. Vital signs and results on urine and/or blood
samples are checked to determine whether life is standard (average) or not.
 Relating with the Reassurers to jointly review the risk.
 Extra Mortality Premium is charged on a sub-standard (under average) life in accordance with
the severity of the observed medical impairment. Declinature will only be recommended where
it is evident that the risk is completely unacceptable due to the degree of observed impairment
and/or moral hazard.
 Issuance of policy document.

1.1 LIFE INSURANCE AS A CONTRACT OF BENEFIT

A Life Insurance policy is a contract of benefit where the amount to be paid on the occurrence of the
event giving rise to a claim is known and agreed at the commencement of the policy. It is not subject
to negotiation at claim time except where an ex-gratia payment is being made by the insurer. In order
words, Life Insurance is not a contract of INDEMNITY.

1.2 IMPORTANCE OF PRE-INSURANCE MEDICAL EXAMINATION

Most of the time, risks are placed with the underwriters through the completion of the requisite
proposal form or brokers slip which gives the underwriters their first feel of the risk being
undertaken. A physical appraisal of the life to be insured may not reveal inherent impairment which
may make the risk to be more than normal.
While vital signs such as Blood Pressure, Weight, Height, Pulse Rate may show some signs of existing
ailment, an analysis of the urine and/or blood samples may reveal presence of ailments that are
capable of terminating the life earlier than expected. It will then be prudent for the underwriter to
carry out such tests as:

a. Urine Analysis (Urinalysis)

b. Haematology Studies
66
 c. Blood Chemistry Studies (most cardio and renal related issues are revealed by these)
d. HIV
e. Electrocardiogram (suitable to assess the functioning of the heart)

f. Other tests may include Smear Test, Bone Marrow test etc depending on what impairment
may have been thrown up from previous tests or questionnaires. As a result of the recent
experience on COVID 19 pandemic, tests for some sums assured may extend to include
COVID 19.

1.3 NON-MEDICAL LIMIT AND FREE COVER LIMIT

The sum assured on a life may not be limited as it is difficult to place a value on human life. However,
the sum assured must be reasonable and must be affordable to the policyholder. It is allowed that
more than one policy can be taken on the same life and all policies can run concurrently. However, in
order to check accumulation, we aggregate the sum assured on each life to be able to know whether
to subject such life to medical examination. The highest sum assured we are comfortable to accept
without subjecting the life to medical examination is called “NON-MEDICAL LIMIT” (for
Individual policy) or ‘FREE COVER LIMIT” (for a group policy). The Free Cover limit is usually much
higher than NON- MEDICAL LIMIT”.

The cost of the medical examination is borne by Leadway where our consulting medical consultant
conducts the examination. Where a client is reluctant or unwilling to submit to our medical consultant,
he may be allowed (at his own cost) to submit a report of a comprehensive examination from his
personal physician provided it is recent (not later than 6 months) and such report covers all the tests
we require for underwriting. Such test must be conducted by a qualified medical personnel and in a
registered clinic or laboratory.

Individual Life policy is essentially long term so a medical examination conducted before inception is
all that is required provided there is no review of benefit mid-term. However, Group Life is usually
underwritten every three years except where benefit has exceeded the level of benefit previously
underwritten.

1.4 REMUNERATIONS AND/OR RATE OF COMMISSIONS AND ITS ASSOCIATED RETURNS

Our rates of Commission to registered Brokers are as stipulated in section 53 of the Insurance Act
2003 and subsequent guidelines which are restated hereunder:

1. Group Life 9% to the brokers or as reviewed from time to time by NAICOM

Commission to Insurance Agents is 4.5%

2. Individual Life Products: As in the product spec approved by NAICOM

In addition section 3.3.0 of NAICOM’s Revised Market conduct and business practice guidelines for
insurance institutions (RMCG) It is unlawful for Leadway to solicit, offer or allow commissions and/or

67
 rebates in the transaction of insurance businesses except as provided by the extant insurance
regulations.

In accordance with the section 3.3.3 of NAICOM’s Revised Market conduct and business practice
guidelines for insurance institutions an insurer shall submit a quarterly return on the rebates,
brokerage commission, not later than the period prescribed by the commission. The return shall be
in accordance with the format as may be prescribed by the commission.

1.6 RENEWAL NOTICES:

It takes at least twice as much effort to secure a new customer than keeping an existing one. We are
expected to make as top priority the renewal of our businesses by sending out renewal notices at
least 90 days before renewal date and following up until renewal is effected.

2. CLASS OF BUSINESSES WE UNDERWRITE

Annuity Funds: a) A retiree life annuity provider shall maintain separate books of account in respect
of the retiree life annuity funds distinct from its other insurance or annuity operations. b) The retiree
life annuity funds and supporting assets and liabilities shall be disclosed separately by way of notes in
the audited financial statement and all management accounts of the company

2.1 Individual Life Products

2.1.1 Pure Risk Products

These products include

(a) Educational Protection Plan
(b) Mortgage Protection Assurance
(c) Credit Life
(d) Term Assurance
(e) Keyman Assurance
(f) Personal Health Plan
(g) Family Benefit Plus Plan
(h) Personal Lifestyle Protection Plan
(i) Group Life Assurance Plan Information Required to Underwrite

(A) EDUCATIONAL PROTECTION PLAN

General Information

- Name of Assured Policyholder

- Address and Date of Birth of policyholder
- Proof of Address
- Proof of Identity
- Riders

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- Name of Child
- Current Class of Child
- Number of years remaining in school
- Annual School fees
- Riders required

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted-vague
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

(B) Mortgage Protection Plan Basic Description of Cover

The policy is designed to pay the outstanding amount on a mortgage taken by the policyholder upon
his demise provided there has been no default. The cover can be extended to include Critical Illness
and/or Total and Permanent Disablement. Benefit is usually paid to the financial institution that
advanced the mortgage. Persons eligible to take policy are those within 18 and 65 years of age.
Critical illness terminates on attainment of age 60

Information Required to Underwrite:

- Name of assured
- Sum Assured
- Mortgage Amount (Sum Assured)
- Interest Rate
- Duration

Exclusions

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- Same as Education Protection Plan and in addition, amount in default before occurrence of claim

(C) Credit Life

Basic Description of Cover

The policy pays a financial institution the outstanding loan granted to a loan customer who dies
before fully repaying the loan. The term for a Credit Life policy is usually much shorter than that for
Mortgage. It can be extended to cover default arising from loss of Job, Critical Illness or Accidental
Total and Permanent Disablement

Information Required to Underwrite:

- Name of assured
- Sum Assured
- Loan Amount (Sum Assured)
- Interest Rate
- Duration

Exclusions

- Same as Education Protection Plan and in addition

- Amount in default before occurrence of claim
- Job loss arising from fraudulent act of loan customer or misconduct
- Voluntary resignation (for Loss of Job cover)

(D) Term Assurance

Basic Description of Cover

The policy pays a lump sum benefit (sum assured) upon the demise of the policyholder. The term
can be for any period from 1 year till attainment of age 65 years. Policy can be extended to include
Critical Illness and Accidental Total and Permanent Disablement. Cover for Critical Illness terminates
on attainment of age 60

Information Required to Underwrite:

- Name of assured
- Date of birth
- Sum Assured
- Duration
- Occupation

70
 Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party that has
acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the Armed Forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical doctor
prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

(E) Key-Man Assurance

Basic Description of Cover

The policy is designed to protect an organization (company) from losses that could arise as a result
of the death of key person(s) in the company. Such persons could be the Chief Executive Officer or a
highly skilled individual whose demise can affect the future or fortune of the company. Where the
sum assured is very high, it is usual to spread the risk over the top executives so as to avoid
concentration. Eligible person(s) must be aged between 18 and 65 years.

Information Required to Underwrite:

- Name of assured (company)

- Name of life (lives) assured
- Date(s) of birth
- Sum Assured
- Duration
- Occupation of the assured
- Annual Report of the company for the preceding 3 years

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted

71
 - Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the Armed Forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders

2.1.2 Savings Related Products

(A) Personal Savings Plan

Basic Description of Cover: The plan is designed to assist individual accumulate funds towards a
future target by leveraging on the investment acumen of the company. Accretion to the
policyholder’s account is in form of bonuses (interest) declared on the fund and shared in an agreed
proportion between the company and the policyholders. The policy has a free death benefit of half
the account balance of the policyholder subject to a limit specified in the policy. Policy allows for
extra life cover as well as riders like Critical Illness, Accidental Total and Permanent Disablement

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Annual Contribution
- Duration of policy
- Occupation of the assured
- Sum Assured (Extra)
- Riders included

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces

72
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

(B) Leadway Savings Plan

Basic Description of Cover: The plan is designed to assist individual accumulate funds towards a
particular target by leveraging on the more favorable interest rate offered by the company while still
providing protection against death, critical illness and/or accidental total and permanent
disablement (if selected). Leadway Interest rate is benchmarked against the average savings rate of
top four commercial banks. Policy can be extended to cover Critical Illness and Accidental Total and
Permanent Disablement.

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Annual Contribution
- Duration of policy
- Occupation of the assured
- Sum Assured
- Riders included and sum assured

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

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(C) Education Savings Plan

Basic Description of Cover: The plan is designed to assist individual accumulate funds towards
funding the education of children at a future date by leveraging on the more favorable interest rate
offered by the company while still providing protection against death, critical illness and/or
accidental total and permanent disablement (if selected). Leadway Interest rate is benchmarked
against the average savings rate of top four commercial banks. Policy can be extended to cover
Critical Illness and Accidental Total and Permanent Disablement.

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Annual Contribution
- Duration of policy
- Occupation of the assured
- Sum Assured
- Riders included and sum assured

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

(D) Leadway Investment Plan

Basic Description of Cover: The plan is designed to assist accumulate funds towards achievement of
a target project at a future date by leveraging on the investment acumen of the company while still
providing protection against death, critical illness and/or accidental total and permanent
disablement (if selected). The product comes with a limited free life cover, although extra life cover

74
and or riders can be added. Investors with sizeable sums of money can benefit from the very
attractive interest rate declared on the plan to acquire higher value more rapidly. The interest rate
declared is regularly reviewed to reflect the current money market realities. Term of policy could be
as short as one (1) year although, such fund can still be reinvested. Eligible persons must be between
ages 18 and 65 years.

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Annual Contribution
- Duration of policy
- Occupation of the assured

- Sum Assured
- Riders included and sum assured

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

(E) Deferred Annuity Plan

Basic Description of Cover: The plan is designed to assist individual accumulate funds towards their
retirement in a seamless manner by leveraging on the more favorable interest rate offered by the
company while still providing protection against death, critical illness and/or accidental total and
permanent disablement (if selected). The plan meets the needs of individuals who are not working in
the organized sector where the Pension Reform Act 2014 is implemented or for those in the
Contributory Pension Scheme but who want to augment their pension. Leadway Interest rate is
benchmarked against the average savings rate of top four commercial banks.

75
Policy can be extended to cover Critical Illness and Accidental Total and Permanent Disablement. On
maturity of the policy (usually coinciding with the retirement of the policyholder) account balance is
converted to an annuity.

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Annual Contribution
- Duration of policy
- Occupation of the assured
- Sum Assured
- Riders included and sum assured

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces

- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

(F) Leadway Smart Cash Plan

Basic Description of Cover: The plan is designed to assist individual accumulate funds towards
achieving a target project over a short period of time (one year or more) in a seamless manner while
still providing protection against death. Policy can be extended to cover Critical Illness and
Accidental Total and Permanent Disablement. On maturity of the policy account balance is paid to
enable policyholder achieve his target plan

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Regular Contribution Amount

76
- Duration of policy
- Occupation of the assured
- Sum Assured
- Riders included and sum assured

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

2.1.3 Endowment Related Products

(A) Leadway Target Plan

Basic Description of Cover:

This a defined benefit plan designed to assist individual to accumulate funds towards a particular
project or landmarks in the future. The estimated required amount will be determined and the
premium will be calculated based on the duration and age of the proposer. It is expected that the
policyholder will faithfully keep to the premium payment frequency selected to ensure the target
amount is accumulated during the tenor of the policy. On maturity or earlier death, the target
amount becomes payable. Policy can be extended to cover Critical Illness and Accidental Total and
Permanent Disablement.

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Target Amount
- Duration of policy

77
- Occupation of the assured
- Sum Assured
- Riders included and sum assured

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders
- Illness not within the list covered
- Claim arising from a pre-existing condition

(B) Endowment Related Products Leadway Target plan Education Target Plan

b. Education Target Plan Basic Description of Cover:

This a defined benefit plan designed to assist individual to accumulate funds towards
funding the education of a child at a future date. The estimated required amount will be
determined and the premium will be calculated based on the duration and age of the
proposer. It is expected that the policyholder will faithfully keep to the premium payment
frequency selected to ensure the target amount is accumulated during the tenor of the
policy. On maturity or earlier death, the target amount becomes payable. Policy can be
extended to cover Critical Illness and Accidental Total and Permanent Disablement.

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Target Amount
- Duration of policy
- Occupation of the assured
- Sum Assured
- Riders included and sum assured

Exclusions:
- Suicide
- Any act committed which constitutes a violation of criminal law

78
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third party
that has acquired interest in the policy
- War or warlike risks
- Participation in hazardous pastimes
- Participation in military service or training in the armed forces
- Any illness or condition of the assured life that has been diagnosed by a specified medical
doctor prior to the application for the policy
- Missing persons
- Commercial motorcycle riders

- Illness not within the list covered

- Claim arising from a pre-existing condition

(C) Whole of Life Product

Family Benefit Plan

Basic Description of Cover:

This is a whole of life policy that pays a lump sum benefit upon death of an insured life whenever it
occurs provided the policy is in force. Premium payment can be made to cease after some years of
the policy or attainment of a particular age. The policy allows inclusion of spouse, parents and/or
parents in law subject to terms and conditions. Individuals above 50 years are not allowed to include
parent just as an individual cannot include parent-in-law if the spouse is not included. Waiting
periods of 6 months for policyholder and spouse and 9 months for parents apply.

Information Required to Underwrite:

- Name of proposer
- Date of birth
- Benefit Amount
- Number of years premium is to be paid for
- Names of other lives to be covered
- Their dates of Birth
- Benefit Amount on added lives

Exclusions:

- Suicide
- Any act committed which constitutes a violation of criminal law
- Disability or illness that is self-inflicted
- Death caused deliberately by the hands of the policyholder, beneficiaries or a third
party that has acquired interest in the policy
- War or warlike risks

79
 - Participation in hazardous pastimes
- Participation in military service or training in the armed forces
- Any illness or condition of the assured life that has been diagnosed by a specified
medical doctor prior to the application for the policy
- Missing persons

(D) Annuities

a.) Personal Annuity Plan

Basic Description of Cover:

This policy is designed to provide streams of income to an individual (called the annuitant) upon
payment of a lump sum premium. Where payment is made for a definite period, it is called Annuity-
Certain, otherwise, it is called Life Annuity. An annuity purchased with the proceeds of the
Retirement Savings Account under the Pension Reform Act PRA) 2014 is a life annuity. Retirement
Annuity under PRA is guaranteed for 10 years.

Information Required to Incept Policy

- Name of proposer
- Date of birth
- Premium Amount
- Frequency of payment of
- Name of Beneficiary
- Names of other lives to be covered

(E) GROUP LIFE ASSURANCE

B. Basic Description of Cover:

The policy pays an agreed lump sum upon the death of the insured member. A person shall
also be presumed dead if after one (1) of being declared missing he has still not been found
and the benefit under the Group Life assurance shall become payable. Employers of Labour
are compelled to have a Group Life Assurance scheme for their staff by virtue of the Pension
Reform Act 2014. The amount of benefit (sum assured) is for a minimum of three (3) times
the Total Annual Emolument of the staff. The death can arise from any cause not exempted,
whether by accident or natural.

C. Territorial Limit: None (i.e. Worldwide Cover)

D. Necessary Risk Information:-

Name and address of proposer/insured
Occupation of the proposer Location of risk
80
 Name of persons to be covered
Annual Total Emolument of each member (for PRA policy) Sum Assured for each member
(for Non-PRA policy)
Period of cover
Loss experience (last three years)

E. Basic Rating/Minimum Premium: NAICOM MINIMUM for Employment Schemes, otherwise,

Credibility Rating Guide
F. Extensions available as Rider:-

- Critical Illness
- Funeral Expenses
- Accidental Total and Permanent Disablement

(F) GROUP/PERSONAL ACCIDENT

A. Basic Description of Cover

The policy cover bodily injury solely and independently of any other cause by accidental,
violent, external and visible means resulting in death or permanent disablement or
temporary total disablement as well as medical expenses.

B. Territorial Limit: WORLD WIDE – 24 HOURS

C. Acceptable Risk/Caution Zone Accidental death/ Injury

D. Necessary Risk Information:-

Name and address of proposer/insured
Occupation of the proposer Period of cover
Loss experience (last three years) Category of Staff
No. of Staff in each category
Estimated Annual Earnings per category e.g.

Category of Employees No of Employees Annual Earnings

35

Admin/Clerical Engineer/Technical Others

E. Basic Rating/Minimum Premium

Category 1 Death PD TTD ME
Professional, Admin, Clerical, Desk Officers 0.75% 0.75% 15% 1%
Category II
Light manual workers (commercial traveler, driver) 0.1% 0.1% 15% 1.25%
Category III
Heavy manual workers (Engineers) 0.125% .125% 20% 1.5%

81
 Minimum Premium N5,000.00

F. Applicable Excess. Nil

G. Applicable Discount/ Deductibles. Group Discount – this is subject to number of Staff/Group

LTA , Special Discount/ Package Discount - Negotiable.

Deductible not applicable except on agreement/ arrangement basis

H. Limit Acceptable. Subject to treaty agreement

I. Extensions:- Motorcycling, Riot Strike & Civil Commotion

J. Endorsements. Age Limit, Aggregate Travel Limit/ Conveyance Limit No Premium No Cover,
Disappearance Clause
Non Occupational Hazard Discount Clause

82
CLAIMS MANUAL

83
TABLE OF CONTENTS

1.1 Introduction
1.2 Claims Settlement Procedure
1.3 Complaints and Dispute Resolution
1.4 Payment of Claims Procedure
1.5 Authorizing personnel and their limits

84
1.1 INTRODUCTION

Leadway Assurance’s care for customers’ satisfaction when they decide to lodge claims is legendary
and we are proud about the achievement recorded in this area. Today in fulfillment of the founder’s
dream and corporate objective, we are pleased to assert that we are the most proactive and reliable
insurer in the area of claim settlement in the Nigerian insurance market attested to by the many
awards recorded in this area and the recognition from all practitioners in and outside of the
insurance market.

It is our desire to make the experience of our clients as pleasant as possible when lodging claims
which is why we have instituted a simple claim process summarized below:

1. All our clients should endeavor to familiarize themselves with the policy terms and
conditions to enhance mutual understanding of issues at times of claims evaluation.

2. Claims should be reported promptly and within the claim notification period of the policy to
facilitate prompt investigation of the alleged loss and/or damage and subsequent
reconciliation with cover terms.

3. Evidence of premium payments are to be submitted

4. Claimants are expected to mitigate their loss in every possible manner and to cooperate
with our claims officials and/or loss adjusters where one is appointed.

5. Claimants should keep written notes of basic facts of the incident and to submit this
alongside the completed claim form with relevant substantiating documents listed below
including photographs where needed for prompt attention.

1.2 CLAIM SETTLEMENT PROCEDURE

The claim procedure in Leadway Assurance in line with section 4.2.0 of NAICOM’s revised
market conduct and business practice guidelines for insurance institutions 2021 (RMCG)
involves the following basic steps

1. Notification and registration of claim in line with section 4.3.0 of NAICOM’s RMCG3
2. Documentation and processing
3. Issuance of offer with discharge voucher
4. Processing and dispatch of settlement cheque/transfer upon receipt of executed

85
 discharge voucher
5. Marking the claim file settled, closed or repudiated accordingly.
6. Post claim review

a. Notification and registration:

 Notification mainly through: Phone calls, E-mail, Letters or SMS
o Ensure the Insured name is as stated on the system.
o Certify the email/address is as captured on the system for communication
purpose.
o If it is a broker/agent business, ensure all correspondence is communicated
through the broker, agent only.
 Claims are registered and our claim numbers allocated for ease of future reference
 Claims are acknowledged and substantiating documents are requested
 Adjusters/claim investigator are appointed where required

b. Documentation and processing in line with section 4.4.0 of NAICOM’s revised market
conduct and business practice guidelines for insurance institutions 2021 including the
following below:
 Claim documents are received from claimant/brokers or agents/representatives
 Claim documents are reviewed
 Adjusters/claim investigators report are read and comments made
 Decisions on offer/ex-gratia/repudiation are made through levels of approval depending
on the quantum.
 Recovery processes are made where applicable – letter of counter indemnity obtained
from insured, recovery agent are appointed to work on our behalf.
 Subrogation are made where applicable – Letter from insured holding the third party
liable for the loss with third party details and response obtained, we proceed against
negligent third party with proves.
 Salvages – Letter of authority from insured to recover goods/property are obtained,
salvage are made open for competitive bidding, management approves the preferred
bidder and payment made for the bid.
 Contribution are requested were applicable – insured/insurer are informed of their
share of the claim.

c. Issuance of offer letter/discharge voucher in line with section 4.5.0 of NAICOM’s revised
market conduct and business practice guidelines for insurance institutions 2021:
 Offer letter are given together with discharge voucher to be executed by the insured.
o Settlement offer should be sent directly to the client (if direct) or through the
broker/agent.
o Settlement offer must include request for banking details of the Insured only
and not a proxy account. If cheque issuance is desired, same should be raised in
the name of the insured.

 In case of rejection or complaint on offer, a further revised offer may be given if justified
by insured based on existing or on provision of additional document.
 Discharge vouchers are executed if the insured are satisfied with adjustment and
86
 returned in exchange for our settlement/payment.

d. Processing and dispatch of settlement cheque upon receipt of executed discharge voucher

 Upon receipt of executed discharge voucher, payment voucher are raised and approved
in line with quantum involved.

o Claims payment must be made to the claimant only i.e. the insured or lien as it
may arise.
o In the event another receiver of the payment is introduced, a letter of authority
must be written and endorsed by the Insured before same can be honored.
o Internal processing of the payment voucher up to account department,
where cheques/transfer are made within 48- 72hours.
o Claims department dispatch settlement cheque/confirm transfer to
insured/brokers or representative.

e. Marking the claim file settled, closed or repudiated accordingly:

 Claims department marked file closed/settled /repudiated accordingly and filed up.
 Claims are marked closed if the insured did not take up the claim by way of
documentation after several reminders.
 Claims are marked settled after the insured is paid and all liability met in line with
contract terms or agreement.
 The basis for repudiation of claims in line with section 55 of insurance Act 2003 are:
o Fraudulent breach by insured in claim documentation/processing e.g. fake
documents.
o Breach of fundamental term of the contract e.g. falsified date of loss which is
behind insurance period or cause of loss is not covered under the policy in
place.

f. Post- Claim Payment Review

 Claim files are reviewed by claims’ department through the account handlers after
settlement before filling away.

 All Claims files are periodically reviewed by internal auditors on quarterly basis to
ascertain if the documentation and processes of claim settlement are adhered to, in line
with internal guidelines and contract terms as specified under the policy.

1.3 COMPLAINTS AND DISPUTE RESOLUTION

Compliant management shall be line with section 4.7.0 of NAICOM’s Revised Market
Conduct and Business Practice Guidelines for Insurance Institutions, 2021.

Complaint Management Process Flow

87
 1. Complaint notification is to be submitted to the customer care division.
2. Where dissatisfied, the attention and involvement of the senior management will be
called upon, and subsequently the Managing Director.
3. Where dissatisfaction persists, the Insured is to approach the NIA or NAICOM for
further resolution.

The Insured is further allowed to take action as provided for in the policy document, usually
through the means of arbitration.

1.4 PAYMENT OF CLAIMS RECOVERIES

Leadway shall settle its proportion of co-insurance claim, Facultative reinsurance or

retrocession obligations no later than 10 days from the receipt of the request for refund
(payment) from the lead insurer/cedant where the lead/cedant has settled same. This is in
line with section 4.8.0 of the NAICOM’s revised market conduct and business practice
guidelines for insurance institutions 2021.

There shall be a complete record of each claims transaction which evidences adherence to
the manual and the internal policies and procedures for the fair, prompt and efficient
handling of claims shall be done in line with section 4.6.0. of NAICOM’s revised market
conduct and business practice guidelines for insurance institutions 2021

88
CLAIMS- GENERAL INSURANCE

89
TABLE OF CONTENTS

CLAIMS

1. Claims Procedures for Different Lines of Business

90
 CLAIMS PROCEDURES FOR VARIOUS LINES OF BUSINESSES

A. MOTOR INSURANCE CLAIMS

A1. Accidental own damage:

- estimate of repair from auto garage of your choice
- present location of the vehicle
- police report
- photographs depicting damages
- receipt of towing (if engaged)

A2. Theft cases:

- Interim and final police reports
- Particulars of the insured vehicle viz purchase invoice/receipt
- Vehicle license
- Original copy of insurance certificate
- Lock & ignition keys
- Custom papers & bill of lading (if available)

(Note that a statutory period of 90 days from date of theft is allowed for Police investigation before
settlement)

A3. Third Party property damage claims:

- obtain Third party’s names and address (phone number inclusive)
- details of the vehicle involved
- witness(es) report
- photographs of the damage vehicles depicting damages

- letter of undertaking
- name and address of the Third party insurer
- accept and forward Third party correspondence unanswered
- police report

A4. Third Party death/ injury claims:

- obtain Third party’s names and address (phone number inclusive)
- details of the vehicle involved
- witness(es) report

91
 - photographs of the injured party
- name and address of the Third party insurer
- accept and forward Third party correspondence unanswered
- police report
- medical report on the injured party
- certificate of death where applicable
- Occupation/statement of income of the deceased
- Certificates of birth of all dependants
- Utility bills incurred by the deceased
- Names and ages of dependants
- medical bills/receipts of payments A5. Total Loss claims
- Original vehicle license
- Purchase invoice and receipts
- Customs & Shipping documents where available
- Ignition/other lock keys
- Proof of ownership
- Interim & Final police reports

B. BURGLARY CLAIMS
- Notify the police of the incident and obtain their report.
- Guard(s)/witness(es) statement
- Statement of loss/estimate of repairs
- Purchase invoices/receipts for items stolen
- Photographs depicting point of entry and damages
- Stock records
- Daily sales records commercial premises
- Bank deposit slips

C. CONSEQUENTIAL LOSS CLAIMS

- statement of loss
- financial records/relevant balance sheet & profit and loss statement
- Purchase records
- Sales records
- Stock records
- records of working processes and attendance
- other relevant documents

D. CONTRACTOR ALL RISKS CLAIMS

- police report and/or fire brigade report
- bill of quantities/statement of loss
- records of works schedule
- records of stocks
- purchase invoices/receipts

E. FIDELITY GUARRANTEE CLAIMS

92
- police report
- statement of loss
- personal records of involved staff
- relevant records of stock/financial transactions
- Referee / Character reference letters
- Details of queries on misconduct or fraud related incidents
- Appointment & Dismissal letters

F. FIRE CLAIMS
- Fire Service report
- Witness(es) report
- Statement of loss/repairs
- Photographs depicting damages
- Records of stocks
- Records of sales & purchases and purchase invoices/receipts

G. GLASS
- witness(es) report
- statement of loss
- photographs depicting damages

H. GOLFERS CLAIMS
- event report
- witness(es) report
- hole-in-one certificate

I. GOODS –IN-TRANSIT CLAIMS

- police report
- statement of loss
- way bills/consignment note
- invoices/receipt
- photographs depicting the damages
- drivers statement and condition of salvage if any
- Witness account

J. MACHINERY BREAKDOWN CLAIMS

- fire service (if fire loss)/Police report (if theft)
- witness(es) report
- manufacturer’s operation manual and insured’s operation manual & maintenance
records
- statement of loss
- Audited annual accounts

K. MONEY INSURANCE CLAIMS

- police report
- witness(es) report

93
- Cash lodgment/vault records
- statement of loss
- cash movement records

L. EMPLOYMENT LIABILITY & EMPLOYEES BENEFITS INSURANCE CLAIMS

- Witness(es) report
- Medical bills/receipts
- Medical report
- Transportation bills (if WC)
- Excuse certificate & discharge certificate
- Post mortem/Coroner’s inquest report
- Cause of death and death certificate

- police report (if automobile accident)

M. PUBLIC /PERSONAL LIABILITY CLAIMS

- police report (in case of death)
- description of loss
- witness(es) report
- statement of loss
- correspondence from the Third party, unanswered

N. PLANTS ALL RISKS CLAIM

- witness(es) statement
- description of loss
- statement of loss
- police report (in case of theft)
- maintenance records /manufacturers’ operation manual

O. MARINE CARGO CLAIMS

O1. TOTAL LOSS OF GOODS

- Protest, if required
- Complete set of original bill of lading
- Original Commercial invoice
- Risk Assessment report
- Form M
- Original packing list
- Particular charges ( Sue & labour etc) receipts
- Copies of correspondence exchanged with negligent bailees

O2. PARTIAL LOSS OF GOODS

- Extended protest or extract from log
- Superintendence/ Survey report
- Account Sales, if salvage sold

94
- Original bill of lading
- Original packing list
- Original commercial invoice
- Risk Assessment report
- Landing condition reports
- Original Delivery waybills
- Police report where applicable
- Original discrepancy or shortlanding or short-delivery certificate.
- Copies of correspondence exchanged with the negligent bailees

O3. SALVAGE LOSS ON GOODS

- Extended protest
- Surveyor’s report
- Account sales
- Commercial invoice

- Original bill of lading

- Original commercial invoice

O4. GENERAL AVERAGE CONTRIBUTION ON GOODS

- Certified extract from General Average adjustment report.
- Original bill of lading
- Original commercial invoice
- Original packing list
- Copies of correspondence exchanged with recovery solicitors/agents

O5. GENERAL AVERAGE DEPOSIT

- Extracts from General Average adjustment report
- Original commercial invoice
- Original packing list
- Original General average deposit receipt
- Copies of correspondence exchanged with recovery solicitors/agents

P. AGRICULTURAL INSURANCE CLAIMS P1. AGRIC. ANIMAL INSURANCE

- Duly completed claim form
- Veterinary doctor's post-mortem report
- Police/fire brigade report (where applicable)
- Lab analysis report
- Relevant feed, drugs receipts, stocking and sales records
- Vaccination records
- Photographic evidence of loss

P2. AGRIC. CROP INSURANCE

- Duly completed claim form
- Detailed extent/estimate of loss

95
- Lab analysis/fire brigade report
- Detailed relevant purchase receipts, feeds, expenses and others
- Planting & harvest records
- Photographic evidence of loss

Q. MARINE HULL CLAIMS

- Statement of claim
- Survey/ Adjusters report
- Invoices and Purchase receipts
- Police report where applicable
- Photographs of damaged vessel
- Captain’s report of the accident/ Loss
- Protest Notes
- Engine & Log books
- Copies of correspondence exchanged with negligent third parties

R. AVIATION
These are documents generally required from the Insured:
- Documents in connection with the aircraft details
- Documents in connection with flight details
- Documents in connection with the accident
- Certificate of airworthiness/registration
- Crew Details
- Maintenance & Engineering information
- Operational manual/passengers documentation
INTERNAL CONTROLS FOR CLAIMS MANAGEMENT

96
CLAIMS- LIFE

97
TABLE OF CONTENTS
CLAIMS

1. Claims Substantiating Documents

2. Claims Validation

98
1. CLAIMS SUBSTANTIATING DOCUMENTS

A. DEATH CLAIMS

- Appropriately filled Claim Form

- Proof of age of life assured, where age was not admitted at inception
- Original Medical Certificate of Cause of Death
- Bank Verification Number (BVN) of the deceased

- Original Proof of Identity (any of National Identity Card, International Passport, Driver’s License,
Permanent Voters Card, or any other ID issued by the State or Federal Government)
- Police report if death was caused by an accident
- Proof to the satisfaction of Leadway of the legal entitlement of the claimant to receive the benefit
- Any other documents or reports that Leadway may reasonably request in considering the claim

B. ACCIDENTAL TOTAL AND PERMANENT DISABLEMENT CLAIMS

- Appropriately filled Claim Form

- Medical Report on the condition
- Any other documents or reports that Leadway may reasonably require in considering the claim

C. CRITICAL ILLNESS

- Appropriately filled Claim Form

- Medical Report on the condition
- Any other documents or reports that Leadway may reasonably require in considering the claim

D. JOB LOSS

- Appropriately filled Claim Form

- Letter of Termination of Employment
- Letter of Employment or last promotion
- Any other documents or reports that Leadway may reasonably require in considering the claim

E. PARTIAL WITHDRAWAL/SURRENDER/MATURITY CLAIMS

99
 Appropriately filled Claim Voucher
Signed written request (not required for Maturity)

2. CLAIM VALIDATION

Upon receipt of the claim form and the substantiating documents, Leadway shall confirm the
following:
- Scheme/Policy is in force at the time of claim
- Legal entitlement of claimant
- Occurrence of the event giving rise to the claim. Leadway reserves the right at its own cost to
investigate the claim to confirm validity of the claim within the context of the policy
- The amount of benefit due to be paid

100
REINSURANCE
MANUAL

101
Leadway applies a defensible standard for evaluating its risk pricing models and tries to hold its reinsurance
intermediaries accountable for this standard in a quality buyer’s market.

This reinsurance manual is also in line with section 4 of the Prudential Guidelines for Insurers and Reinsurers in
Nigeria and the NAICOM’s Revised Market Conduct and Business Practice Guidelines for Insurance Institutions 2022.

All reinsurance premiums to reinsurers are in accordance with the terms of the reinsurance contract. Premiums for
local facultative placements shall be paid within 14days of receipt of premium from the broker or the insured as
stipulated in section 3.5.10 of NAICOM’s Revised Market Conduct and Business Practice Guidelines 2022.

The current 2022 reinsurance capacity (Life/Non-life) for each risk can be seen in the Appendix 2. Reinsurance is
placed at Leadway by considering the following:

 Net shareholders fund considering the maximum allowable under NAICOM’s Prudential Guidelines and Net
retention subject to the Board of Directors approval
 Available reinsurance market capacity
 Economics of the market place for pricing
 NAICOM prudential guidelines for special risks- Oil and Gas and Aviation

Once the treaty arrangement has been agreed for the year, it is uploaded onto the business applications which is
then operated in accordance with the underwriting and reinsurance acceptance processes. In some cases we
purchase Facultative reinsurance on risks in excess of retention and treaty capacity.

There are risks we write only for our retention without declaration to treaty because of market forces which are
then placed in accordance with inward coinsurance i.e. we can co-insure based on our retention. Leadway actively
involves other Nigerian co-insurers to the extent of their retention as indicated in their books of accounts, on a
direct basis or by ‘Facultative’ insurance arrangements for distribution of risk to a selection of insurance companies
based on their capacity for risk retention as evidenced in their audited accounts. Companies will be selected not only
on the strength of their balance sheets but also on their reserves and integrity towards their obligation of
indemnification. Market capacity depends largely on the risk and as there is currently limited reinsurance
arrangement for construction risks, the market will be largely dependent on utilizing local insurers, to the full extent
of their retentions and also available domestic reinsurance capacities, largely that of continental and Africa Re.

Refer to the Appendix 3 for our Reinsurance Operational guide.

102
APPENDIX 1

CLAIMS
APPROVAL
DESIGNATION CADRE
S/N LIMIT
1 TEAM LEAD SENIOR ANALYST (MIN. 5 YEARS EXPERIENCE 0
2 UNIT HEAD ASSOCIATE N300K
3 HEAD OF CLAIMS ASSOCIATE DIRECTOR N2M
4 HEAD OF TECHNICAL DIVISIONAL DIRECTOR N5M
5 ED/MD EXCO ABOVE 5M

UNDERWRITING

Designation Premium Range Premium Range

S/N
1 Team Lead 0 0 -50k
2 Unit Head 0 - 0.5m >50k - 1m
3 Head of Department >0.5m - 2.5m >1m - 5m
4 Divisional Head >2.5m - 5m >5m - 10m
5 ED/MD >5m >10m
APPENDIX 2- REINSURANCE TREATY CAPACITY

LEADWAY ASSURANCE COMPANY LIMITED

SUMMARY OF YEAR 2022 REINSURANCE TREATY ARRANGEMENT

RETENTION TREATY TOTAL U/W

CLASS CAPACITY CAPACITY - N
=
(N
=) (N
=) (Sum insured)

1. FIRE & CON LOSS, IAR (COMBINED)

a. Fire Surplus – 4 Lines 2,500,000,000.00 10,000,000,000.00 12,500,000,000.00

b. 1. Fire Risk & Catastrophe Excess

of Loss
Cover: N= 750m Xs N= 350 m

2. Fire MPL Error & Catastrophe

Excess of Loss
Cover: N
= 4.0b Xs N
= 1.1b

LEAD REINSURER: SWISS RE

Reinsurers’ Signed Proportion

Fire Surplus

Swiss Re 20.00%
Africa Re 30.00%
Cont. Re 22.50%
GIC Re 17.00%
CCR Re 4.50%
FBS Re 2.50%
Waica Re 2.00%
Nigeria Re 1.50%

Fire Excess Of Loss

Swiss Re 30.00%
Africa Re 30.00%
Cont. Re 19.50%
GIC Re 16.50%
FBS Re 2.50%
Nigeria Re 1.50%
 2. MARINE CARGO

a. Surplus - 18 Lines (per 250,000,000.00 4,500,000,000.00 4,750,000,000.00

cert./declaration)

b. Combined Marine Cargo Working & 100,000,000.00 700,000,000.00 800,000,000.00

CAT Excess of Loss

Cover: N
= 700.0m xs N
= 100.0m

LEAD REINSURER: SWISS RE

Reinsurers’ Signed Proportion

Marine Cargo Surplus

Swiss Re 42.50%
Africa Re 25.50%
Cont. Re 12.00%
GIC Re 12.00%
CCR Re 4.00%
FBS Re 2.50%
Nigeria Re 1.50%

Marine Cargo Excess Of Loss

Swiss Re 42.50%
Africa Re 25.50%
Cont. Re 17.00%
GIC Re 11.00%
FBS Re 2.50%
Nigeria Re 1.50%
3. ENGINEERING

1ST SUPLUS
i. CAR & EAR– 18 Lines 400,000,000.00 7,200,000,000.00 7,600,000,000.00
ii. MB – 10 Lines 171,000,000.00 1,710,000,000.00 1,881,000,000.00
iii. CPM/PAR – 10 Lines 171,000,000.00 1,710,000,000.00 1,881,000,000.00
iv. EEI – 10 Lines 171,000,000.00 1,710,000,000.00 1,881,000,000.00
v. Boiler - 9 Lines 64,125,000.00 577,125,000.00 641,250,000.00

ENGINEERING (THIRD PARTY LIABILITY)

LIMIT 720,000,000.00

LEAD REINSURER: SWISS RE

Reinsurers’ Signed Proportion

Swiss Re 35.50%
Africa Re 30.00%
Cont. Re 19.50%
GIC Re 11.00%
FBS Re 2.50%
Nigeria Re 1.50%

AGRICULTURE
a. QUOTA SHARE 50% : 50%

CROP 500,000,000.00 500,000,000.00 1,000,000,000.00

LIVESTOCK 500,000,000.00 500,000,000.00 1,000,000,000.00
POULTRY 500,000,000.00 500,000,000.00 1,000,000,000.00
ACQUACULTURE 500,000,000.00 500,000,000.00 1,000,000,000.00
FARM PRODUCE 250,000,000.00 250,000,000.00 500,000,000.00

b. STOP LOSS

Layer 1: 100% < LR < 150%

Layer 2: 150% < LR < 200%

LR: Loss Ratio

LEAD REINSURER: SWISS RE

Reinsurers’ Signed Proportion

Agric Quota Share

Swiss Re 27.50%
Continental Re 10.00%
Africa Re 7.50%
FBS Re 2.50%
Waica Re 2.50%
Leadway Share 50.00%

Agric Stop Loss

Swiss Re 65.00%
Africa Re 25.00%
Continental Re 10.00%

MARINE HULL SURPLUS

1ST SURPLUS OF 12 Lines (per vessel) 120,000,000.00 1,440,000,000.00 1,560,000,000.00

LEAD REINSURER: AFRICA RE CORPORATION

Reinsurers’ Signed Proportion

Africa Re 50.00%
Cont. Re 35.00%
Waica Re 10.00%
FBS Re 5.00%

BONDS

QUOTA SHARE TREATY (50% / 50%) 360,000,000.00 360,000,000.00 720,000,000.00

LEAD REINSURER: AFRICA RE CORPORATION

Reinsurers’ Signed Proportion

Africa Re 55.00%
Cont. Re 35.00%
Waica Re 5.00%
FBS Re 2.50%
Nigeria Re 2.50%

GENERAL ACCIDENT EXCESS OF LOSS

(BB, FG, CIT, CIS, GIT, PI, PA, GTPL/PL, GPA D&O & AR)

Working / CAT Excess of Loss

1ST LAYER: N
= 80,000,000. Xs 100,000,000

2ND LAYER (CAT only) N

= 100,000,000 xs 180,000,000

Maximum Single Limit

180,000,000.00
Maximum Aggregate Limit
280,000,000.00
LEAD REINSURER: AFRICAN RE CORPORATION

Reinsurers’ Signed Proportion

Africa Re 49.00%
Cont. Re 39.00%
Waica Re 7.50%
FBS Re 2.50%
Nigeria Re 2.00%
 2022 TREATY REINSURERS Rating Body / Rating Body /
Rating Rating

1 SWISS RE AFRICA LIMITED S & P: AA -

3 CCR RE S & P: A A.M Best : A

4 GENERAL INSURANCE CORPORATION A. M. Best : B++

5 AFRICA REINSURANCE CORPORATION S & P: A- A. M. Best : A

6 CONTINENTAL REINSURANCE PLC A. M. Best : B+

7 NIGERIAN REINSUARANCE CORPORATION

8 WAICA RE GCR : B+ A.M Best : B+

9 FBS REINSURANCE LIMITED

2022 TREATY FOR SPECIALTY

Security Type Retention ($) Treaty ($) Maximum Capacity
($)
Aviation Only Excess Of Loss
750,000.00 29,250,000.00 30,000,000.00
Energy & Excess Of Loss
Aviation 3,000,000.00 27,000,000.00 30,000,000.00
Energy Variable Multi- -
line Package 30,000,000.00 483,040,000.00

LIFE

2022 LIFE Reinsurance

Treaty
Class Retention(N
=) Treaty (N
=) U/W Capacity (Sum
Insured) (N
=)
Section A: Surplus 500,000,000.00 per any
Terms one life
Retention Limits
Individual Life 35,000,000.00
 Group Life 40,000,000.00

Non-medical and Free

Cover Limits:
Individual Life 50,000,000.00
Group Life 100,000,000.00

Facultative Capacity 1,000,000,000 per any

one life
Section B: Quota Shares
Terms

Capacity per any one

life- Group Life Gross 40,000,000.00
retention limit
Quota Share Proportions
Leadway Assurance Co
Limited
Reassurers 87.5%
12.5%

The Q/S arrangement further protects the gross group life retention limit of the cedants surplus treaty. Full terms
and conditions are subject to the ‘2015 Life Reinsurance Treaty’.
APPENDIX 3- REINSURANCE OPERATIONAL GUIDE

Step Task Job aid Responsibility

1 Receive offer slip and risk details from the ceding Semi-Auto Reinsurance
company. Officer
2 Forward offer slip and risk details to underwriting Semi-Auto Reinsurance
team for review and recommendation on risk Officer
proportion1 ▲A.
3 Receive underwriting advice via email. Semi-Auto Reinsurance
Officer
4 Risk acceptable? Semi-Auto Reinsurance
Officer
4.1 No, reject the offer. Semi-Auto Reinsurance
Officer
4.2 Yes, proceed with risk in agreement with the Semi-Auto Reinsurance
Leadway reinsurance treaty and sign the offer Officer
slip.
5 Forward signed slip to the ceding company. Semi-Auto Reinsurance
Officer
6 Receive credit note from ceding company. Semi-Auto Reinsurance
Officer
7 Book the business2. Turnquest Reinsurance
Log TQ Click underwriting Click new officer
transaction Click new business Fill the
fields Authorize ▲B.
8 Authorized? Semi-Auto Reinsurance
Officer
8.1 No, amend and reprocess. Semi-Auto Reinsurance
Officer
8.2 Yes, generate and send Debit notes/guaranty Semi-Auto Reinsurance
policy to the ceding company. Officer
9 Receive and forward evidence of payment to Semi-Auto Reinsurance
the finance team for payment confirmation3 Officer
10 Payment confirmed? Semi-Auto Reinsurance
Officer
10.1 No, notify the ceding company. Semi-Auto Reinsurance
Officer
10.2 Yes, issue a receipt and send it to the ceding Semi-Auto Reinsurance
company. Officer
End.
Notes 1. The underwriting team shall review the offer slip and risk details which include –
premium rate, gross premium, client details, terms and type of insurance cover,
etc. The underwriting team shall review the information of the risk in line with
Leadway underwriting guidelines and the provision in the Leadway reinsurance
treaty and provide advice.
2. The reinsurance officer shall book business on Turnquest (TQ) to generate debit
notes and a guaranty policy. The guaranty policy shows the detailed
document of the accepted risk, the proportion, effective start and end date of
the agreement.

Input Document Output Document

 Offer slip  Signer offer slip
 Policy document/Endorsement  Debit note
documents.  Guaranty policy
 Survey report
 Premium worksheet
 Credit note
 EOP
 Other necessary documents.

Control Point
 ▲A – The underwriting team shall review the offer slip and risk details to ascertain the
risk level.
 ▲B– The reinsurance officer shall review the offer slip and risk details to ascertain the
risk level.
Control Type Control aid Control Mode
Preventative Semi-Auto Adhoc
Preventative Semi-Auto Adhoc

Task Job aid Responsibility

1 Receive a facultative prospect business from the Semi-Auto Reinsurance
underwriting/operations team. Officer
2 Review the risk details to determine facultative Semi-Auto Reinsurance
excess1 ▲A. Officer
3
4
5
6
7
8 Initiate discussions with facultative reinsurers2. Semi-Auto Reinsurance
Officer
9 Receive a response from the facultative Semi-Auto Reinsurance
reinsurers. Officer

10 Risk accepted? Semi-Auto Reinsurance

Officer
10.1 No, risk declined. Semi-Auto Reinsurance
Officer
10.2 Yes, assess the risk proportion of the facultative Semi-Auto Reinsurance
reinsurer. Officer
11 Generate facultative outward reinsurance offer Turnquest Reinsurance
slip from TQ. Officer
Log TQ Click to process policy Click
reinsure Fill the fields Click offer slip
Click reassign.

12 Send offer slip to the interested reinsurer. Semi-Auto Reinsurance

Officer
13 Receive the signed facultative offer slip. Semi-Auto Reinsurance
Officer
14 Issue and send credit note for the proportion of Semi-Auto Reinsurance
premium to the reinsurer. Officer
15 Request and receive a Debit note/guaranty Semi-Auto Reinsurance
policy from the facultative reinsurer. Officer
16 Confirm and receive evidence of remittance of Semi-Auto Reinsurance
premium3. Officer

17 Payment received? Semi-Auto Reinsurance

Officer
17.1 No, notify the operations team/relationship Semi-Auto Reinsurance
officer. Officer

17.2 Yes, process reinsurer’s premium on Navision: NAV Reinsurance

17.3 Officer
 Log NAV Click my task Click payment request Click New Fill the fields4
Send for approval ▲B.

18 Approved? Semi-Auto Reinsurance

Officer
18.1 No, amend and reprocess. Semi-Auto Reinsurance
Officer
19 13.2 Yes, request and receive EOP from the finance Semi-Auto Reinsurance
Officer

14 Forward EOP to reinsurer and request receipt. Semi-Auto Reinsurance

Officer
15 Upon completion of the placement, record in the Semi-Auto Reinsurance
reinsurer’s facultative outward register. Officer
End.
Notes 1. The reinsurance officer shall review the risk details to determine LAC’s share i.e.
retention plus treaty share. If there is any balance it will be placed on a
facultative basis.
2. Reinsurers are selected using financial strength, reciprocity, type of business,
and quick turnaround.
3. The reinsurance officer must confirm payment from the operations or
underwriting unit by the client within one month.
4. The link in the details must be clicked on to attach all necessary documents
required to process and approve the reinsurer premium.
 Input Document Output Document
 Signed offer slip Policy document/Endorsement
 Premium Payment Analysis workbook documents.
 Confirmation of premium receipt FAC Credit Note
 Debit note Offer slip
 Guaranty policy EOP
Key Risk
 Inability to completely FAC out
the risk.
Control Point
 ▲A – The reinsurance officer shall review the risk details to determine facultative
excess.
 ▲B – All assigned authorizers shall approve payment on NAV.
Control Type Control aid Control Mode
Preventative Semi-Auto Adhoc
Preventative Semi-Auto Adhoc

3. TREATY RENEWAL PROCESS

Step Task Job aid Responsibility
1 At the end of the 3rd quarter, review the current Semi-Auto Reinsurance
reinsurance treaty for renewal1 ▲A. Officer
2 Collate all necessary documents2. Semi-Auto Reinsurance
Officer
3 Send documents to treaty reinsurance broker for Semi-Auto Reinsurance
renewal3. Officer
4 Set up a meeting for treaty negotiation and Semi-Auto Reinsurance
renewal4. Officer
5 Negotiation agreed? Semi-Auto Reinsurance
Officer
5.1 No, renegotiate. Semi-Auto Reinsurance
Officer
5.2 Yes, receive agreed treaty and review ▲B. Semi-Auto Reinsurance
Officer
6 Treaty satisfactory? Semi-Auto Reinsurance
Officer
6.1 No, notify broker. Semi-Auto Reinsurance
Officer
6.2 Yes, send the treaty to the Head, reinsurance, Semi-Auto Reinsurance
and Executive Director for review and approval Officer
▲C.
7 Approved? Semi-Auto Reinsurance
Officer
7.1 No, notify broker. Semi-Auto Reinsurance
Officer
7.2 Yes, send treaty renewal to NAICOM for approval. Semi-Auto Reinsurance
Officer
8 Approved? Semi-Auto Reinsurance
Officer
8.1 No, respond to comment and reapply. Semi-Auto Reinsurance
Officer
8.2 Yes, proceed to reinsurance treaty set up on TQ: Turnquest Reinsurance
Officer
Log TQ Click set up Click reinsure
5
Go to Reinsurance setup Click on class
Click on year Click on clone treaty set up
Click on cloned year6 Authorize treaty.

9 File treaty. Semi-Auto Reinsurance

Officer
End.
Notes 1. The treaty review is carried out on the need for an update viz-a-viz current
business operations.
2. The document includes underwriting and claims data showing operations for
the period. The data include all paid and outstanding claims and premiums
received.
3. The reinsurance officer shall receive EOP from the ceding company to forward
evidence of premium remittance in line with NAICOM guidelines to the finance
team for confirmation. If payment was not made at the expected timeline, the
reinsurance officer should follow up with ceding company to ensure payment is
received.
Input Document Output Document
 Offer slip  Signer offer slip
Task
 PolicyJobdocument/Endorsement
aid  Debit note Responsibility
20 documents.
Receive a facultative prospect business from the
 Guaranty Semi-Auto
policy Reinsurance
 Surveyunderwriting/operations
report team. Officer
21 Premium
Review worksheet
the risk details to determine facultative Semi-Auto Reinsurance
 Creditexcess
note▲A.
1 Officer
 EOP
22 Other necessary
Initiate documents.
discussions with facultative reinsurers2. Semi-Auto Reinsurance
Officer
23 Receive a response from the facultative Semi-Auto Reinsurance
reinsurers. Officer
Control Point
24 ▲ARisk – Theaccepted?
underwriting team shall review the offer slip and Semi-Auto
risk details toReinsurance
ascertain the
risk level. Officer
24.1
 ▲B–No, Therisk declined. officer shall review the offer slip andSemi-Auto
reinsurance risk details to Reinsura
ascertain the
risk level.
Control Type Control aid Control Mode
Preventative Semi-Auto Adhoc
Preventative Semi-Auto Adhoc
 Yes, assess the risk proportion of the facultative reinsurer.
25 Generate facultative outward reinsurance offer slip from TQ.
Log TQ Click to process policy Click reinsure Fill the fields Click offer slip
Click reassign.

26 Send offer slip to the interested reinsurer. Semi-Auto Reinsurance

Officer
27 Receive the signed facultative offer slip. Semi-Auto Reinsurance
Officer
28 Issue and send credit note for the proportion of Semi-Auto Reinsurance
premium to the reinsurer. Officer
29 Request and receive a Debit note/guaranty Semi-Auto Reinsurance
policy from the facultative reinsurer. Officer
30 Confirm and receive evidence of remittance of Semi-Auto Reinsurance
premium3. Officer

31 Payment received? Semi-Auto Reinsurance

Officer
31.1 No, notify the operations team/relationship Semi-Auto Reinsurance
officer. Officer

31.2 Yes, process reinsurer’s premium on Navision: NAV Reinsurance

Officer
 Log NAV Click my task Click payment request Click New Fill the fields4
Send for approval ▲B.

14 Forward EOP to reinsurer and request receipt. Semi-Auto Reinsurance

Officer
15 Upon completion of the placement, record in the Semi-Auto Reinsurance
reinsurer’s facultative outward register. Officer
End.
Notes 5. The reinsurance officer shall review the risk details to determine LAC’s share i.e.
retention plus treaty share. If there is any balance it will be placed on a
facultative basis.
6. Reinsurers are selected using financial strength, reciprocity, type of business,
and quick turnaround.
7. The reinsurance officer must confirm payment from the operations or
underwriting unit by the client within one month.
8. The link in the details must be clicked on to attach all necessary documents
required to process and approve the reinsurer premium.
Input Document Output Document
 Signed offer slip Policy document/Endorsement
 Premium Payment Analysis workbook documents.
 Confirmation of premium receipt FAC Credit Note
 Debit note Offer slip
 Guaranty policy EOP
Key Risk
 Inability to completely FAC out
the risk.
Control Point
 ▲A – The reinsurance officer shall review the risk details to determine facultative
excess.
 ▲B – All assigned authorizers shall approve payment on NAV.
Control Type Control aid Control Mode
Preventative Semi-Auto Adhoc
Preventative Semi-Auto Adhoc
3. TREATY RENEWAL PROCESS
Step Task Job aid Responsibility
1 At the end of the 3rd quarter, review the current Semi-Auto Reinsurance
reinsurance treaty for renewal1 ▲A. Officer
2 Collate all necessary documents2. Semi-Auto Reinsurance
Officer
3 Send documents to treaty reinsurance broker for Semi-Auto Reinsurance
renewal3. Officer
4 Set up a meeting for treaty negotiation and Semi-Auto Reinsurance
renewal4. Officer
5 Negotiation agreed? Semi-Auto Reinsurance
Officer
5.1 No, renegotiate. Semi-Auto Reinsurance
Officer
5.2 Yes, receive agreed treaty and review ▲B. Semi-Auto Reinsurance
Officer
6 Treaty satisfactory? Semi-Auto Reinsurance
Officer
6.1 No, notify broker. Semi-Auto Reinsurance
Officer
6.2 Yes, send the treaty to the Head, reinsurance, Semi-Auto Reinsurance
and Executive Director for review and approval Officer
▲C.
7 Approved? Semi-Auto Reinsurance
Officer
7.1 No, notify broker. Semi-Auto Reinsurance
Officer
7.2 Yes, send treaty renewal to NAICOM for approval. Semi-Auto Reinsurance
Officer
8 Approved? Semi-Auto Reinsurance
Officer
8.1 No, respond to comment and reapply. Semi-Auto Reinsurance
Officer
8.2 Yes, proceed to reinsurance treaty set up on TQ: Turnquest Reinsurance
Officer
Log TQ Click set up Click reinsure
Go to Reinsurance setup5 Click on class
Click on year Click on clone treaty set up
Click on cloned year6 Authorize treaty.
 9 File treaty. Semi-Auto Reinsurance
Officer
End.
Notes 1. The treaty review is carried out on the need for an update viz-a-viz current
business operations.
2. The document includes underwriting and claims data showing operations for
the period. The data include all paid and outstanding claims and premiums
received.
3. The brokers for Non-Specialty are AON Benfield, United African Insurance
4. Brokers, Scib, APPROVAL
etc while forINspecialty,
PRINCIPLEthe
(AIP) PROCESS
broker is Gallagher.
Step 4.
Task The meeting can be virtual or physical and either of aid
Job the partyResponsibility
can set up the
meeting which includes the Executive Director, Head, Reinsurance,
1 Receive quotation requests from the underwriting Semi-Auto Reinsurance
Reinsurance officer, and the broker.
unit for special risk policy. Officer
5. At the reinsurance setup stage; the treaties are selected according to the
2 Review the risk details1 ▲A. Semi-Auto Reinsurance
type of treaty that needs to be set up on TQ.
Officer
6. During the setup process, the cloned year is revisited to pick and fill all
3 Risk details sufficient? Semi-Auto Reinsurance
necessary and applicable details in the treaty.
Officer
3.1 No, notify the underwriting team. Semi-Auto Reinsurance
Officer
3.2 Yes, send a quotation request to the reinsurance Semi-Auto Reinsurance
broker/local reinsurers. Officer
4 Receive and review quotes from Reinsurance Semi-Auto Reinsurance
brokers / local reinsurers2. Officer
5 Select and send the most competitive quotes to Semi-Auto Reinsurance
the underwriting team. Officer
6 Receive documents from the underwriting team Semi-Auto Reinsurance
on evidence of offers, acceptance, and Officer
declinature for NAICOM.
7 Review and collate document for NAICOM Semi-Auto Reinsurance
submission ▲B.
3 Officer
8 Documents okay? Semi-Auto Reinsurance
Officer
8.1 No, notify the underwriting team. Semi-Auto Reinsurance
Officer
8.2 Yes, send the collated document to NAICOM for Semi-Auto Reinsurance
approval. Officer
9 Approved? Semi-Auto Reinsurance
Officer
9.1 No, respond to NAICOM’s comment and resend. Semi-Auto Reinsurance
Officer
9.2 Yes, send approved documents to the Semi-Auto Reinsurance
underwriting team. Officer
10 File for the post-placement report (PPR). Semi-Auto Reinsurance
Officer
11 Save approved AIP in Reinsurance Directory. Semi-Auto Reinsurance
Officer
End.
Notes 1. The reinsurance officer shall review the risk details to determine the information
provided for the quotation request is sufficient for reinsurance broker/local
reinsurers.
2. Depending on the type of quotation request, the reinsurance broker/local
reinsurers can share more than one quotation.
3. The collated documents are premium worksheet, provisional foreign
reinsurance slip, details of risk, sum insured, schedule of local participating
underwriters, evidence of offers and responses from insurers/reinsurers, details
of local brokers, details of intended foreign reinsurers, letter of authority from
the lead insurer and statement of compliance.

Input Document Output Document

 Quotation request email  Approval Notification.
 Collated documents – premium worksheet,
provisional foreign reinsurance slip, details of
risk, sum insured, schedule of local participating
underwriters, evidence of offers and responses
from insurers/reinsurers, details of local brokers,
details of intended foreign reinsurers, letter of
authority from the lead insurer and statement of
compliance.
KPIs Key Risk
 Inability to completely FAC out
the risk.
Control Point
 ▲A – The reinsurance officer shall review the risk details for the quotation request.
 ▲B – The reinsurance officer shall review and collate all necessary documents
needed for NAICOM’s approval.
Control Type Control aid Control Mode
Preventative Semi-Auto Adhoc
Preventative Semi-Auto Adhoc

5. POST PLACEMENT REPORT (PPR) PROCESS

Step Task Job aid Responsibility
 1 From 90 days of AIP issuance, send PPR Semi-Auto Reinsurance
requirements to the underwriting team1. Officer
2 Receive and Review submitted documents from Semi-Auto Reinsurance
the underwriting team▲A. Officer
3 Documents okay? Semi-Auto Reinsurance
Officer
3.1 No, notify the underwriting team2. Semi-Auto Reinsurance
Officer
3.2 Yes, collate documents and forward them to the Semi-Auto Reinsurance
compliance unit for review and approval ▲B. Officer

4 Approved? Semi-Auto Reinsurance

Officer
4.1 No, rectify concerns and resend. Semi-Auto Reinsurance
Officer
4.2 Yes, send collated documents to NAICOM. Semi-Auto Reinsurance
Officer
5 Documents satisfactory? Semi-Auto Reinsurance
Officer
5.1 No, respond to NAICOM’s query and settle the Semi-Auto Reinsurance
fine received. Officer
5.2 Yes, receive the Certificate for Offshore Semi-Auto Reinsurance
(COR) Placement from NAICOM. Officer
6 Save COR certificate in Reinsurance Directory. Semi-Auto Reinsurance
Officer
End.
Notes 1. This is a form of ensuring that LAC strictly adheres to the terms and conditions
of AIP to receive the Certificate of Offshore Reinsurance (COR).
2. All documents provided must be correct and must agree with what was filed
during AIP as any form of mistake not detected before submission to NAICOM
will attract a fine.
Input Document Output Document
 PPR requirements COR
This manual is also in line with section 4 of the Prudential Guidelines for Insurers and Reinsurers in
 Approval email from compliance
Nigeria.
KPIs Key Risk

Control Point
 ▲A – The reinsurance officer shall review the PPR requirements for submission
 ▲B – The compliance unit shall review the collated PPR requirement to ensure it is
satisfactory for NAICOM’s approval.
Control Type Control aid Control Mode
Preventative Semi-Auto Adhoc
Preventative Semi-Auto Adhoc
 Page 1 of 3

Subject: short rate table

SHORT RATE CANCELLATION TABLE

SHORT RATE CANCELLATION TABLE (Cont'd)

10/18/2009
 Page 2 of 3

SHORT RATE CANCELLATION TABLE (Cont'd)

10/18/2009
 Page 3 of 3

© Copyright 2000–2006 National Council on Compensation Insurance, Inc. All Rights Reserved.

10/18/2009
 NATIONAL INSURANCE COMMISSION
HEAD OFFICE: Piol 1239 Ladoke Akinlola Boulevard Garki II, Abuja, P.M.B. 457, Garki Abuja, Nigeriatr: 09-8756021
E-mail: [email protected],Websile: www.naicom.gov.ng

CIRCULAR NO: NAICOM/DPR/CIR/37/2021

DATE: 18TH OCTOBER, 2021

TO: ALL REINSURANCE, INSURANCE AND BROKERAGE COMPANIES

REVISEDMARKET CONDUCT AND BUSINESSPRACTICE GUIDELINES FOR INSURANCE

INSTITUTIONS

As part of the ongoing effort of the Commission to ensure that Insurance

Institutions conduct themselves in professional manner in line with the
International best practices, the Commission hereby issues "Revised Market
Conduct and BusinessPractice Guidelines for Insurance Institutions", replacing
the earlier Guideline (Market Conduct and Business Practice Guidelines for
Insurance Institutionsin Nigeria June, 2016).

quired to ensure full compliance, please.

L. .. A ah
Director (Policy & Regulation)
For: Commissioner for Insurance

LAGOS CONTROL OFFICE: A1agbon, Ikoyi Road, Ikoyi, P.M.B. 80144, VI Lagos.ENUGU ZONAL OFFICE: No 151busa Independent Layout, Enugu
KANO ZONAL OFFICE: 6B Ahmadu Bello Way, Kano, ILORIN ZONAL OFFICE: Federal Mortgage Bank House, Asa Dam Road, lIorin,
PORT HARCOURT ZONAL OFFICE: NO.8 Ada George Road, Off NTA Ngbuobe Port Harcourt,
\

REVISED MARKET CONDUCT AND BUSINESS PRACTICE GUIDELINES

FOR INSURANCE INSTITUTIONS

ISSUED BY

THE NATIONAL INSURANCE

COMMISSION

OCTOBER, 2021
TABLE OF CONTENTS

PREAMBLE

OBJECTIVES OF THE GUIDELINES

1. TRADE PRACTICES AND FAIR CUSTOMER TREATMENT

1.1.0 Unfair Trade Practices
1.2.0 Treatment of Customers
1.3.0 Disclosure of Information
1.4.0 Pre-sales Requirement and Advertisement
1.5.0 Sales and/or Contract Execution Requirement
1.6.0 Professional Advice
1.7.0 Policy Servicing (After Sales Service)
1.8.0 Personal Information Protection.
1.9.0 Conflict of interest

2.0 SPECIFIC DOCUMENTATION FOR PRODUCT APPROVAL

2.1.0 Product Application

2.2.0 General Requirements
2.3.0 Product Approval Checklist
2.4.0 Product Returns
2.5.0 Product design
2.6.0 Product Pricing
2.7.0 Filing
2.8.0 Offshore Placement Consideration
2.9.0 Product Withdrawal and/or Recall
2.10.0 Disclosures
2.11.0 Incomplete Submission
2.12.0 Other Regulatory Instrument
3. OPERATIONS, PRICING, COMMISSIONS AND RETURNS

3.1.0 Operational Manuals

3.2.0 Rates Filing
3.3.0 Remunerations and/or Commissions and its Associated Returns
3.4.0 Return or Refund Premium and its Associated Returns
3.5.0 Premium Collections, Remittances and Returns
3.5.7 Notification of unremitted Premium
3.5.9 Remittance of premiums to reinsurers
3.6.0 NAICOM Relationship Officer
3.7.0 Compliance with Anti-Money Laundering and Combating Financing of Terrorism
(AMUCFT) Requirements
3.8.0 Other requirements
3.9.0 Returns in respect of Aviation Insurance Placements by Brokers Customer Due Diligence
3.10.0 Adequacy of Data for Underwriting Purpose
3.11.0 Other Relevant Extant Laws, Regulations, etc

4 CLAIMS MANAGEMENT
4.1.0 General Requirements
4.2.0 Claims Procedure
4.3.0 Claims Notification
4.4.0 Claims Processing
4.5.0 Claims Settlement
4.6.0 Internal Controls for Claims Management
4.7.0 Complaints and Dispute Resolution
4.8.0 Payment of Claims Recoveries

5 APPOINTMENTS, OPERATIONS, EXPANSIONS AND DOCUMENTATION

5.1.0 Appointment of Principal Officers

5.2.0 Qualifications ~

3
5.3.0 Head of Department
5.4.0 Branch/Regional and/or Foreign Operations
5.5.0 Change of Name
5.6.0 Change of Ownership/Directorship

6 REGISTRATION AND DOCUMENTATION

6.1.0 Checklist for Insurance and Reinsurance Registration
6.2.0 Checklist for Registration of Insurance Brokers
6.3.0 Checklist for Registration of Loss Adjusters
6.4.0 Checklist for Separation of Composite Licence
6.5.0 Checklist for Agency Registration (Fresh Licence)
6.6.0 Checklist for Renewal of Brokerage Licence
6.7.0 Checklist for Renewal of Loss Adjusters Licence
6.8.0 Checklist for Renewal of Agency Licence

PREAMBLE

a. These Guidelines are issued in exercise of the powers conferred on the National Insurance
Commission ("the Commission") under the National Insurance Commission Act 1997 and
the Insurance Act 2003.

b. These Guidelines shall form part of the extant insurance regulatory and supervisory tools
and shall be read in conjunction with the provisions of the Insurance Act as well as other
regulations, notices and circulars that the Commission may issue from time to time.

c. These Guidelines shall apply to all Insurance Institutions. All Insurance Institutions are
required to ensure strict compliance with these guidelines by formally directing their staff to
comply.

d. Every insurance institution shall establish internal policies and procedures to give effect to
the provisions of these Guidelines and shall form part of its internal control.

4
e. All Insurance Institutions are required to formally direct their staff to comply and ensure strict
compliance with these Guidelines.

OBJECTIVES OF THE GUIDELINES

a) These guidelines sets out the minimum standards required from Insurance Institutions in
their dealings with Clients, Policyholders, Shareholders and other Stakeholders.

b) It seeks to promote greater fairness and transparency between policyholders and insurance
institutions.

c) It establishes strong market conduct among the practitioners/stakeholders. Strong market

conduct ethics serve to reduce mistrust that may exist between clients and insurers, and
enhanced mutual confidence improves market efficiency. Conversely, weak market conduct
ethics are usually the major reason for the poor development of an insurance market

d) It also provides the Board of Directors and Management of insurance institutions with a
framework for the establishment of policies and procedures for effective claims management
among other key responsibilities. This is imperative, as Insurers stake their reputations and
financial stability on the quality and efficiency of their claims operations

e) The guidelines provide principles to ensure customers are treated fairly, both before a
contract is entered into and through to the point at which all obligations under the contract
are discharged.

f) The guidelines also state the responsibility of the insurance institutions in ensuring that their
activities are properly coordinated and carried out in a professional manner.

g) The Guidelines also sets out the general licensing and Authorization requirements for
insurers, intermediaries and other insurance institutions.

5
1. TRADE PRACTICES AND FAIR CUSTOMER TREATMENT

1.1.0 Unfair Trade Practices

1.1.1 Insurance institutions shall not engage in any form of unfair practice. Generally, unfair
trade practices shall include but not limited to the following:

a. Making or causing to be made any misrepresentation conceming the benefits,

advantages, conditions, or terms of an insurance policy;

b. Providing false information or failure to make full disclosure of all requested

information on an application for a company's product(s);

c. Using false or misleading information to induce the lapse, forfeiture, exchange,

conversion, or surrender of an insurance policy;

d. Obtaining money or property using false statement of a material fact or deliberate

omission of a material fact in order to make the false statement not misleading;

e. Employing any device, scheme, or artifice to;

i. Facilitate return of a portion of the premium/commission to the

policyholder/customer following the procurement of an insurance policy;

ii.Granting rebate on premium or commissions, or offer of any benefit. except those

benefit specified in the policy, to induce the sale of an insurance product;

iii.Any offer of inducement to enter into any insurance contract, or to receive a quote,
submit an application or in connection with any other solicitation for sale of
insurance; or

iv. De-marketing of any insurance institution or any false description of the features of
another company's policy to induce the replacement of that policy with
another.

f. Submitting false financial bid for inclusion in the list for Insurance placement

1.2.0 Treatment of Customers

1.2.1 Insurance Institutions shall ensure that they treat their customers fairly throughout the
duration of the business relation.

1.2.2 Fair treatment of customers by insurance institutions, shall generally, amongst others,
cover the following:
 a) Act competently, carefully and diligently in regard to all transactions between
insurance institutions and their customers.

b) When providing adviGe or exercising discretion, must do so in the interest of the

customer and advice given must be professional.

c) Take appropriate measures to ensure that its employees and agents meet high
standards of ethics and integrity.

d) Develop and market products in a way that meets the interest of customers.

e) Provide customers with clear information before, during and after sale.

f) Reduce risk of sale of products which are inappropriate to customers' needs.

g) Deal with customers' complaints in a fair manner.

h) Manage and meet reasonable expectations of customers.

i) Acknowledge customer's mail within two (2) working days and respond within
reasonable time.

j) Provide sufficient information on their website.

1.2.3 The Executive and Senior Management shall have the ultimate responsibility for fair
treatment of customers.

1.2.4 Insurance Institutions shall establish Service and Efficiency Unit where all cases of
unsatisfactory services, whether in terms of employee conduct or failure to meet the terms
of the contract, shall be reported, considered and/or resolved.

1.2.5 Fair treatment of customers shall be taken into consideration in the design of the business
strategy/development of products.

1.2.6 All insurance institutions shall entrench a culture of fair treatment of customers.

1.3.0 Disclosure of Information to the Customer

1.3.1 Insurance institutions shall:

a) Provide adequate and timely information that will enable the customer reach an
informed decision.

7
 b) Take reasonable care to ensure that the information provided to customers are
accurate and in easily understandable language.

c) Not present to customers misleading or deceptive information.

1.3.2 Insurance institutions shall give customers reasonable access to all information which are
material to the contract both in hard and soft copies where necessary. The information
shall include but not limited to:

a) Address of its head office and other contact details.

b) Products; scope of cover, price, conditions and exclusions

c) Claims procedure (as contained in Paragraph 4.2.0 below)

d) Complaints handling: Every insurance institution should have a complaints

procedure manual which will include, among other things the following:

i. Complaints procedure

ii. Timeline for handling complaints

iii. Complaint handling Committee

iv. Regular feedbacks on complaint progress

v. Complaint Handling Phases

1.3.3 Insurance Institutions shall take reasonable steps to obtain adequate information about the
customer to assess his insurance needs.

1.3.4 Information obtained from customers shall be treated as confidential and shall not be
disclosed to third parties except as may be required by law.

1.3.5 The insurance institutions shall advice the customer of their duties to disclose all relevant
information and ensure that the consequences of non-disclosure and inaccuracies are
pointed out to the prospective client.

1.3.6 Insurer shall avoid influencing prospective clients in taking decisions on their proposed
insurance contracts but should inform their clients that all answers to questions in the
proposal form or questionnaire are theirs and they are responsible to the veracity of their
responses.

1.3.7 An Insurance intermediary shall disclose on behalf of its client all material facts within its
knowledge and give a fair presentation of the risk.

8
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1.3.8 An Insurance policy, product literature, policy summary or marketing material shall be
clearly worded in easily understandable language and shall define any word likely to be
unfamiliar or capable of misinterpretation to the policyholder or claimant.

1.3.9 An insurance policy document shall contain, among others, the under listed information
which shall form the basis of the insurance contract:
a. Details of the company (name of the company, principal place of business,
contact details, etc)
b. Policy Schedule
c. Characteristics of the product and/or scope of cover,
d. The premium/price
e. Commencement and duration of the policy
f. Benefit (main and supplementary)
g. Excess and deductibles
h. Terms, conditions, exclusions and/or limitations
i. Deferred payment periods
j. Waiting periods
k. Surrender value and charges (where applicable)
I. Cancellation
m. Applicable laws
n. Claims procedure
o. Complaints procedure
p. Various dispute resolution arrangements/statutory Complaints Bureaux - the
Company, the Association and the National Insurance Commission's
Complaints Bureau
q. Any other information which are very material to the contract

1.3.10 In the case of life insurance and annuities, the following additional information shall be
provided to the insured:

a. Participation rights in surplus funds

b. The basis of calculation and state of bonuses
c. The current cash surrender value
d. Premiums paid to date
e. For unit-linked life insurance, a summary report on performance of the
investment and the associated expenses.

1.3.11 Confidentiality: An insurance institution shall have policies and procedures for
management of confidential information that:

a. Safeguards against misuse or inappropriate communication.

9
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'.'

b. Promote awareness of confidentiality requirements.

c. Implement intemal control mechanisms that meet the objectives of

confidentiality.

d. Deploy appropriate technology to manage confidential information.

e. Ensure data security and assess risks associated with any major breaches

f. Ensures that the Board and Management take confidentiality as part of the
organization's culture and strategy.

1.3.12 In addition, an insurance agent shall:

a. Disclose to the prospective customers the name of the insurer being

represented and the type of product(s) he is authorized to sell and other relevant
information about the principal.

b. Take due care to avoid giving misleading information to customers.

1.3.13 An Insurance Institution shall provide the following additional requirement for Insurance
Sales via Internet and Mobile Telecom Operators:

a. The address of the Insurer's head office and the contact details of the
supervisor/manager of the head office,

b. The contact details of the insurer, branch or intermediary, and of the

supervisor/manager responsible for the supervision of the business, if different
from above,

c. The jurisdiction in which the insurer or intermediary is legally permitted to

provide insurance,

d. Procedures for the submission of claims and a description of the insurer's claims
handling procedures and

e. Contact information of the authority or organization dealing with dispute

resolution and or consumer complaints (such as NAICOM's Complaint Bureau,
NIA's Bureau and Company's Customer Complaints Department).

1.3.14 For proper understanding of contract relationship, insurance intermediaries shall:

a. Ensure that the client understands his relationship with the intermediary and on
whose behalf the intermediary is acting

b. Obtain written/electronic mandate from client to represent the client to the

insurer and communicate the grant of a cover to the client after effecting
insurance

10
 c. Avoid conflict of interest

d. Identify, the scope of products and or services the insurer can offer.

1.3.15 An insurance institution shall explain when and how the premium is payable and how such
premium is to be collected, where another party is financing all or part of the premium, full
details shall be given to the client/insurer (as applicable) including any obligations that the
client may owe to that party.

1.3.16 An Insurance Institution shall not, either in promotion activities or presentation of sales,
make inaccurate or unfair criticisms of any insurance institution or any member of a trade
association as approved by the Commission.

1.4.0 Pre- Sales Requirement and Advertisement

1.4.1 Insurance Institutions shall prior to:

a. Marketing any product, ensure that the product has been approved by the
Commission.

b. Introducing a product, provide necessary support to Agents to ensure that they

understand the product.

1.4.2 An insurance institution shall promote its products and services in a manner that is clear,
factual, accurate, and not misleading;

1.4.3 An insurance institution shall, if it subsequently becomes aware that the information
provided in a promotion/advertisement is not accurate and clear or is misleading,
immediately but not later than 7 days withdraw the information and take appropriate steps
to correct such misrepresentation.

1.4.4 In addition to the provisions of extant rules relating to advertisement, information provided
in a promotion or advertisement shall:

a. State prominently the basis for any claimed benefits and any significant
limitations; and
b. Not conceal, diminish or obscure important statements or warnings.

c. Contain nothing which is in breach of the law nor omit anything which the law
requires
d. Not encourage or condone defiance or breach of the law

11
'.'

e. Contain nothing which is likely, in the light of generally prevailing standards of

decency and propriety, to cause grave or widespread offence or to cause
disharmony.
f. Not be framed as to abuse the trust of clients or exploit their lack of experience or
knowledge
g. Be capable of substantiating all descriptions, claims and comparisons made in
the cause of the promotion activities

h. Where appropriate, distinguish between contractual benefits which the

insurance policy is bound to provide and non-contractual benefits which may be
provided.
i. An advertisement shall be true, factual, clear and unambiguous.

j. Any statistics presented in an advertisement shall be proved valid,

k. No advertisement shall use lottery or any other game of chance as promotional

technique to induce public actions without prior approval of the Commission;

I. An advertisement making projection of returns on investments shall explain the

basis of the projection:
m. An advertisement stating the rate of interest shall state the rate per annum:

n. A product advertisement shall only make offers that are adjudged feasible:

o. No advertisement shall contain religious bias:

p. No advertisement shall disparage reputation of others

q. No advertisement shall be comparative of named competitors:

r. An advertisement shall produce evidence in support of testimonials and

endorsement.
s. An advertisement shall contain the address of the of the advertisers' corporate
office together with the telephone numbers, e-mail address, fax numbers and
website address, where available.
t. An advertisement shall contain the Commission's approval number which shall
remain valid in so far as there are no changes. Where however changes are
effected on the initial approval, a fresh request for approval containing the
changes shall be made to the Commission.

1.4.5 Advertisement content shall be subject to the prior approval of the Commission

12
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'."

1.5.0 Sales and/or Contract Execution Requirement.

a. The insured shall be advised and be given the opportunity to read and react to
the contents of the policy document before signing.

b. In line with the "no premium no cover" requirement, policy/certificate shall not be
executed/issued until the premium is paid.

c. Insurance institutions shall explain to the client the importance of disclosing all
subsequent changes that might affect the insurance throughout the duration of
the policy/contract.

1.6.0 Professional Advice

1.6.1 An insurance institution shall ensure that, where customers receive advice before
concluding an insurance contract;

a. Such advice is appropriate; taking into account the customer's disclosed

circumstances.

b. Such advice includes recommendations on the appropriateness of a

product/policy based on the disclosed needs of the customer.

c. Explain and document the basis of the advice.

d. Communicate in a clear and effective manner to the customer any potential

conflict of interest.

e. There is a system in place to monitor the quality of advice given by its staff

1.6.2 An insurance institution shall appropriately supervise its staff and agents. periodicaily
review the quality of advice offered to customers by its agents/staff and where any
deficiency is observed, take necessary remedial action.

1.6.3 An insurance institution shall provide continuous training programs to ensure that its staff
and its agents:

a. Are abreast of market trends, economic conditions, innovations and

modifications made to the products and services;

b. Maintain appropriate level of industry knowledge including the characteristics

and risks of the products and services;

c. Know the applicable legal and regulatory requirements;

13
, .
".'
d. Understand the requirements for effective communication of information
regarding the products and services;

e. Are familiar with the documentation regarding the company's products and
services.

f. Are competent, suitable and up to date in technical and management issues as

it affects their works

g. Are aware of legal requirements including the law of agency affecting their
activities; and only handle classes of business in which they are competent

h. Are aware of and adhere to the standards expected of them by this guideline.

i. Understand the type of client it is dealing with and the extent of the client's
awareness of risk and insurance.

j. Give advice only on those matters in which it is knowledgeable and seek or

recommend other specialist for advise when necessary

k. With particular reference to Brokers, explain why policies are proposed and
provide comparisons in terms of price, cover or service.

1.7.0 Policy Servicing (After Sales Service)

1.7.1 Insurance Institutions shall:

a. Service policies diligently through to the point at which all obligations under the
policy have been satisfied.

b. Disclose to the policyholder information on any changes that are likely to affect
the terms and conditions of the contract; and give reasonable notice before any
changes take effect.

c. Where there are changes in terms and conditions, notify the policyholder of their
rights and obligations regarding such changes and obtain the policyholder's
consent.

d. Ensure fair treatment in the event of switching between products or early

cancellation of a policy.

e. Ensure that the client receives the insurer's renewal invitation at least sixty (60)
days to expiry and issue subsequent reminders.

f. Ensure that its client is aware of the expiry date of the insurance even if it
chooses not to offer further cover to the client
1 14
 g. Ensure that renewal notices contain a requirement for keeping a record
(including copies of letters) of all information supplied to the insurer for the purpose
of renewal of the contract.

1.7.2 An Insurer shall notify the insured of any:

a. Change in the name of the insurer, its legal form or address of its head office
and any other office as appropriate.

b. Acquisition by another undertaking resulting in organizational changes.

c. Portfolio transfers and their rights.

1.7.3 Insurance institution shall:

a. Ensure that any documents issued complies with all statutory or regulatory
requirements that may be issued from time to time

b. Ensure that the policy documents are issued to the insured or his/her broker
without delay.

c. Ensure prompt response to all correspondence

d. Ensure that all written terms and conditions are clearly set out.

e. Make available to any new insurance institutions, as instructed by the client, all
documentation to which the client is entitled and which is necessary for the new
insurance institutions to deal on behalf of the client

f. Not to withhold documentation from its clients without their consent, unless
adequate and justifiable reasons are disclosed in writing and without delay to the
client. Where documentation is withheld, the client must still receive full details of
the insurance contract.

g. Where any intermediary is in possession of (and issued to the insured on behalf

of insurer/reinsurer) any contract document, such document shall be properly
kept and accounted for when necessary. For the purpose of accountability,
intermediaries shall:

i. Keep and maintain a register of cancelled certificates of insurance

ii. Return to the insurer all cancelled certificate of insurance not later than thirty
(30) days from the date of cancellation.

iii. Contravention of (i) and (ii) above shall be a ground for penalizing the
intermediary.

15
1.8.0 Personal Information Protection:

1.8.1 An Insurance Institution shall:

a. Develop policies and procedures in respect of privacy protection in order to

ensure compliance with legal provisions and industry best practice

b. Provide necessary training to their employee at all levels of the organization in

order to promote awareness of privacy protection requirements

c. Implement internal control mechanisms that meet the objectives of privacy

protection and support the achievements of these objectives.

d. Ensure that the appropriate technology is available and in place to adequately

manage the financial, medical and personal information an insurer is holding on
a customer

e. Implement policies and procedures relating to privacy protection in order to

manage risks and threats pertaining to security breaches. Any security breach
shall be notified in a timely manner, to the responsible persons (Board Members,
Members of Senior Management or the relevant key Persons in control
functions)

f. Implement policies and procedures relating to data security in order to be able to

report in a timely manner, security breaches to affected customers and the
Commission; and meet other relevant reporting requirements

g. Assess the risks associated with any major breaches in security and mitigate the
impacts of these on its resources, operations, environment and reputation.

h. Determine the measures to be taken in the light of the risks occurring from
security breaches as part of business continuity planning

i. Ensure that group structures are not abused to circumvent prohibitions on the
sharing of personal information.

1.9.0 Conflict of Interest

1.9.1 In their dealings either with each other or with customers, insurers and intermediaries may
encounter conflicts of interest. Conflict of interest arises where a party has competing
professional and personal interests.

f J(i
1.9.2 Conflicts that have the potential or are likely to be perceived as having the potential to have
a direct and significant effect on an Insurance Contract must be identified, mitigated, or
managed.

1.9.3 An insurance institution shall establish policies and procedures which shall require the
following:

a. Disclosure of significant interests

b.Training of its personnel in respect of conflict of interest

c. Disqualification from facilitation or participation in all or a portion of the insurance

placement.

d. Divestiture of significant interest and/or

e.Severance of relationships that create actual or potential conflicts

2.0. SPECIFIC DOCUMENTATION FOR PRODUCT APPROVAL

2.1.0 Product Application: All applicationfor productapprovalmadeto NAICOMshouldat minimumcontainthe
followingdocuments:

a. Formal application ietter

b. Product name

c. Objective of the proposed new/repackaged product(s)

d. Evidence of payment of the product approval fee as specified in the schedule A

e. The policy wordings documentation

f. Proposal form

g. Claim form

h. Marketing brochure/Flier

i. Premium computation sheet explicitly showing expenses and commissions

(both reinsurance and payable to direct intermediaries).

j. Actuary's report/Premium Justification

k. Letter of Comfort from the Reinsurance provider in respect of each proposed

product

17
 I. Financial Strength Rating and Country of registration of the proposed Reinsurer
(if applicable).

m. Product business plan, feasibility report and success strategy of the product
proposed (at least for 5 years)

n. Email Address/phone number of Company (Contact person)

o. Commission payable to other intermediaries

p. KYC forms

q. Internal Underwriting Report! valuation

r. Specimen Certificate (Where applicable)

s. Distribution channel(s)

t. Any other relevant information

2.2.0 General Requirements

a. All applications and requirement thereof must be one per product

b. All applications should state clearly the value additions/uniqueness or features to

existing (conventional) product in the market.

c. All products must unambiguously specify at what time a policy may be

surrendered.

d. All applications must be duly endorsed by a named official of the applying

company.

e. All proposal forms must conspicuously reflect the provisions of Section 54 (2) of
the Insurance Act 2003.

f. Cancellation conditions must be expressly stated in the policy document.

g. A phone number must be specified on the proposal form/product flyer to enable

the potential client share any grievances before conclusion of the contract.

h. All Products policy document/claim forms must state the internal complaint
handling procedure and that any unsatisfied & aggrieved insured may contact
the Nigerian Insurers Association (Contact address, email and phone number
specified); where not satisfied may contact the National Insurance Commission
(Contact address, email and phone number specified). Where the in,rnal

:I 18
"

process fails to produce desired result, the right to competent court of

Jurisdiction is the final arbiter.

i. State ways accumulation/Excess of the risk will be managed/ mitigated.

j. Territorial scope and Targeted market must be stated clearly in the application
letter.

k. An Undertaking that the proposed product is packaged in compliance with sound

principles of insurance duly signed by MD/CEO or any other named most senior
ranked officer.

I. An illustrative computation of surrender values shall be expressly stated in the

policy document showing what would be payable (see Appendix E for the
format).

m. In addition to the conventional sections of an insurance policy (partly stated in

section 1.3.11 of this Guidelines), all policy documents must have a summary
Policy Schedule which shall include the following broad headings:

i. Policy Number

ii. Period of Insurance

iii. The Insured and his address

iv. The Insurer and principal place of business

v. Type of Insurance

vi. Limit/Sum Insured

vii. Deductible/ Excess

viii. Territorial limit

ix. Currency(ies)

x. Conditions

xi. Original Premium and/or renewal premium respectively

xii. Tax payable including all local Taxes/Levies (if applicable)

xiii. Intermediary(ies) if any

xiv. Choice of Law and Jurisdiction

n. The description of the risk covered by the products shall be disclosed.

119
,

o. The Actuary's report (where applicable) shall include a disclosure on

assumptions used including commissions, expenses and mortality rates. If the
product is relatively new with limited historical experience, the actuarial report
shall disclose the fact and indicate the assumptions made to cater for the lack of
appropriate historical experience. The actuarial review should also comment on
the adequacy of the reinsurance arrangements to be adopted on the product.

p. Where an insurance product has been designed and developed through

collaboration between an insurer and an intermediary, and where the insurance
product is branded and marketed by the intermediary, the name of the insurer
shall appear prominently in the marketing material.

q. The insurer shall only launch and/or issue an insurance product upon receipt of
NAICOM's "No Objection" letter.

r. The proposal form, claim form and marketing brochure of a new or repackaged
insurance product shall bear the name and contact details of the insurer.

s. The insurer shall be responsible for providing information that is accurate, clear
and truthful not only to customers but also to intermediaries who may rely on this
information in providing advice to customer.

t. An insurer shall take steps to ensure that any advertising and promotional material
is consistent with the terms and conditions of their application to NAICOM and
the Commission's No Objection shall be obtained prior to the use of the
promotional items.

u. Customers' dispute resolution process shall be conspicuously indicated in the

policy document.

2.3.0 Product Approval Checklist (see schedule B)

2.4.0 Product Returns

2.4.1.1 Insurers shall submit bi-annually Returns to NAICOM on the performance of each new or
rebranded product from 6 months after the approval continuously for at least three
years' period, using the attached templates (see schedule C).
2.4.1.2 The report must reach the Commission not later than 15 days into the succeeding quarter.

2.5.0 Product Design

20
 - --1

All products designed to be introduced in the Nigerian Insurance Market must

conform to the concept of the fair treatment of potential customers.
Note:

a. Sufficient information must be provided to guide potential customers' decision.

b. The followings must be taken into consideration while developing new product:

i. Cost/Benefit Analysis

ii. Risk Management

iii. Implementation Plan

iv. Post-implementation plan

2.6.0 Product Pricing

2.6.1.1 Analysis and review of the Actuary must be considered in the pricing process, which must
amongst others reflect the emerging experience in price adjustments, monitor
deviations of technical underwriting pricing instrument and anti-competition.
2.6.1.2 The pricing of an insurance product involves the estimation of claims cost and other
business costs arising from the product and the investment income arising from the
investment of the premium income attaching to the product. Pricing risk occurs where
the actual experience on claims, costs or investment returns arising from the sale of a
product are different from what was assumed.
2,6.1.3 An insurer should consider incorporating ongoing actuarial review and involvement in the
pricing process and, where relevant, undertaking specific independent reviews of
pricing for schemes and large or complex risks.

2.7.0 Product Filing

Prior approval of the Commission shall be obtained before launching or sales new and
repackaged insurance products

2.8.0 Product Withdrawal and/or Recall

21
 An insurance Operator who intend to withdraw or recall any insurance product
from the market shall:

a. Notify the Commission prior to the recall and give reasons

b. Specify in the notification letter that measure have been put in place to ensure
adequate protection of policyholder.

2.9.0 Disclosures
2.9.1.1 Disclosure involves provision of appropriate and adequate information.
2.9.1.2 The insurer or its representative shall take reasonable steps to ensure that a customer is
given appropriate information about a policy in good time and in
a comprehensible form so that the customer can make an informed decision
about the arrangements proposed.

2.10.0 IncompleteSubmission
2.10.1.1All incomplete submission shall henceforth be treated as non-submission. A fresh
application will thus be required. Applicants are therefore advised to strictly comply with
the procedure and documentary requirements for filing product approval request.
2.10.1.2Failure to provide further clarification or document required by the Commission within a
specified timeline shall result to disapproval of the request and subsequent closure of the
file.
2.10.1.3Any contravention of this circular shail attract requisite sanctions and penalties as
stipulated by extant laws and regulations.
2.10.1.4Any applications adjudged to be materiaily non-compliant with other extant insurance
regulation shall be disapproved and already approved product, shail be recalled.

2.11.0 Other Regulatory Instrument

The Commission's Market Conduct Guidelines, other extant relevant laws and
regulations concerning insurance product development and sales are stiil in force.

p
22

" ,."
\
, .

3.0 OPERATIONS, RATE FILING, COMMISSION AND RETURNS

3.1.0 Operational Manual

3.1.1 An insurer shall, file the following manuals with the Commission for approval:

a. Underwriting policy and procedure manual;

b. New product development manual

c. Claims policy and procedure manual;

d. Complaints policy and procedure manual;

3.1.2 It shall be the responsibility of the Board of Directors and the Chief Executive Officer to
ensure that these manuals are produced and filed with the Commission for approval

3.1.3 Any subsequent review of these manuals shall be filed with the Commission prior to the
coming into effect of the amendments.

3.2.0 Rates Filing:

3.2.1 An Insurer shall submit on annual basis their minimum rates applicable to all classes of
non-life business (other than compulsory insurance business) to the Commission on or
before 1st October of the preceding year. The insurer may commence usage of the rates
after 90(ninety) days of submission where there is no objection or no further clarification is
required from the Commission.

3.2.2 An Insurer is required to file any subsequent changes in the rates earlier submitted not
later than one month prior to usage.

3.3.0 Remunerations and/or Commissions and its Associated Returns

3.3.1 It shall be unlawful for any Insurance Institution to solicit, offer or allow commissions and/or
rebates in the transaction of Insurance Businesses except as provided by the extant
Insurance Regulations. For the avoidance of doubts, Over-Riding Commission, Business
Acquisition fees and other similar fees not provided for by the Nigerian Insurance Laws
shall not be solicited, deducted, offered or paid in any form in respect of any insurance
transaction in Nigeria. Notwithstanding, the administrative charge of not more than 2.5% of
the net premium to lead underwriters shall be permissible."

3.3.2 An Insurer, who grants or receives a rebate, offer, demand, payor receive commission in
any form contrary to Section 53(1) -(3) of the Insurance Act 2003 may, in addition to the

I
 --------- ----------~..."..

penalty prescribed by Sections 53(4) and 76 of the Insurance Act, 2003, be liable to other
penalties as may be prescribed from time to time by the Commission.

3.3.3 An Insurer shall submit a quarterly return on the rebates, brokerage commission and
other fees paid out or payable on all its production during the preceding quarter to the
Commission, not later than the period prescribed by the Commission. The return shall be
in accordance with the format as may be prescribed by the Commission.

3.4.0 Return or Refund Premium and its Associated Returns

3.4.1 For the avoidance of doubt no Insurer, Broker or its Agents shall charge or receive
premiums in excess of the actual premium on an insurance policy that may result in
refunding the excess amount paid or with the intent of returning the excess in any form, by
cash or otherwise to the insured, its agents or any party thereafter.

3.4.2 An Insurance Institution shall keep and maintain a register of return or refund premiums in
hard/soft copy, where transactions are to be entered on the day they are made. The
register shall be presented in such a manner to include: -
a. The date of transaction;
b. Policy number;
c. Policy period;
d. Name of client;
e. Name of insurer/broker/agent;
f. Gross premium received with date;
g. Commission paid with date;
h. Net premium;
i. Excess premium returned/refunded; and
j. Reasons for the return or refund premium.

3.4.3 Similarly, a register of policies cancelled or reversed after the receipt of premium or credit
note from the broker must be kept and maintained by an Insurer. A Broker shall also
maintain a register of cancelled businesses where the premium had earlier been
received, notwithstanding whether it has been remitted to the insurer or not.

3.4.4 All payments for returned premium which must be approved by the CEO or an Executive
Director of the Insurance Company shall be made in the name of the original insured.
Where. the returned premium is to be made through other party, the Commission's
approval is required.

I 24
3.4.5 An Insurance Institution shall submit to the Commission, on a monthly basis, soft copy of
the report of Returned or Refunded Premiums and Cancelled/Reversed businesses
indicated above not later than 15 days from the end of the Month in the format prescri bed
by the Commission and a Quarterly Report in hard copy not later than the period
prescribed by the Commission. The hard copy above must be signed by the Chief
Compliance Officer and Head of Internal Audit of the Insurer.

3.4.6 Where there was no incidence of returned premium in any month, the Institution shall file
a "Nil Return".

3.4.7 Any unexplained payment or where the explanation, in the opinion of the Commission, is
not satisfactory, such payment shall be deemed suspicious and subject to appropriate
treatment under extant laws.

3.5.0 Premium Collections, Remittances and Returns

3.5.1 Insurance institutions shall ensure compliance with the provisions of section 50 of the
Insurance Act 2003.

3.5.2 In consonance with the Insurance Act 2003, there shall be no outstanding premium in the
books of any insurer as cover granted on credit is not recognized by the law.

3.5.2 All insurance covers shall only be provided on a strict 'No Premium No Cover' basis.
Consequently, only cover for which full payment has been received, directly by the Insurer
or indirectly through a duly licensed insurance broker, shall be recognizable as income in
the books of the insurer. Any insurer, who grants cover without having received the full
premium in advance or premium receipt notification from the relevant insurance broker,
shall be liable to a penalty in the sum of the total premium received in respect of the
transaction for the first offence and the sum of two (2) times the premium for subsequent
offence(s) subject to a minimum of N500, 000. 00 in respect of each cover so granted, and
in addition, may be a ground for suspension of the license of the Insurer.

3.5.3 Irrespective of the period of insurance, an Insurer shall ensure that at any point in time,
they have received directly or indirectly through the Insurance Broker, the full premium in
advance for the cover being granted.

3.5.4 An insurance broker shall within 48 hours of receiving insurance premium on behalf of
any insurer, notify the insurer in writing in each case, of the receipt of such insurance
premium. All such notifications shall be accompanied by the broker's credit notes
acknowledging indebtedness to the insurer (or insurers in the case of co-insurance). Upon
the receipt of such credit notes, the insurer shall issue cover and forward the policy
documents along with the related debit notes to the insurance broker. An insurance broker

25
 who fails to notify the insurer of any premium received on his behalf shall be liable to a
penalty in the sum of the total premium received in respect of the transaction for the first
offence and the sum of two (2) times the premium for subsequent offence(s) subject to a
minimum of N500, 000. 00 in each case of failure to notify.

3.5.5 Where premium is paid to Lead Insurer in the case of co-insurance, the lead Insurer shall
act as if it were a broker as prescribed in this Guidelines. A Lead Insurer who fails to
notify all co-insurers of any premium received on their behalf shall be liable to a penalty in
the sum of the total premium in respect of the transaction for the first offence and the sum
of two (2) times the premium for subsequent offence(s) subject to a minimum of N500,
000. 00 in each case of failure to notify.

3.5.6 A lead insurer who fails to remit to other co-insurers premiums received on their behalf
within 30 days from the inception of the risk shall be liable to a penalty in the sum of one
(1) times of the amount of premium not remitted for the first offence and the sum of two (2)
times the premium not remitted for subsequent offence(s) subject to a minimum of N500,
000. 00 for each Co-Insurer.

3.5.7 Notification of unremitted premium - An insurer shall, not later than 30 days from the
end of every quarter, notify the Commission of all premiums acknowledged as having been
received by brokers or lead insurers but not remitted to them on quarterly basis. Any
insurer who fails to render this return shall be liable to a minimum penalty of N250, 000. 00
and additional sum of N20, 000. 00 for each day of default.

3.5.8 An Insurance broker or lead insurer shall, not later than 30 days from the end of every
quarter, render to the Commission returns of premiums received and unremitted to the
insurers on quarterly basis. Any insurance broker who fails to render this return shall be
liable to a minimum penalty of 11.1250,
000. 00 and additional sum of 11.110,
000. 00 for each
day of default.

3.5.9 Remittance of premiums to Reinsurers - All remittances by insurers of reinsurance

premiums to reinsurers shall be in accordance with the terms of the reinsurance contract.
Evidence of such remittances to reinsurers by the insurer shall be a condition for
determining admissibility of reinsurance debtors in the insurer's financial statement.

3.5.10 Premiums for all local facultative placements shall be paid within 14 days of receipt of
premium from the broker or the insured and shall not be subjected to periodic declaration
and reconciliation.

26
•
3.6.0 NAICOM Relationship Officer

3.6.1 Insurance and reinsurance companies shall appoint or have a relationship officer who shall
be the Liaison Officer interfacing with NAICOM and shall be called NAICOM Relationship
Officer

3.6.2 The appointed NAICOM Relationship Officer shall be a senior member of staff not below
the rank of Assistant General Manager (or its equivalent) whose duties shall include but
not limited to:

a. Ensuring that all necessary returns are filed as required by this guidelines

b. Vetting of all retums to the Commission

c. Ensuring compliance with all statutory requirements

d. Ensuring effective dissemination of directives and policy changes as may be

contained in administrative letters, circulars, guidelines and other relevant
statutory documents issued by the Commission from time to time.

e. Giving a quarterly Report to the Commission in respect of the reports under

reference.

3.6.3 The NAICOM Relationship Officer (NRO) who shall report directly to the Chief Executive
Officer shall be at liberty to report to the Commission observations or conducts which are
inconsistent with the statutory provisions and/or standard practice within the insurance
industry.

3.7.0 Compliance with Anti-Money Laundering and Combating Financing of Terrorism

(AMLlCFT) Requirements:

3.7.1 All Insurance Institutions are required to comply with extant laws and regulations on Anti-
Money laundering and Combating Financing of Terrorism (AMLlCFT).

3.8.0. Other Requirements

3.8.1 Commission on Group Life

The Commission on Group Life Assurance Business shall not exceed the maximum as
prescribed by the Commission.

3.8.2 Appointment of Insurance Agent

27
..-
An insurance company shall not accept business from an agent not assigned to the company
in the agent's license issued by the Commission.

3.8.3 ISS Levy

An insurance institution shall not impose an additional charge or transfer to the clients the cost
of the ISS Levy payable in respect of the gross premium income.

3.8.4 Authorization Confirmation Requirement:

'An insurance institution shall state clearly an Authorization Confirmation Footer in its letter-
headed papers, brochures, pamphlets, leaflets, website and any publication thereof. The clause
shall read: "Authorised and Regulated by the National Insurance Commission and state the RIC
or RBC or RAC or RIA No xxxxx."

3.9.0 Returnsin Respectof Aviation InsurancePlacementsby Brokers

Where an aviation insurance placement and premium payment was through an Insurance
Broker, it shall be the duty of the Broker to submit to the Commission on Occurrence
Basis, the proposed schedule of premium remittance not later than 72 hours from the date
of the receipt of the premium from the insured.

3.10.0 Adequacy of Data for Underwriting Purpose

No insurer shall participate in any insurance placement/underwriting without first obtaining

adequate and sufficient information/data on the proposed subject matter of insurance
which would include but not limited to names and relevant data on the property or lives
assured, as well as specified benefits on which the premium is computed.

3.11.0 Other Relevant Extant Laws, Regulations, etc.

All insurance institutions are required to comply with any other extant laws, regulations,
guidelines and circulars applicable for the carrying out of Insurance Business in Nigeria.

28
..,
4.0 CLAIMS MANAGEMENT

4.1.0 General Requirements

4.1.1 This requires each insurer to develop, document and implement claims management
policies and procedures for all of its lines of business.

4.1.2 This takes into consideration international standards and best practice and addresses two
inter-related aspects of the claims management function:

a. Market conduct: the ways in which the insurer communicates and interacts with
the consumer; and

b. Internal controls: the means to ensure that the preceding functions work
effectively.

4.1.3 This Guidelines and the documented claims policies and procedures of an insurer will
be considered in assessing unreasonable delay in the settlement of claims by such insurer
for purposes of the Insurance Act 2003. An insurer shall include as part of its policies and
procedures, settlement timelines for claims for all types of business and shall ensure that
these timelines reflect the principles of good market conduct.

4.2.0 Claims Procedure

4.2.1 Every Insurance institution shall:

a. Ensure that claims settlement procedures are clearly defined and appropriately
communicated to the insured.

b. Set out timelines in its policy and procedure manual within which to settle all
admitted claims.

c. Have a fair and transparent claims handling and claims dispute resolution
procedures in place.

d. Maintain written/digital documentation on its claims handling process.

e. Inform claimants about procedures, formalities and common timeframes for

claims settlement.

f. Provide claimants with information about the status of their claims in a timely
manner.

g. Ensure that Assessors and Adjusters are given independence to operate.

29
 •

.,.
h. Explain to its clients their obligation to notify claims promptly and to disclose all
material facts and advise subsequent developments as soon as possible.

i. Give prompt advice to the clients on any requirements concerning the claims

4.2.2 The insurer shall ensure that the claims settlement process is handled fairly, promptly and
efficiently and in accordance with the terms of the insurance contract and company policy.
The insurer, broker or agent shall have documented intemal policies and procedures for
the fair, prompt and efficient handling of claims in accordance with the terms of the
insurance contract and company policy. Such policies and procedures shall be approved
by the Board of Directors and reviewed and updated periodically. The insurer, broker or
agent shall ensure that staff are aware of and adhere to these procedures.

4.2.3 Timely and accurate claim processing information shall be provided to the policyholder or
claimant at all times.

4.3.0 Claims Notification

4.3.1 Notification of the claims may be made in line with the policy conditions, provided that the
claimant shall use any fast means of communication to the insurer, designated contact
person or department or through the intermediary by:
a. Direct reporting
b. Telephone call
c. Text message
d. Email
e. Fax
f. Letter
g. Use of official social site or website

4.3.2 Provided that where the mode of communications used lacks written evidence, the
insurer shall inform the claimant of the need to follow up such communications with a
letter and/or completion of the appropriate claims form.

4.3.3 Where claims notification (or an incident that may give rise to claims) is received by an
intermediary, such notification shall immediately but not later than 2 working days be
transmitted to the insurer.

4.3.4 When a policyholder or claimant reports a loss, the insurer, broker or agent shall make
available an appropriate claims form for the class of business, with clear instructions as t~

30
.,.
how the form shall be completed. This shall be done within 2 working days of receiving
notification of a claim.

4.3.5 When a loss is reported, the insurer, broker or agent shall advise the policyholder or
claimant to co-operate in the investigation by providing the insurer with all relevant
information to ensure timely processing of the transaction.

4.3.6 If the insurance institution requires specific documents from policyholder or claimant
when a claim is filed, such as copies of official documents regarding the loss or any other
relevant form of evidence, the insurer, broker or agent shall provide a list of these
requirements with the claims form.

4.3.7 If a broker or agent is the initial contact for the policyholder, the broker or agent shall
forward the completed claims form to the insurer within 2 working days from the date of
receipt of the completed claims form.

4.3.8 An insurer shall respond promptly to notification of a claim. The insurer shall
acknowledge receipt of the claims form within 2 working days.

4.3.9 The insurer shall indicate to the policyholder or claimant the relevant department or
contact person to whom all information or enquiries must be channelled. The insurer's
claims department, the broker or agent shall be easily accessible.

4.3.10 The insurer shall maintain a checklist for all relevant documents needed. This shall be
completed and dated for all claims.

4.3.11 The insurer shall advise the policyholder of the consequences of submitting a false or
incomplete statement (which could include criminal prosecution).

4.3.12 If a claim involves more than one insurer on the risk, the lead insurer or broker, where
applicable, shall contact the other insurer(s) within 2 working days of the initial
notification.

4.3.13 The insurer shall inform the policyholder or claimant if an independent adjuster will be
engaged to conduct a survey and/or an assessment. Where the insurer uses loss
adjusters or other surveyors, the insurer must be satisfied as to their competence and
qualifications and shall use only persons who are registered for these purposes. The
insurer shall hire the adjuster within 2 working days from the date of receipt of the
completed claims form accompanied by all relevant documentation. The adjuster shall
submit the assessment of damage report within ten (10) working days after receiving the
instructions from the insurer. In large and complex special risk losses, a specified extra
grace period might be allowed; however, the claimant shall be formally notified of this
exception and evidence of concurrence obtained.

4.3.14 Within five (5) working days of receipt of the assessment report, the insurer shall notify

/31
..
the claimant as to its acceptance or rejection of the claims.

4.3.15 In instances where the insurer does not engage the services of an adjuster, the insurer
shall conduct an investigation into the reported loss within five (5) working days of receipt
of a claims form accompanied by all relevant documentation.

4.3.16 An Insurance intermediary shall advise the client without delay of the insurer's decision or
otherwise on a claim; and give all reasonable assistance to the client in pursuing his
claims provided that, the intermediary shall not take up recovery assignment on a policy
contract which has not been serviced through him or shall not work as a claims
consultant for a policy which has not been serviced through him.

4.3.17 An insurer shall not settle insurance claims in which it did not issue the policy or
participate as co-insurer in an attempt to entice a policyholder whose claim was rejected,
If an insurer has a genuine reason why such claims shall be paid, it shall be reported to
the appropriate authorities.

4.4.0 Claims Processing

4.4.1 On receipt of a claim, the insurer shall establish a claims file which at a minimum shall
contain the following information:

a. Policy number;

b. Name of policyholder or claimant;

c. Information on claimants;

d. Description of the loss;

e. Claim file number;

f. Claim form;

g. Checklist of all relevant documents;

h. Progress report schedule;

i. Date of loss or accident

j. Opening date of the file;

k. Initial value of the claim reserve and any subsequent changes;

I. Reporting date;

m. Request for an adjuster or investigator;

n. Date on which the adjuster's report is received;

I 32
..
o. Electronic and/or paper copy of the adjusters' and investigators' reports where
applicable;

p. Dates and amounts of payments;

q. Date of denial, if applicable;

r. Reasons for denial or reduced settlement;

s. Name of broker or agent, if applicable;

t. Documents recording contacts with the policyholder;

u. Documented evidence of agreements or settlements;

v. Claims discharge form and/or acceptance form;

w. Date of file closure;

x. A record of all communications whether formal or informal; and

y. Any other information pertinent to the claim.

4.4.2 The insurer shall update the claims file and document all actions taken as part of the
claims management process in order to be able to address questions that may arise
conceming the handling and settlement of the claims.

4.4.3 If it is determined that the claim is not covered by the insurance policy or denied, the
insurer shall notify the policyholder or claimant in writing stating the policy provisions,
conditions or exclusions on which the claim is being denied. This shall be done within a
reasonable time/as quickly as possible.

4.4.4 The insurer shall not dissuade policyholders or claimants from obtaining the services of a
solicitor or adjuster given that the established claims processes have been followed but
processes or decision not satisfactory.

4.4.5 The insurer shall keep the policyholder or claimant informed of the status of the claims and
shall provide explanations for any delay.

4.4.6 The insurer shall inform the policyholder or claimant when it decides to appoint an
independent expert (for exampie, loss adjusters, solicitors, surveyors) and explain the
reasons and role of these persons in the settlement of the claims.

4.4.7 The insurer shall implement a mqnagement reporting system to track the timeliness of
claims settlement and other pertinent information. Management shall receive and review
periodic reports on claims which at a minimum shall include:

a. The age analysis of outstanding claims;

i 33
..
b. Claim reported but not yet documented or adjusted;

c. Claims reported, adjusted but not yet accepted;

d. Claims accepted but not yet paid; and

e. Adequacy of claims reserving.

4.5.0 Claims Settlement

4.5.1 When an insurer makes an offer of settlement, the insurer shall disclose to the
policyholder or claimant the basis used for the offer of settlement.

4.5.2 After acceptance of liability and an agreement has been reached between the insurer and
the policyholder or claimant on the amount of the claim, the insurer shall cause a
discharge voucher to be issued not later than five (5) working days from the date of
acceptance of liability.

4.5.3 In the case of claims settlement procedures involving other insurers, the claim shall be
settled with the policyholder or claimant in an appropriate time period while potential
disputes with respect to subrogation between insurers are being resolved

4.5.4 The insurer shall ensure that once an agreement has been reached and payment effected
a copy of the release signed by the policyholder or claimant shall be retained in the
policyholder's or claimant's file.

4.5.5 Insurers are required to furnish the Commission with data on paid claims (indicating
nature of business such as direct, indirect, co-insurance and facultative reinsurance) and
outstanding claims on quarterly basis. Such information shall be submitted on or before
the 15th days from the end of the quarter.

4.6.0 Internal Controls for Claims Management

4.6.1 There shall be a complete record of each claims transaction which evidences adherence to
this Guidelines.

4.6.2 An insurer shall have documented internal policies and procedures for the fair, prompt and
efficient handling of claims. Such policies shall be approved by the Board of Directors and
reviewed at periodic intervals.

4.6.3 The insurer shall ensure that staff are aware of and adhere to these procedures. An officer
of the insurer shall be responsible for the maintenance of the policies, manual and
procedures and shall ensure that the manual is up-to- date.

~
34
. ""

4.6.4 Information to be detailed in the policies and procedures manual shall, at a minimum,
include:

a. Clearly defined levels of authority;

b. Claims settlement procedures, including loss estimation and investigation

procedures;

c. Procedure for rejecting claims;

d. Dispute resolution procedures;

e. Method for monitoring compliance with claims management processes and

procedures; and

f. Segregation of duties in the claims department.

g. Written intemal policies and procedures for combating fraud associated with
claims as considered appropriate for its level of exposure and vulnerabilities.
These procedures will serve to minimise the incidence of fraudulent claims and
the resulting rise in premium

4.6.5 An insurer shall ensure that any of its staff involved in the claims handling process possess
suitable qualifications and/or experience. The insurer, broker or agent shall provide training
on an ongoing basis for the staff.

4.6.6 An insurer shall ensure that the intemal auditor's function covers review of the claims
settlement process and reserving for claims.

4.6.7 An insurer shall establish, implement and update a statistical database to track how long
they take to settle claims as well as the trends in settlements and expenses

4.6.8 The Senior Management shall receive periodic reports on the time taken to process claims
and appropriate action taken where necessary. The Board of Directors shall also receive
reports on a Quarterly basis on claims management.

4.6.9 An insurer shall ensure that members of staff in their claims department are aware of and
follow the company's intemal policies and procedures on fraud and are adequately trained
to recognize the early warning indicators.

4.6.10 An insurer shall ensure that periodic reviews are done on the claims assessment process.
This shall include revisiting the valuation and assessment basis for certain types of claims
on an ongoing basis and having the intemal audit department conduct examinations on the
process.

4.6.11 An insurer shall establish procedures to detect and prevent the categories of fraud which
shall include but not limited to:

35
..
a. Fraud against the insurer by policyholders

b. Fraud by the Intermediaries against the Insurer and/or policyholder.

c. Fraud against the Insurer by its director or employee on his or her own or in
collusion with parties internal or external to the Insurer.

4.7.0 Complaints and Dispute Resolution

4.7.1 Each insurance institution shall establish well-documented policies, procedures and
processes for complaint and dispute management to ensure, as far as possible, that such
situations are resolved promptly and fairly. At a minimum, the procedures shall include:

a. Acknowledgement of receipt of the complaint within 2 working days from the

receipt of correspondence

b. Details of how the complainants will be kept informed of the status of their
complaint;

c. Provisions for Arbitration Clause in the policy document. It shall be noted that
the Arbitrator shall not:

i. be a former employee of an insurer/intermediary;

ii. simultaneously perform other functions which could affect their

independence; and;

iii. be subjected to unnecessary influence or instruction from the

insu rers/intermed iaries.

d. Information to complainants on how and when to resort to the markets dispute

resolution mechanism and ultimately the Commission's Complaints Bureau as
an alternative dispute resolution mechanism or litigation; and

e. Establishment of the timeline for sending a final response in writing to the

complainant.

f. Keep record for each complaint received and the measures taken for its resolution

4.7.2 Insurance institutions shall ensure that policies, and renewal documents, contain the
complaint handling procedures.

4.7.3 Insurance institutions shall accept complaints whether intimated by phone or in writing.

4.7.4 An Insurance Institution shall ensure that complaints are dealt with expeditiously. It shall
be the responsibility of the Top Management to ensure the management of all
..
complaints.

4.8.0 Payment of Claims Recoveries

4.8.1 An insurer shall settle its proportion of the claim on co-insurance, facultative reinsurance
or retrocession obligations not later than ten days from the receipt of the request for
refund (payment) from the lead insurer/cedant where the lead/cedant had settled same.

4.8.2 An insurer shall submit to the Commission a quarterly return on all outstanding balances
from other insurer(s) and reinsurers during the preceding quarter, not later than 14 days
from the end of the quarter in the prescribed form by the Cornmission.

4.8.3 Insurer(s) shall settle its portion of a loss adjuster's fee not later than 10 days after the
submission of the adjuster's report to the underwriter(s). Where a lead insurer pays the
fee on behalf of the other co-insurers, the co-insurers shall reimburse the lead their
respective proportion of the fee within 5 working days of the settlement of the adjuster by
the lead insurer.

5.0 APPOINTMENT, OPERATION, EXPANSION AND DOCUMENTATION

5.1.0 Appointment of Principal Officers

6.1.1 An Insurance Institution shall submit a proposal for the appointment of the following and
obtain approval prior to the appointment:

a. Executive Directors;

b. Company Secretaries;

c. Management staff from AGM and above;

5.1.2 Stages for Approval: There shall be two stages of approval:

6.1.2.1 Stage 1: No Objection prior to Appointment: Requirement for Letter of 'No

Objection' from Insurance Institutions.

a. Five copies of Curriculum Vitae

b. Copies of Credentials

c. Board Resolution proposing the candidate

d. Consent letter by the proposed candidate that the application is served with
his/her knowledge and consent

37
5.1.2.2 Stage 2: Final Approval: The following documents shall be submitted:

a. A completed Personal History Statement (PHS) Form (for Executive Directors

and Company Secretaries only).

b. Copy of the terms of employment of the candidate (offer and acceptance)

c. Handover Note and Exit report of the former Managing Director/CEO to be

submitted within 30 days of exit (for MD/CEO only).

d. Board Resolution in respect of the appointment

e. Bank Verification Number (BVN) of the candidate

f. Sworn affidavit of non-disqualification in line with Section 12(1) of the Insurance Act
2003

g. Evidence of disengagement from previous employment and Acceptance of

same/Redeployment Letter where applicable

h. Evidence of current membership of Chartered Insurance Institute of Nigeria

(CIIN) for all Technical Staff including Marketing.

5.1.3 For Non-Executive Directors

5.1.3.1. An Insurance Institution shall submit an application for approval of the appointment of a
Non-Executive Director prior to commencement in Board affairs. The application shall be
accompanied with the following documents:

a. Board Resolution in respect of the appointment.

b. A completed Personal History Statement (PHS) form

c. Curriculum Vitae

d. Statement of Value addition of the proposed Non-Executive Director by the

Company (showing the basis of his engagement)

e. Bank Verification Number (BVN)

f. Sworn affidavit of non-disqualification in line with Section 12(1) of the Insurance Act
2003.

5.2.0 Qualifications

5.2.1 Insurance and reinsurance companies

38
5.2.1.1 The proposed Managing Director/CEO of Insurance/Reinsurance Company must
satisfy the conditions stated in Section 31 of the Insurance Regulation, 2003.

5.2.1.2 An Executive Director (Technical/Operations) of Insurance and Reinsurance

companies must have the same qualification requirements as that of the MD/CEO.

5.2.2 Insurance Brokers

5.2.2.1 Refer to relevant section of the Insurance Law and Regulation 2003.

5.2.3 Loss Adjusters

5.2.3.1 Refer to relevant section of the Insurance Law and Regulation 2003.

5.3.0 Heads of Department

5.3.1 In addition to such other departments as may be required to be maintained by insurers and
reinsurers by any law and/or regulations for the time being in force, all insurers and
reinsurers shall have and maintain the following departments:

a. Underwriting Department

b. Claims Department

c. Risk Management Department;

d. Audit Department;

e. Information Technology Department;

f. Actuarial Department,

g. Other relevant Technical Departments.

5.3.2 Requirements for Granting Approval or No Objection for Branch Heads and Heads
of Departments (HOD)

5.3.2.1 The HODs must be persons having professional qualifications and experience in the
relevant fields.

5.3.2.2 For Technical Departments, the respective heads must submit:

a. Curriculum Vitae

b. Photocopies of Credentials (Academic and Professional) for Executive Directors

c. Evidence of current membership of the CIIN

I 39
• d. Copy of the proposed terms of employment

e. Sworn affidavit that the proposed head of department has not been convicted of
fraud or any other offence.

5.4.0. Branch/Regional and/or Foreign Offices

5.4.1 Approval by the Commission must be obtained before the establishment of any branch
office

5.4.2 For effective service delivery, a branch office shall, at minimum, have the followings:

a. Branch head who shall possess:

i. minimum of five (5) years relevant work experience; Or

ii. Minimum of first degree/HND; or

iii. Professional qualification/Competence in insurance; and the proposed branch head

shall rneet the requirements spelt out in Section 33 of the Insurance Regulation,
2003
b. Such a branch shall have relevant IT infrastructure which will enable seamless
interface with the Head Office.

c. Other necessary facilities and relevant officer(s) as may be required for the effective
administration and control of the activities of the office.

5.4.3 Any insurance institutions operating or intending to operate an off-shore branch or

subsidiary shall seek and obtain approval from the Commission to commence or continue
business. In granting approval for offshore office, the Commission will consider the
following:

a. Source of finance for the establishment of the off-shore office

b. Evidence of "No Objection" granted by the Regulatory Authority of the host

Country where offshore branch is to be established.

c. Feasibility study report/five (5) years business plan

d. Management profile of the proposed offshore branch

e. Evidence of having at least three (3) existing branch offices in other geo-political
zones of the Federation.

f. Quarterly and annual returns on the operations of such off-shores or subsidiaries

shall be filed with the Commission

j 40
5.4.4 Agency Branch Outlet

a. Approval of the Commission must be obtained before the establishment of any

sales/agency outlet

b. Proposed head (CV & Credentials) of the agency/sales office

c. Purpose/reason for the outlet

d. Address/location

e. Board resolution in this regard

f. An undertaken that the office will not be used for underwriting purposes.

5.4.5 Requirements for closure of branch office

Approval of the Commission must be obtained before the closure of any branch office and
such applications stating the reason(s) for closure must be accompanied with the following
documents:

(i) Board Resolution approving the closure

(ii) Evidence of Publication in at least two (2) National Newspapers

(iii) New Address where applicable

(iv) Conspicuous Notice on the closure at the Branch Office

(v) Any other information as may be required by the Commission

Note: Companies are required to send SMS to existing policy holders notifying them of the
change or closure of the branch.

5.5.0 Change of Name: Application for change of name shall be in two (2) stages:

5.5.1 Stage 1: Application for Letter of 'No Objection'

5.5.1.1 The following shall be submitted to the Commission for letter of "No Objection":

a. Extract of Board Resolutions as to the decision to change the name.

b. Search from CAC confirming the availability of name

c. Evidence of payment of the appropriate fee as may be prescribed by the

Commission

j 41
..
d. Publish intention of change of name in at least two widely read National
Newspapers and forward evidence of publication accompanied by an
undertaken that there was No Objection from the general public.

5.5.1.2 Stage 2: Upon securing a letter of "No Objection" from the Commission, the company
shall submit the following for final approval:

a. Certified true copy of certificate of change of name

b. Surrender certificate earlier issued by the Commission bearing the former name.

5.5.2 Change of Address

5.5.2.1 The following shall apply with respect to Change of Corporate Head Office:

a. Board Resolution on the proposed change

b. CAC documents in respect of change

c. Newspaper publication notifying the public in at ieast two National Newspapers

for a minimum of 21 days prior to movement.

5.6.0 Change of Ownership/Directorship:

5.6.1 All changes in ownership of an insurance institution that will entitle any person to control
(directly or indirectly) less than 10% holding of its shares must be communicated to the
Commission before such transactions are concluded.

5.6.2 All changes in ownership of an insurance institution that will entitle any person to control
(directly or indirectly) above 10% holding of its shares must obtained an approval ("No
Objection") from the Commission before such transactions are concluded.

5.6.3 The application for "No Objection" of change of ownership by any insurance institutions
stated in paragraph 6.6.2 shall be accompanied with the following supporting documents in
addition to requirements as contained in Section 30 of the Insurance Act 2003:

a. Evidence of Board approval of the proposed transaction.

b. The experience of the acquiring entity in Insurance or related field if any.

c. The source of fund for the acquisition

I 42
•
d. The draft MOU between the parties - where applicable

e. Any proposed changes in the Management of the Company

f. Three (3) years business plan

g. Copy of the due diligence report conducted by the acquiring party (on each party
in case of merger)

h. Profile of the acquiring entity

5.6.4 Note that other documentation and/or due diligence may be required, in addition to the
requirement stated in paragraph 6.6.3, for change of ownership that will entitle any person to
control (directly or indirectly) more than 50% holding of the shares of the insurance institution
concerned.

6.0 REGISTRATION AND DOCUMENTATION

6.1.0 CHECKLIST FOR INSURANCE & REINSURANCE COMPANY REGISTRATION

6.1.1 Stage 1: Preliminary Stage

a. Submission of Letter of Intent from the Promoter(s).

b. Application fee (see schedule A)

c. Request the Promoter(s) to provide the following:

i. Profile of the Directors.

ii. Proposed Company name.

iii. Draft Memorandum and Articles of Association (MEMART) of the Proposed

Company.

iv. Sworn Affidavit of Financial Soundness of the Shareholders

v. Evidence of financial soundness of the Promoterllnvestor/shareholders

vi. Evidence of Confirmation (Clean Bill of Health) from the Primary Regulator
and Approval to the Promoter/Joint Venture Partners by the Regulator
(where necessary).

vii. Holding Company Structure and Funding - if Company is a Part of Holding

Company.

I 43
..
viii. The Class of Insurance (whether General/Life and/or Reinsurance Business)
to be transacted.

d. Pre-Qualification Interview by Directors

6.1.2 Stage 2: Application Stage

6.1.2.1 Submission of Completed Registration Application Form along with the following:

a. Certificate of Incorporation of a Limited Liability Company.

b. Certified True Copy of the Memorandum and Articles of Association

(MERMART) of the Company.

c. Fully completed CAC Form 1.1 (Application for Registration) which comprises of:

i. CAC 2

ii. CAC 2.1

iii. CAC 3

iv. CAC 4

v. CAC 7

d. 5-Year Business Plan and Feasibility Study on the proposed Class of Business
and Target Market which shall contain the following as a minimum:

I. Executive summary

ii. Background of the Company.

iii. Vision, Mission and Objectives of the Company

iv. Business overview

v. Operation plan

vi. Competitive analysis

vii. Management team

viii. Financial plan which shall include:

Expenses budget

Sales/income forecast

I 44
..
Profit and loss statement

Balance sheet

Cash flow statement

Break-even projection.

ix. Assumptions and projections

x. Market analysis

xi. Product and services.

e. Information Technology infrastructure (IT Tools)

f. Underwriting and Marketing Procedures and Processes

g. Investment, Accounting, Management Information System (MIS) Reporting etc.

h. Complaint and Grievance Management Systems and Procedures.

i. SLA/MOU on proposed shared services (if any) {refer to section 9 (1-2) of prudential
guidelines 2015 for guidance}.

j. Evidence of Payment of Non-refundable Application Fee (N5,000,000.00 subject to

Commission's review)

k. Completed personal history forms of proposed directors

I. Details of the proposed MD/CEO

m. A Sworn Declaration of Non-Disqualification of the proposed Directors in

accordance with Section 12(1) of the Insurance Act 2003 shall be submitted

n. The company's proposed organogram

o. Evidence of good corporate governance and control framework.

6.1.2.2 The reinsurance business intended to be transacted and sample of Cover

Notes and/or contract wordings

6.1.2.3 Submission of specimen documents of the following (where applicable):

i. Proposal forms

45
..
ii. Policy documents

iii. Cover notes / Certificates

iv. Claims forms

v. Table of premium rates and their basis

6.1.2.4 Operational Manuals (Underwriting, claims, Product Development and

Complaint Handling respectively)

6.1.2.5 Publication of the Company's name and Promoters/Directors in National

Dailies for public notice

6.1.2.6 Pre-Registration Interview

6.1.2.7 Pre-registration on-site inspection of Principal/Head Office

6.1.2.8 Copy of CEO's and EDs' appointment and acceptance letters with recent
identification documents

6.1.2.9 Copy of the CEO's and EDs resignation of appointment in the former place of
employment and the acceptance of the same.

6.1.3 Stage 3: Final Stage

6.1.3.1 Evidence of compliance with Minimum Paid-Up Capital Requirements:

6.1.3.2 Evidence of Minimum Deposit with the Central Bank of Nigeria (i.e. 50% of
Paid-Up Share Capital). Note that NAICOM is to issue a letter of authorization to
CBN on the payment of the Statutory Minimum Deposit (If the Commission is
satisfied with stage 2 requirements/documentation).

6.1.3.3 Board resolution proposing candidates for the position of MD/CEO with
consent letters from the proposed candidate that the application is served with
his/her knowledge and consents respectively.

6.1.3.4 Evidence of adequate and valid reinsurance/retrocession arrangement of the

company

6.1.3.5 Statement as to the method of distributing profits as between policyholders

and shareholders in the case of life business (Where Applicable)

46
..
6.1.3.6 An Actuary statement or report as to the calculation of premium Rates and
Non- forfeiture values (in case of life), terms and conditions to be offered and
other related issues.

a. A sworn affidavit report by the company of having received "No Objection" from
the public after 21 days' notice.

b. Evidence of having put in place an appropriate Information Technology

Infrastructure and appoint a Head of IT with relevant qualification.

c. Evidence of appointment/identification of key personnel, senior

management/head of departments which is to be submitted to the Commission
for approval

d. Evidence of payment of Registration Fee

e. Issuance of Certificate of Registration/License

6.2 Checklist for Registration on Insurance Brokers

6.2.2 Stage 1

6.2.2.1 Copy of CAC form C02, C03, CO?

6.2.2.2 Memo & Article of Association.

6.2.2.3 Evidence of Incorporation as a limited liability Company.

6.2.2.4 Completed Application form 20

6.2.2.5 Application fee (see schedule A)

6.2.2.6 Sworn declaration by the Director as to location of principal place of

business.

6.2.2.7 Sworn declaration by each of the Directors as to their financial interest in

other financial institutions

6.2.2.8 Five Years Business Plans

6.2.2.9 CV and credentials of the proposed CEO.

6.2.2.10 CVs of All Directors

47
. .
6.2.2.11 Directors profile with detail of employment history for the past ten years.

6.2.2.12 Evidence of Registration of the CEO with CIIN

6.2.2.13 Evidence of professional qualification or related course.

6.2.2.14 Bank Verification Number (BVN) of all Directors

6.2.2.15 Completed personal History statement form from all the Directors.

6.2.3 Stage 2

6.2.3.1 Evidence of resignation of the proposed CEO from previous employment.

6.2.3.2 Letter of offer of appointment and acceptance of offer of proposed CEO.

6.2.4 Stage 3

6.2.4.1 Pre-registration Inspection

6.2.4.2 Payment of Registration/Licence fee (see schedule A)

6.2.4.3 Evidence of Current subscription with CIIN

6.2.4.4 Professional Indemnity covers of not less than N10M.

NOTE: The application and licensing fee are subject to change as may be determined by the
Commission from time to time.

6.3 Check List for the Registration of Loss Adjuster

6.3.2 Stage 1

6.3.2.1 Copy of CAC form C02, C06, CO?

6.3.2.2 Memo & Article of Association.

6.3.2.3 Evidence of Incorporation as a limited liability Company

48
- .
6.3.2.4 Completed Application form

6.3.2.5 Evidence of payment of Application fee (see schedule A)

6.3.2.6 Sworn declaration by the Director as to location of principal place of

business.

6.3.2.7 Sworn declaration by all the Directors as to their financial interest in other
financial Institutions.

6.3.2.8 Evidence of the Company's Registration with ILAN

6.3.2.9 Evidence of registration of the CEO with CIIN

6.3.2.10 CV and credentials of the proposed CEO.

6.3.2.11 Evidence of professional qualification.

6.3.2.12 Directors profile with detail of employment history for the past ten years.

6.3.2.13 Five-year business plans

6.3.2.14 BVN numbers of all directors

6.3.2.15 Completed personal History form for all the Directors including the proposed
MD/CEO.

6.3.3 Stage 2

6.3.3.1 Evidence of resignation of the proposed CEO from previous employment

6.3.3.2 Letter of offer of appointment and acceptance of offer of proposed CEO.

6.3.4 Stage 3

6.3.4.1 Pre-registration Inspection

6.3.4.2 Professional Indemnity cover of not less than N10M

6.3.4.3 Payment of Registration/License fee (see schedule A)

6.3.4.4 Evidence of current Subscription of CEO with ILAN

6.3.4.5 Evidence of current subscription of CEO with CIIN

NOTE: The application and licensing fee are subject to change as may be determined by the
Commission from time to time.

49
r--------------- -- ..
_-

7.4.0 Checklist for Separation of Composite Licence

7.4.1 Stage 1

a. Submission of letter of intent from the composite company

b. Board resolution on the separation of the company

c. Proposed names of the two companies

d. Names and current CVs of the proposed CEOs

e. Names and profiles of top management staff for the two companies

f. Details of the present/future share service areas between the companies

g. Proposed principal place of business

h. Solvency status of the two companies after separation

i. Pre-separation financial statement of the company

j. Post-separation financial statement of the two companies respectively

k. For public quoted companies, AGM endorsement of the separation

7.4.2 Stage 2

a. Evidence of incorporation for the new company

b. New/amended MEMART showing Life and General Insurance Business

c. Swom declaration of non-disqualification of the proposed directors and top

management staff of the company (ies) where applicable

d. Personal history form of all new directors and top management staff

e. Copy of notice of intention to separate the companies in at least five National

Newspapers

f. Copy of the CEOs, Executive Director(s) and other top management appointment
letters (where applicable)

7.5.0 Checklist For Agency Registration (Fresh Licence)

a. Duly Completed Application Form 26

50
,----------------- - -- -------

'.

b. Receipt of Payment of Application Fee (W2, 000.00)

c. Tax Clearance

d. Letter of Authority from Principal(s)

e. Curriculum Vitae & Credentials of Applicant

f. Certificate of Proficiency by CIIN

g. Declaration as to Telephone Number and/or E-mail Address

7.6.0 Checklist for the Renewal of Brokerage Licence

a. Duly Completed Application Form 20

b. Evidence (receipt) of payment of Renewal Fee

c. Current Tax Clearance Certificate (of at least the year before the previous
accounting year end)

d. Professional Indemnity Policy running concurrently with the life span of the
licence requested

e. Certificate of Oath from External Auditor (Form 29)

f. Statutory Declaration on Oath which shall contain the following:

I. Company does not hold financial interest in excess of 10% in an

insurance/reinsurance company in Nigeria

il. Company does not hold directly or indirectly financial interest in any loss
adjusting company

iiI. Sworn declaration of reasonable care to secure continuous compliance with

the provisions of the Insurance Act 2003 and other relevant guidelines issued
by the Commission and authenticity of any statement, information, book or
any document whatsoever submitted.

iv. Sworn affidavit by the MD/CEO deposing that the broker has remitted all
premium received to the insurer(s)/reinsurer(s) concerned.

g. Other declaration which shall contain the following:

I. That the company kept proper records of all business transacted during the
preceding years
51
• '0

ii.Company's premium income

iii. Company's brokerage income

iv. that no director is an employee of any insurer/reinsurer

v. Current contact details of the CEO and One Top Management Staff

vi. where licence is to be collected by the broker (any of NAICOM's Offices)

h. Summary of business transacted

i. Evidence of regular (annual) payment of ISS levy

j. Original Copy of the expired certificate

k. Evidence of Current Membership of NCRIS

I. Evidence that the CEO is a current member of CiiN

m. Evidence of submission of the audited financial statements for the preceding

year.

n. Where any licence anniversary date falls between January to June, evidence of
submission of audited financial statement prior to 'm' above is required.

o. Evidence of the Commission's approval of the Audited Financial Statements for

the year prior to 'm or n' above.

p. Evidence of regular filing or submission of the necessary returns shall be a

prerequisite for consideration of application for renewal of the license or
certificate.

q. Annual sworn Declaration by the MD/CEO that the company would continue to
be run and managed in accordance with the provisions of the insurance laws
and regulations of Nigeria.

r. Payment of any other outstanding fee/penalty (if applicable)

7.7.0 Checklist for the Renewal of Loss Adjusters Licence

a. Duly completed Application Form 22

b. Receipt (Evidence) of payment of renewal fee

52
r----------------- -

'.

c. Current Tax Clearance Certificate (of at least the year before the previous
accounting year- end)

d. Declaration of Professional Fees earned in the preceding year

e. Sworn Declaration by the CEO as to location of principal place of business

f. Evidence that the CEO is a current member of CIIN

g. Declaration of ownership interest

h. Evidence of current membership of ILAN

i. Summary of Business Transacted

j. Evidence of payment of ISS Levy

k. Original Copy of the Expired Certificate

I. Sworn declaration of reasonable care to secure continuous compliance with the

provisions of the Insurance Act 2003 and other relevant guidelines issued by the
Commission and authenticity of any statement, information, book or any
document whatsoever submitted.

m. Declaration of records

n. Declaration of not engaging in any professional misconduct

o. CV & Credentials of the CEO (if there is any change)

p. Evidence of regular filing or submission of the necessary returns shall be a

prerequisite for consideration of application for renewal of the license or
certificate.

q. Declaration of where licence is to be collected by Loss Adjuster (any of

NAICOM's Offices)

r. Annual sworn Declaration by the MD/CEO that the company would continue to be
run and managed in accordance with the provisions of the insurance laws and
regulations of Nigeria.

s. Payment of any other outstanding fee/penalty (if applicable)

7.8.0 Checklist for Renewal of Agency Licence

a. Duly Completed Application Form 26

53
 .
..

'.
b. Receipt of Payment of Renewal Fee

c. Current Tax Clearance (of at least the year before the previous accounting year-
end)

d. Letter of Authority from Principal(s)

e. Copy of Expired Licence

f. Declaration as to Telephone Number and/or E-mail Address

SCHEDULE A

1 Application Fees (non-refundable) N

Reinsurance company 5,000,000.00

Life insurance company 5,000,000.00

General insurance company 5,000,000.00

Brokers 250,000.00

Loss adjusters 200,000.00

Agent 2000.00

2 Registration/Licencing Fees

Reinsurance company 1% of paid-up share capital

Life insurance company 1% of paid-up share capital I

General insurance company 1% of paid-up share capital

Brokers 2,250,000.00

Loss adjusters 200,000.00

Agent n/a

3 Re-registration/appeal Fee:

Brokers 250,000.00 (j)

/f
54
4 Renewal Fees:

Brokers 200,000.00

Loss adjusters 150,000.00

Agents 2,000.00

5 Change of Name:

Insurance/Reinsurance company 25,000.00

Brokers 25,000.00

Loss adjusters 25,000.00

6 Change of Address

Reinsurance company n/a

Life insurance company n/a

General insurance company n/a

Brokers n/a

Loss adjusters n/a

7 Change of ownership (acquiring majority share) fee in:

Reinsurance company 1% of the acquisition amount

Life insurance company 1% of the acquisition amount

General insurance company 1% of the transaction amount

8 Product Approval Fee 100,000.00 Per Product

(j
./'

55
 :;:;;o;~._ ..~-........-:-

I . ..'"

9 Addition of "Reinsurance" to Broker's Certificate 250,000.00

10 Certification Fee per year for:

Audited Account 50,000.00

Certificate of operation for Insurers or Brokers 50,000.00

SCHEDULE B

SIN PRODUCT APPROVAL CHECKLIST

1 Formal application letter with brief description of the product(s)

2 What the product(s) covers

3 Extent of cover

4 Features of the product(s)

5 Scale of benefits

6 Value addition/uniqueness of the product(s)

7 Bundled/single product

8 Surrender value & basis of computation

9 Dispute resolution

10 Claims processes

11 Target market

12 Territorial scope

13 How accumulation/excess of the risk will be managed

14 Conditions/warranties (stated & inserted in the policy document)

15 Prototype of market brochure/flyers (if required)

16 Prototype of proposal form which must be in compliance with the industry Know Your
 Customer (KYC) form/standard

17 Prototype of policy document and its contents

18 Reinsurance treaty/letter of comfort from the treaty provider

19 Feasibility report/product business plan

20 Success strategy

21 Actuarial report/valuation (if required)

22 Premium and/or benefit justification

23 Underwriting valuation/reports duly signed by head of technical/underwriting unit

24 Basis for premium assumptions

25 Table of ratings/premium

26 Commission payable

27 Specimen certificate of cover (if required)

28 MOU/SLA (if required)

29 Distribution channel

30 Grievance management procedure

31 Evidence of product approval fee

SCHEDULE C: PRODUCT PERFORMANCE RETURN - NAME OF PRODUCT

Number Date of Total Claims Claims Cancelledl Channel of Reason for

of product premium deciined and surrendered distribution noo-
policies launch generated Due Paid Outstanding reasons for policies pertormance
noo-
settiement

SCHEDULED: PERSONNEL RETURN

NAME DESIGNATION GENDER EDUCATIONAU DATE REASON

57
"
OF EMPLOYMENT OF EXIT FOR
PROFESSIONAL LEAVING
STAFF
QUALIFICATION

SCHEDULE E: SURRENDER VALUE COMPUTATION FORMAT

SIN POLICY DURATION (YEAR) SURRENDER CHARGES APPLICABLE

INTERESTIDISCOUNT RATE
MARGIN (IF ANY)

58
 YA ND FAITH PEACE AND PROGRE
UNIT SS

NATIONAL INSURANCE COMMISSION

(NAICOM)

PRUDENTIAL GUIDELINES
FOR INSURERS AND REINSURERS
IN NIGERIA

EFFECTIVE JULY, 2015

Print @ Cavewood Cottage Ltd. 08032178223, 08023016874

 PRUDENTIAL GUIDELINES
FOR INSURERS AND REINSURERS
IN NIGERIA

ISSUED BY

YA ND FAITH PEACE AND PROGRE

UNIT SS

THE NATIONAL INSURANCE

COMMISSION

EFFECTIVE JULY, 2015

 Prudential Guidelines for Insurers and Reinsurers in Nigeria

TABLE OF CONTENTS Page

Preamble v

1. PROTECTION OF POLICY HOLDERS FUNDS 1

1.1 Background 1

1.2 Requirements for Protection of Policyholders Fund 1

1.3 Ring-Fencing Actions 2

1.4 Transition Arrangement 3

2. ANNUAL RETURNS AND ACCOUNTS 5

2.7 Accounting Period 6
2.8 Filling Fees 6

2.9 Insurance Levy Returns 6

2.10 Approval of Annual Returns 6
2.11 Admissible Assets and Liabilities 6
2.12 Annuity Funds: 7
2.13 Age Analysis of Outstanding Claims 8
2.14 Minimum Solvency Margin 8
2.15 Trade Receivables (Age Analysis of Trade Receivables) 8
2.16 Claims Reserving Methods and Documentation 8
2.17 Impairment 9
2.18 Quarterly Returns 9
2.19 Penalties 9

2.20 Off-Shore Operations: 10

2.21 Disclosure: 10
2.22 Audit 10

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

3. INVESTMENTS 11

3.1 Introduction 11
3.2 Investment Policy 11
3.3 Investment Committee 12
3.4 Asset Allocation 13
3.4.1 General Requirements 13
3.4.2 Insurance Fund 14
3.4.3 Shareholders’ Fund 16
3.5 Investment of Proceeds of Capital Raising 16
3.6 Investment Accounting and Reporting 16

4. REINSURANCE 17

4.1 Reinsurance Arrangements and Exposure Limits 17

4.2 Reinsurance Treaties/Arrangements (Except Oil and Gas) 17

4.3 Reinsurance Arrangement (Oil and Gas Insurance) 18

4.4 General Requirements for Foreign Facultative Reinsurance Arrangements 19

4.5 Requirements for Approval-in-Principle to Reinsure Abroad (AIP) 20

4.6 Requirement for No Objection 21

4.7 Letter of Attestation (LOA) 22

4.8 Requirement for Post Placement Reports and Certificate for

Offshore Reinsurance (COR) 22

5. AVIATION INSURANCE 23

5.1 Background 23

5.2 General Requirements for Aviation Insurance 23

ii
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

5.3 Underwriting/Due Diligence 23

5.4 Reinsurance/Exposure Limits 24

5.5 Submission of Aviation Insurance Returns 25

5.6 Compliance 26

6. RISK MANAGEMENT FRAMEWORK FOR INSURERS AND REINSURERS

IN NIGERIA 27

6.1 Introduction 27

6.2 General Requirements 28

6.3 Guidance Notes for Insurers and Reinsurers 31

6.3.1 Elements of a Risk Management Strategy 31

6.3.2 Risk Management Process 32

6.3.3 Material Risks in Insurance 34

7 IFRS HARMONIZATION CARVE-OUTS AND REGULATORY REQUIREMENT

FOR NIGERIA INSURANCE INDUSTRY 41
7.1 Introduction 41
7.2 Background Information 41
7.3 Benefits of Harmonisation 42
7.4 Applicability of the Framework 42

7.5 Harmonization Carve-Outs and Regulatory Requirements 43

7.6 Mandatory Exceptions and Optional Exemptions 43
7.7 Presentation of Financial Statements (IAS) 45
7.8 Title of the Financial Statements (IAS) 45
7.9 Frequency of Reporting 46
7.10 Line Items in Statement of Financial Position 46

iii
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

7. 11 Addition of Line Items in Statement of Financial Position 46

7.12 Description of Line Item in Statement of Financial Position 46
7.13 Classification of Correction /Non-Current Items 47
7.14 Disclosure of Sub-Classification of Line Items 47
7.15 Disclosure of Elements of Equity 47
7.16 Financial Statement of Composite Insuerer 47
7.17 Presentation of all items of Income and expense recognized in a period 47
7.18 Expense Classification 48
7.19 Income Tax Relating to each Component of other Comprehensive Income 48
7.20 Analysis of other comprehensive income 48
7.21 Disclosure on Dividends (IAS 1) 48
7.22 Presentation of the Performance of life business 48
7.23 Presentation of Note 49
7.24 Management Commentary 50
7.25 Statement of Cash Flows (IAS 7) 50
7.26 Properties Plant and Equipment (IAS 16) 50
7.27 Depreciation Property, Plant and Equipments 51
7.28 Property, Plant and Equipment without Perfected title documents 51
7.29 Investment Properties (IAS 40) - Measurement after recognition 51
7.30 Basis of Determination of fair value 52
7.31 The Effect of Foreign Exchange Rates 52
7.32 Consolidations and Separate Financial Statement 52
7.33 Measurement after Recognition 52
7.34 Interests Instruments: In Joint Venture (IAS 31)-Basis of Consolidation 53
7.35 Separate Financial Statement of the Venture 53
7.36 Financial Instruments Recognition and Measurement (IAS 39) 53
7.37 Unquoted Investment 54
7.38 Financial Instruments Presentation (IAS 32) 55
7.39 Disclosure of Treasury Shares 55

iv
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

7.40 Earnings Per Share (IAS 33) 55

7.41 Provisions, Contingent Liabilities and Contingent Assets (IAS 37) 55
7.42 Insurance Contracts (IFRS 4) 55
7.43 Current Market Interest Rates 56
7.44 Continuation of Existing Practices 56
7.45 Insurance Contacts Acquired in a business Combination or
Portfolio Transfer 56
7.46 Discretionary Particpatory Features in Insurance Contracts 56
7.47 Information on Sensitivity to Insurance Risk 57
7.48 Information on Claims Development 57
7.49 Liability Adequacy Test 57
7.50 Non-Current Assets Held for Sale Discontinued Operation (IFRS 5) 58
7.51 Financial Instruments: Disclosure (IFRS 7) 58
7.52 Disclosure of Specified Items of income gains or losses 58
7.53 Information about the nature and the risks from Financial Instruments 59
7.54 Loans or receivables designated as at Fair value through profit or loss (IFRS 7) 59
7.55 Sensitivity Analysis (IFRS 7) 59
7.56 Capital Management 59
7.57 General Regulatory Requirement 60
7.58 Other Issues 60

8. DIVESTMENT 61
8.1. Insurance Companies 61
8.2 Insurance Brokers 61
8.3 Investment Through Holding Company 61
8.4 Foreign Investor 62
8.5 No Objection 62

8.6 Procedure and Timelines 62

v
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

9. OUTSOURCING 63
9.1 Introduction 63
9.2. General Requirements 63
9.2.1 Board Classification 63
9.2.9 Reporting Requirements 69
9.2.10 Remedies for Grievances Related to Outsourced Services 69

vi
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

PREAMBLE

a) These Guidelines are issued in exercise of the powers conferred on the

National Insurance Commission (“the Commission”) under the National
Insurance Commission Act 1997 and the Insurance Act 2003.

b) The Guidelines sets out the minimum prudential standards for underwriting,
reinsurance, investments, reserving, outsourcing etc required from Insurance
Institutions to facilitate reliable, sound and sustainable growth of insurance
and reinsurance companies.

c) It also provides the Board of Directors and Management of insurance

institutions with a framework for the establishment of policies and procedures
for internal controls.

d) These Guidelines shall be read in conjunction with the provisions of the

Insurance Act as well as other regulations, notices and circulars that the
Commission may issue from time to time.

e) These Guidelines shall apply to all Insurance and Reinsurance institutions.

f) All Insurance and Reinsurance companies are required to ensure strict

compliance with these guidelines by formally directing their staff to comply.

g) Reference in these guidelines to “insurer” also applies to “reinsurer”

h) Items in any of the previous Guidelines which are not specifically mentioned in
this Guidelines stand repealed.

i) This Guidelines shall come into effect in July 2015

vii
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

1. PROTECTION OF POLICYHOLDERS FUND

1.1 Background

By the provisions of the Insurance Act 2003, policyholders/ annuitants are protected
against the risk of insolvency of an insurance company by not only establishing
exclusive Funds but also setting standards for investments representing them. The
objective of this Guideline is to ensure that:
i) Investments held in compliance with Section 25, are not pledged as security
for the borrowings by companies.
ii) Funds relating to annuity and policyholders' Funds are adequately protected
in the event of insolvency of an insurance company.
iii) Investments are held in the name of the relevant Insurance Company.
iv) Investments representing insurance Funds are not co-mingled with
shareholders' investments.
v) Asset-liability management strategies are strengthened.

1.2 Requirements for Protection of Policyholders' Funds

The following requirements shall apply:

i) An Insurer shall strictly comply with the requirement of Sections 19 and 25 of
the Insurance Act at all times.
ii) An Insurer shall ensure that its accounting records show the amount of
Policyholders Funds and related assets at all times. For verification purposes,
their periodic financial statements should show the position at least on a
monthly basis.
iii) An Insurer's Investment policy shall clearly reflect the requirements of
Section 25 of the Insurance Act and shall include measures to be taken to
ensure:
a) That investment representing Policyholders Funds are not co-mingled
with other Funds in the company's investment registers, in the record of
custodians of relevant assets and/or registries for their titles.

1
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

b) That a notation of proprietary and preferential interests of the

policyholders is made in the mandate given to the custodians of the
assets or registrars of their titles.

1.3 Ring-Fencing Actions:

The requirements above shall be given operational effect by the following

ring-fencing actions:

i) The Custodian of the financial assets (including Bankers) and/or Managers

of relevant titles registry such as land registries, Central Securities and
Clearing Systems Plc and Company Registrars, shall be required, in writing,
to register the interest of policyholders in the assets with the following special
notation:

a) That the assets shall not be used as collateral for any borrowing of any
entity, including the Company itself.

b) That the assets are maintained and shall be held as under the
provision of Section 19(3) of the Insurance Act; and

c) That, in the event of the insolvency or bankruptcy of the Insurers, the

assets shall only be applied for the purpose of settling the claims of
policy holders under the control of the National Insurance Commission
or its duly appointed agents.

ii) Copies of the letter to Custodian and Managers of titles registry shall be
forwarded to the Commission within 5 working days of the inception of the
investment or classification of an investment for purposes of this Guideline.

iii) The Custodians (including bankers) and Managers of titles Registries shall
be required to confirm the notation of policyholders' interest direct to the
Commissioner for Insurance, Plot 1239 Ladoke Akintola Boulevard, Garki ll,
Abuja.

iv) The withdrawal or disposal of any assets that will result in a shortfall in the
asset cover for Policyholders' Funds, without the prior written permission of
the National Insurance Commission is hereby prohibited.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

v) The hypothecation of assets representing Policyholders' Funds shall be

disclosed in the annual financial statements of the company and any financial
summary included in communications with policyholders, any lender or other
members of the public. Any deficit shall be disclosed together with steps being
taken to make it up.
vi) Assets not in the name of the Insurance Company shall not be acceptable as
cover for Policyholders' Funds.
vii) Unsecured investments or loans shall not be accepted as cover for
Policyholders' Funds.
viii) Companies are required to report to the Commission any time that their
investments cover for Policyholders' Funds fall below the statutory minimum.
This notification shall include arrangement, being made to make up the
deficiency.
ix) Statement of compliance with this requirement shall be submitted to the
Commission on a quarterly basis and shall be signed by the Head of Internal
Audit and Chief Compliance Officer.
x) The financial statements of an Insurance Company shall not be taken to have
complied with the requirements of the Insurance Act when the requirement of
this Guideline is not complied with.
xi) The penalties payable for non-compliance with this and other Guidelines and
Circulars issued by the Commission shall be accounted for in the financial
statements issued and Quarterly Returns made by the company.

1.4 Transition Arrangement

To give effect to the requirement of this Guideline, Insurers are required to:
i) Ensure that the required records are maintained and the notations of
policyholders' interest in assets are registered with relevant
custodians/registrars not later than 30 October, 2015;
ii) Submit updated versions of their investment policies reflecting the
requirement of this Guideline not later than 30 October, 2015;

3
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

iii) Ensure that Custodians/Registrars shall be required to communicate the

lodgement and notation of the policyholders' interest direct to the National
Insurance Commission not later than 30th November, 2015.

4
 Prudential Guidelines for Insurers and Reinsurers in Nigeria

2. ANNUAL RETURNS AND ACCOUNTS

2.1 An Insurer is required to submit to the Commission the duly audited financial
statements and annual returns in the prescribed forms (See Annual and Quarterly
Regulatory Template for Nigerian Insurance Industry) in respect of its operations as at
the end of the preceding financial year.

2.2 The duly audited financial statements and annual returns shall be submitted in one (1)
hard copy accompanied by a soft copy in an excel format.

2.3 The returns shall be filed on or before 30th June of the following year.

2.4 The following shall accompany audited Annual Returns and shall be in hard and soft
copy except items a, b, c, d, h, i and j which shall be in hard copy only:
a) Letter of Commitment duly signed by the CEO and CFO

b) A copy of Management letter and the response of the Management to the

issues raised therein;

c) Certificate of solvency issued by the external auditors in the case of General;

Business;

d) Certificate of solvency issued by the Actuary in the case of Life Business;

e) Two copies of the report on Liability Adequacy Test (LAT) issued by the
Actuary for Life and General Insurance businesses;

f) Schedule of outstanding premium collection in the first ninety after the year
end duly certified by the CEO and the External Auditor.

g) Details of trade receivables and age analysis at year end (all premiums
acknowledged as having been received by the broker/co-Insurer but not yet
remitted to the underwriter).

h) Completed Form L38 (formerly Form 11E) duly signed by the External Auditor
and the CEO;

i) Evidence of payment of filing fees and penalties for late submission, if

applicable.

j) Risk Management Declaration duly signed by 2 Directors

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

2.5 An Insurer shall be deemed to have failed to file its annual returns if the provisions of
S.26 of the Insurance Act 2003 are not met 12 months after the end of the financial year

2.6 Cash flow statements shall be prepared and presented on Direct Method Basis.

2.7 Accounting Period:

st
For purposes of compliance with the above, accounting period shall run from 1
st
January to 31 December of each year.

2.8 Filing Fees:

Each company shall at the time of submission of annual returns and audited financial
statements pay the following filing fees:
a) Composite Insurers N1,000,000
b) Life Insurer N500,000
c) General Insurer N500,000
d) Reinsurers N1,500,000

2.9 Insurance Levy Returns:

a) An Insurer shall, not later than 31st of March of each year, file with the
Commission a duly completed assessment as applicable for the purpose of
insurance levy assessment. Assessments made pursuant to the above
paragraph shall be confirmed, modified or varied on presentation of audited
st
financial statement as at 31 December of each year. Any amount assessed
must be fully settled on or before 30th September of the following year.

b) Every sum payable by an Insurer by way of insurance levy that remained

unpaid after 30th September of the year of assessment shall attract interest at
the rate of 2 .5% above the Central Bank of Nigeria Monetary Policy Rate
(MPR).

2.10 Approval of Annual Returns:

a) An Insurer shall obtain approval of its Annual Returns and Accounts from the
Commission before consideration by the shareholders at its Annual General
Meeting (AGM) and distribution of dividends to shareholders.

b) An Insurer shall not publish its financial statements in any national newspaper
except as stipulated in Sections 26 (4) & 27 (6) of the Insurance Act 2003.

2.11 Admissible Assets and liabilities:

a) For purposes of calculating the solvency margin of an Insurer, the following
assets shall be netted off the related liabilities:
i) Deferred acquisition cost;
ii) Prepaid reinsurance cost.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

b) For the avoidance of doubt, the following shall not form part of admissible
assets under Section 24 of the Insurance Act, 2003.
i) All investments/assets not in the name of the Insurer;

ii) Investment placed with fund managers and deposit with related entities
and institutions not insured as a Deposit Money Bank by NDIC;

iii) Investments in excess of the limits prescribed in clause 3.1.4-3.1.4 of

this Guideline;

iv) Investment in related companies except insurance business;

v) Goodwill;

vi) Deferred tax assets; and

vii) Investment in foreign Securities. Foreign investment shall be any

investment in Securities outside Nigeria whether quoted or unquoted).

viii) Existing Investments in companies that have not reported profit or paid
dividend in the preceding three years.

ix) Commercial loans including loans to related entities

x) Proportions of Land & Building and Investment Property admissible for

Solvency Margin purposes shall not constitute more than 1/3 of the
required Solvency Margin of the Company for Life and Non-Life
business. In this regard, a transition period of three (3) years shall be
allowed.

c) Liabilities for the purpose of Section 24 of the Insurance Act, 2003 shall
exclude deferred tax.

2.12 Annuity Funds:

a) A retiree life annuity provider shall maintain separate books of account in
respect of the retiree life annuity funds distinct from its other insurance or
annuity operations.

b) The retiree life annuity funds and supporting assets and liabilities shall be
disclosed separately by way of notes in the audited financial statement and all
management accounts of the company.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

2.13 Age Analysis of Outstanding Claims

a) An insurer shall disclose in their audited financial statements to the
Commission, the sum outstanding as unsettled claims as at the end of the
year according to age analysis as follows:
i) 0 – 90 days
ii) 91 – 180 days
iii) 181 – 270 days
iv) 271 – 365 days
v) 366 Days and above
b) Form G2 of this Guideline shall be the acceptable presentation format.
2.14 Minimum Solvency Margin
Margin of solvency shall be defined as total admissible assets less total liabilities, and
this shall not be less than either 15% of net premium or the amount of minimum capital
requirement whichever is higher.

2.15 Trade Receivables (Age Analysis of Trade Receivables)

a) To be included in the audited Annual Return is the details of Brokers’
individual indebtedness as at year end of report.
b) The Form shall be the acceptable presentation format.
c) An Insurer shall disclose in their audited annual returns to the Commission,
the sum outstanding as at year end according to age analysis as follows:
S/No. Age of Debt
1 Within 30 Days
2 Above 30 Days

2.16 Claims Reserving Methods and Documentation

i) Insurers shall have appropriate claims reserving policies and procedures
approved by its Board of Directors. At a minimum such policies shall include
the following:
a) The date on which the reserve shall be initiated;
b) The process to be followed to adjust the initial reserve amount;
c) The method of reserving for each form or category of insurance
acceptance.
d) The measurement method to be used (case estimates and or any
triangulation estimate); and
e) Authorization limits to adjust reserves.
ii) The insurer shall have documented methods for quantifying claims reserves.
The reserve shall be:

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

a) Established upon the notification of a claim;

b) Updated when additional information is received to ensure that it
reflects the anticipated extent of the liability; and
c) Reviewed on an on-going basis.
iii) The insurer shall therefore develop a proper procedure for coding/registration
and statistical processing of claims. This would involve the use of claims
reserving methods such as case estimates and/or triangulation estimates per
class of business.
iv) An insurer shall in addition to the reserves required to be included pursuant to
the provisions of the Insurance Act 2003 and any other relevant regulation,
provide reserves for meeting outstanding claims.
v) An insurer shall furnish to the Commission such details of the methods used
in calculating the reserves to be provided.
vi) The Commission may disallow any method used in calculating the reserves
where it is satisfied that the method does not result in the provision of
adequate reserves.

2.17 Impairment
Impairment of trade receivables shall be determined in accordance with the
requirements in the applicable IFRS.

2.18 Quarterly Returns:

a) An Insurer shall, within thirty (30) days from the end of each quarter, file
Management Account of its operations as at the end of the quarter in line with
the regulatory reporting template.
b) The first Quarter Return shall reflect the position of the audited/unaudited
Management Financial Statements of the preceding year, while subsequent
Quarterly Returns shall reflect the position of the immediate preceding
quarter
2.19 Penalties
a) Late filing of Quarterly Returns shall attract a fine of N5,000 per day for each
day of default.
b) Failure to render Quarterly Returns may be a condition for cancellation of
operating licence under Section 8 of the Insurance Act, 2003.
c) An Insurer shall be deemed to have failed to render Quarterly Returns if such
Returns are not submitted to the Commission on or before the end of the next
quarter.
d) Any restatement of Returns necessitating re-filing shall attract a fee equal to
the original filing fee.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

2.20 Off-Shore Operations:

a) Quarterly and Annual performance report on the offshore investments shall
be filed with the Commission.

b) Quarterly and Annual returns on the operations of such off-shores

subsidiaries shall be filed with the Commission in line with paragraph 1.1.11
(a) above.

2.21 Disclosure:
a) Contraventions: All contraventions on which penalties have been imposed
in any accounting year shall be disclosed in the audited annual accounts to be
presented at the Annual General Meeting

b) Embedded values: An insurer shall report on the financial condition of the

company by including the embedded values as determined and certified by
the Actuary by way of disclosure in the audited financial statements.

2.22 Audit:
a) All appointment of External Auditor by an Insurer shall be subject to approval
by the Commission.

b) All notifications of the appointment to the Commission shall be accompanied

by an original copy of the Service Level Agreement (SLA) between the
Insurer and the External Auditor which, at a minimum, shall contain the
information in Form A1.
c) All Insurers are required to send a profile of their auditors to the Commission
not later than two (2) months prior to the commencement of the audit. At a
minimum, the profile shall contain:
i) The name of the auditor
ii) Designation
iii) Qualifications
iv) Years of experience
v) Years of experience in the audit of insurance companies and the
names of the Insurer(s)
vi) Evidence of registration with Financial Reporting Council

d) The tenure of an appointed External Auditor shall be a maximum of 5 years.

e) An Insurer is required to establish an Internal Audit unit to be headed by a

professionally qualified Accountant who must be a senior Management staff.

f) The Internal Audit report of an Insurer shall be filed with the Commission every
quarter.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

3. INVESTMENTS

3.1 Introduction
Investment is a core function of an Insurer which requires regulatory consideration to
ensure that all Insurers maintain admissible investments sufficient and adequate to
meet its statutory obligations.

As part of the initiative to enhance the quality of the investments in Insurance

Companies in Nigeria, the Commission undertook a review of the prudential
Guidelines on investments. In this regard, the revised Prudential Guidelines on
investments aim to address various aspects of Insurers' operations.

3.2 Investment Policy

a) An Insurer is required to have a written investment policy approved by the
Board of Directors which shall guide it in acquiring, investing, exchanging,
holding, selling and managing investments.

b) The Board shall review the investment policy and its implementations on an
annual basis or at shorter intervals as it may decide and make such
modifications to the investment policy as is necessary to bring it in line with
the investment provisions of the extant Laws and Regulations; keeping in
mind protection of policyholders' interest and pattern of investment laid down
in these Guidelines or in terms of the agreement entered into with the
policyholders.

c) At a minimum, the policy shall address the following:

i) Policies, Procedures and Controls covering all aspects of the
investing activities;

ii) Quantified objectives regarding the composition of classes of

investments, including maximum internal limits;

iii) Periodic evaluation of the investment portfolios as to their risk and

reward characteristics;

iv) Competency requirements for the individuals making day-to-day

investment decisions to assure that investments are managed in an
ethical and capable manner;

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

v) The types of investments to be made and those to be avoided, based

on their risk and reward characteristics and the Insurer's level of
experience with the investments;

vi) The relationship of classes of investments to the Insurer's liabilities;

vii) The Insurer's investment evaluation criteria and the manner of its
implementation;

viii) The level of investment risk (based on quantitative measures)

appropriate for the Insurer given the level of capitalization and
expertise available to the Insurer.

d) The details of the Investment Policy or its review as periodically decided by

the Board shall be made available to the internal auditor. The auditor shall
comment on such review and its impact on the investment operations,
systems and processes in their report to be placed before the Board Audit
Committee.

3.3 Investment Committee

i) An Insurer is required to properly constitute an Investment
Committee. The decisions taken by the Investment Committee shall
be recorded and be open to inspection by the Commission.

ii) The Investment Committee shall:

a) Ensure compliance with the Board approved investment
policy.

b) Consider and recommend optimal investment mix

consistent with risk profile approved by the Board of the
Insurer.

c) Evaluate the value of the daily marked-to-market portfolios

and make proposals to the Management of the Insurer.

d) On periodic basis, review the performance of the major

Securities of the investment portfolios of the Insurer.

e) Carry out such other functions relating to investment

strategy as the Board of the Insurer may from time to
timedetermine.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

3.4 Asset Allocation:

An Insurer shall structure its investment portfolio to meet the minimum requirements
of the Insurance Act 2003 and minimize risk that could arise from over-concentration
of assets in terms of security issued, type and maturity as follows:

3.4.1 General Requirements

a) No Insurer shall invest in derivatives without an approval from the
Commission
b) Not more than 20% of the total current accounts balances and bank
placements shall be placed in any one bank.

c) No fund shall be placed with an institution not insured as a Deposit Money

Bank by NDIC.

d) No Insurer shall invest its fund in its parent company.

e) All investment decisions shall be guided by the Board approved investment

policy, and the basis for investment selection shall be properly documented
for independent review.

f) No Insurer shall invest in any company that either has not reported profits or
paid dividend in the preceding three years.

g) No Insurer shall outsource its investment functions without an approval from

the Commission.

h) Insurers may invest in Bankers Acceptance and Commercial Papers

guaranteed by an issuing bank.

i) The following conditions shall apply to borrowings by an Insurer:

i) Any borrowing of an amount up to 2.5% of shareholders funds shall
be with the approval of the Commission.

ii) An Insurer's total borrowings at any given time shall not exceed 5% of
its shareholders fund.

iii) Any borrowing with option to convert to equity of the company shall
be with the approval of the Commission.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

3.4.2 Insurance Fund:

a) Subject to the liquidity required for relevant obligations of the Insurers/

Reinsurers, the following limits should be observed with regards to
investment-type decision on insurance funds:

i) Securities offered by any one company, not more than 20%

ii) Quoted equity (in total), not more than 50%

iii) Unquoted equity (in total), not more than 10%. Investment shall be in
a company that has minimum corporate rating of “A” range by at least
one recognised risk rating agency registered by SEC.

iv) Federal Government Securities (in total), not more than 100%

v) State Government Securities (in total), not more than 20%, which
must be guaranteed by the Federal Government and approved by
SEC

vi) Debt instrument or special funds issued by corporate entities (in

total), not more than 10%

vii) Equipment leasing, not more than 5%

viii) Real estate

In the case of Life insurance funds, not more than 35%
In the case of Non-life insurance funds, not more than 25%

b) Insurance funds may be invested in debt instruments issued by the Federal

Government of Nigeria or Central Bank of Nigeria, if such Securities are;

i) Approved by SEC and have the full guarantee of the issuer;

ii) Readily marketable i.e. listed/proposed for listing on a registered

Securities Exchange;

iii) Issued in accordance with existing relevant legislation(s).

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

c) Insurance funds may be invested in debt instruments issued by any State

Government, provided such Securities;

i) Have the full guarantee of the Federal Ministry of Finance.

ii) Are readily marketable i.e. listed/proposed for listing on a registered

Securities Exchange.
iii) Are issued in accordance with existing relevant legislation(s).

d) Insurance funds may be invested in debt instruments issued by Corporate

entities if:

i) They have clearly defined term/maturity features, periodic and

terminal payout, as well as interim, terminal and contingency
redemption features.

ii) They must have been lawfully issued.

iii) Investment shall be in a company that has minimum corporate rating

of “BB+” range by at least one recognised risk rating agency
registered by SEC

iv) They are quoted on a registered Security Exchange or listed on the

nd
2 tier of a registered Stock exchange.

e) An Insurer shall not invest insurance funds in the shares or any other
Securities issued by the following:
i) Owned shares;
ii) A shareholder of the Insurer
iii) Subsidiaries or Associates, Joint ventures and affiliates of the
company or its shareholders.

f) An Insurer shall not sell, transfer or exchange insurance funds assets to:
i) Itself
ii) Any shareholder, Director or affiliate of the Insurer
iii) Any employee of the Insurer
iv) Other related party (related party as defined by accounting standard)

g) Insurance funds shall not be pledged as collateral for any borrowing by an

Insurer

h) Insurance funds shall not be invested off shore

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

3.4.3 Shareholders' Funds:

a) Investment of shareholders funds in unquoted equity, including investments
in associates, subsidiaries, joint ventures and other related companies
should be limited to 20% of such funds.
b) The limit in (a) above shall not apply to investments in insurance related
businesses. However, investments in such Insurance related businesses
shall be with the approval of the Commission

c) Investments of Shareholders' funds on insurance related business and any

off-shore investment shall be subject to the Commission's approval.

3.5 Investment of proceeds of capital raisings:

An Insurer shall not invest more than 25% of the proceeds of public offers and private
placements of shares in non-insurance related companies or ventures.

3.6 Investment Accounting and Reporting

a) Valuation of Investments - Valuation rules for both financial reporting and
solvency assessments will be as prescribed by International Financial
Reporting Standards (IFRS).

b) In line with Section 17(1) (f) of the Insurance Act 2003, an Insurer is required to
keep and maintain a register of all investments.

c) All investments representing insurance and annuity funds (where ring fenced)
shall be specifically indicated in the records of the Custodians/Registrars.

d) All Investments relating to insurance and annuity funds shall be distinguished

from those representing other funds in the financial statements.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

4. REINSURANCE

4.1 Reinsurance Arrangements and Exposure Limits:

All Reinsurance Treaties and Retrocession must comply with the following minimum
requirements:
a) In exercise of the powers conferred on the Commission by the provisions of
Section 72 (2) (f) of the Insurance Act, 2003, all insurance or reinsurance
businesses have been domesticated. All foreign placements shall be by way
of reinsurance only subject to the prior approval of the Commission.

b) All reinsurance/retrocession arrangements must be approved by the Board of

Directors.

c) The Foreign Reinsurer(s) shall, at a minimum, have good reputation,

governance history, satisfactory 3-years claims-handling practices and
maintain an acceptable Financial Strength Rating (FSR) conducted by an
internationally recognized rating agency

d) An insurer shall not unduly expose itself and/or its shareholders' fund by
accepting any risk for which, in the event of a loss, it does not have the
requisite financial capacity and/or reinsurance support to settle the
corresponding claims.

e) An insurer shall ensure that, where reinsurance support (treaty or facultative)

is obtained, the requisite reinsurance premium is paid in accordance with the
terms and conditions of the reinsurance contract.

f) For purposes of documentation, an insurer shall, in respect of its facility

declarations and other facultative placements, obtain necessary reinsurance
confirmation/evidence of cover for its records prior to inception of the policy.
Where this is not possible owing to the peculiar or exceptional nature of the
placement, it shall be done within a reasonable time but not later than 30 days
after inception.

g) During treaty renewals/negotiations, available local reinsurance capacity

must be exhausted prior to any foreign treaty placement.

4.2 Reinsurance Treaties/Arrangements (except Oil and Gas):

a) An Insurer shall ensure that the Treaty Slips are fully signed by all the
participating Reinsurers.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

b) All Reinsurance Treaties and Life Treaty Cover-notes/addendum, for the

following year, shall be filed with the Commission on or before 31st
December of the preceding Year or 15 days before the effective renewal date
for those whose treaty renewal dates do not fall on 1st of January. In both
cases, the submissions shall also be accompanied by the following:
i) Signed slips of all reinsurance arrangements and not only Cover-
notes issued/signed by the reinsurance brokers;

ii) Evidence of premium remittance for the previous Four (4) Quarters,
(i.e. 4th, 1st, 2nd and 3rd Quarters); and

iii) Evidence of payment of Minimum and Deposit (M&D) Premium for

the following year on the General business Treaties.

iv) The Financial Strength Rating of the foreign Reinsurers.

4.3 Reinsurance Arrangements (Oil and Gas Insurance):

The following requirements shall be in addition to the requirements of the
Guidelines for Oil and Gas Insurance in Nigeria

a) All Reinsurance Treaties/Arrangements, for the following year, shall be filed

th
with the Commission on or before 15 December of the preceding Year. The
reinsurance arrangements shall be duly signed by the Reinsurers/Security
Providers and accompanied by a formal Letter from the Reinsurers stating in
numerical terms their maximum capacity for Operational Risks and
Construction Risks.

b) Where an insurer purchases non-proportional excess of loss reinsurance, the

reinsurance treaty/facility must state the maximum capacity granted to the
insurer in numeric terms. For proportional treaty/facility, the reinsurance
treaty or facility must state proportional line share and the maximum capacity
granted in numeric terms.

c) Where excess of loss reinsurance is purchased, the deductible must not be

more than 2.5% of Shareholders' Fund (SHF) for construction risk and 5% of
SHF for operational risks. For proportional treaty/facility, the insurer's
retention shall not be more than 2.5% of SHF for construction risk and 5% of
SHF for operational risks.

d) No reinsurer/security provider shall grant Oil & Gas Reinsurance cover to

Local Insurer(s), on the aggregate, more than its known maximum capacity.
Thus it shall be the duty of the local insurer to ensure that it is apprised of the
aggregate capacity of the reinsurer(s) and total prior exposure of the
prospective reinsurer/security provider(s) to other Nigerian local insurers, to
enable determination of available capacity of the reinsurer(s) prior to
accepting reinsurance cover from the reinsurer.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

e) Reinsurance premium remittance by any insurer in contravention of the

above shall attract a penalty of 5 times the reinsurance premium paid to the
reinsurer.

4.4 General Requirements for All Foreign Facultative Reinsurance Arrangements:

a) Foreign facultative insurance/reinsurance placement of all risks from Nigeria

must comply with Section 72 (4) of the Insurance Act 2003 which requires
prior approval of the Commission. All intending applicants for Offshore
Placement are required to comply with these requirements.

b) An Insurer that intends to arrange any facultative reinsurance of any risk

abroad shall apply for Approval-in-Principle (AIP) and subsequently submit
Post Placement Reports for issuance of Certificate for Offshore Reinsurance
(COR) within the timeline required.

c) It is the duty of the Lead Insurer/Coinsurer to arrange appropriate reinsurance

for a risk. The Insurer may handle the reinsurance arrangements by itself or
appoint a Reinsurance Broker to place the risk on its behalf.

d) Where the Insurer intends to utilize the services of a Reinsurance Broker to

place the reinsurance and/or apply for the Commission's Approval-in-
Principle (AIP) to reinsure a proportion of any risk abroad, the Insurer may
issue a Letter of Authority to the Broker, appointing the Broker as the
Reinsurance Brokers for that particular risk.

e) Where a Letter of Authority has been issued to the Reinsurance Broker, it shall
be the responsibility of the Broker to ensure compliance with local content
requirements as may be required by the Commission. Where no such
authority has been issued, the responsibility shall lie with the Lead Insurer
.
f) In order to reduce undue exposure of Policyholders and Insurers to potential
unprotected proportion of a risk as well as to provide time for review of request
for Approval-In-Principle, all applications must be submitted to the
Commission at least ten (10) days prior to the commencement period of
insurance.

g) There shall be no Assignment of a Reinsurance Policy. The financial interest

of a third party may, however, be noted in the policy by way of either a “Loss
Payee” or “Lien Clause” or other conventional reinsurance clauses.

h) There shall be no Direct Premium Payment Cut through Clause which allows
direct payment of premium to the Reinsurer or its Agent by the Insured.

i) All Primary Policies must unambiguously state the Order Hereon to read
100% of 100%, while the Reinsurance Slip must state the exact proportion
intended to be ceded offshore.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

j) All applications for Approval in Principle, Letter of Attestation and Certificate of

Offshore Reinsurance shall be filed in compliance with the template as
prescribed by the Commission. Non utilization of the template for
applications would be rejected by the Commission.

k) Incomplete submission shall henceforth be treated as non-submission and a

fresh application shall be required. All prospective applicants are therefore
required to ensure strict compliance with the procedure and documentary
requirements for each category of application. This would be duly
communicated to the applicant.

l) All applications adjudged to have material non-compliance with the

requirements of the law would be disapproved. Applicants are therefore
strongly advised to note and be guided accordingly. The applicant would be
duly notified.

m) Failure to provide further clarification or documents required by the

Commission within the timeline specified in the letter will result in closure of
the file. All such applicants shall have to file a new application with all
documentary requirements.

n) Where Approval-in-Principle (AIP) has been granted by the Commission, the

applicant (Insurer or Reinsurance Broker) shall, within Ninety (90) days from
the date of issuance of the AIP or Thirty (30) days from the date of issuance of
the Letter of Attestation, whichever is earlier, submit a Post-Placement Report
and apply for Certificate for Offshore Reinsurance. The Post-Placement
Report shall contain the requisite information as may be required by the
commission and as indicates in the relevant paragraphs.

4.5 Requirements for Approval-In-Principle to Reinsure Abroad (AIP)

All requests for Approval-in-Principle to place a specified proportion of risk abroad

must be accompanied by the following:
a) Details of the Risk: the Specimen Primary policy.
b) Copy of the Specimen Local Brokers Slip (where necessary).

c) Copy of the provisional Foreign Reinsurance Slip.

d) Sum insured – which should where necessary, include the Combined Single
Limit or Loss Limit or Estimated Maximum Loss.
e) Detailed Premium Worksheet.
f) Proportion of the risk to be retained in the Nigeria market.
g) Proportion of the risk to be ceded abroad.
h) Schedule of proposed participating local underwriters and the allotted
proportion.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

i) Evidence of having offered all other Local Insurers and their responses
(declinature) thereto.
j) Details of local Broker Involved (including contact e-mails, telephone and
address of the CEO of the broking firm).

k) Details of the intended foreign reinsurer(s) and placement broker(s) stating:

i) Name of the company(ies),
ii) Addresses,
iii) Total Proportion of risk to be ceded offshore,
iv) Phone numbers/email addresses of contact persons.
v) Current financial strength rating of each of the intended foreign
reinsurer(s).
vi) Intended Foreign Reinsurers' Country of Registration/ License.
l) Letter of Authority from the Lead/Ceding Insurer (where the application is filed
by a Broker)

m) Statement of compliance with Maximum Exposure Limits

(retention/deductible) with respect to percentage of Shareholders Fund
(2.5% for construction and 5% for Operational risks in respect of Oil and Gas
Risks).

n) An undertaking to remit the corresponding 1% Levy (on the Gross Premium)

to the Commission in respect of each transaction.

o) Confirmation that the proposed policy is in conformity with the Nigerian Civil
Aviation Authority Act's current minimum passenger liability limit in relation to
Aviation risks.

p) Such other requirements as may be prescribed by the Commission from time

to time.

4.6 Requirements for Request for No Objection

Subject to exhaustion of the capacity of the Nigerian Insurance Industry, a No
Objection shall be requested in the following cases:
a) Where a risk is retained 100% locally without foreign facultative reinsurance
support and the individual insurer is subsequently constrained to secure
additional capacity from foreign facultative reinsurers due to rejection/declinature
from facility providers and/or pre-agreed local facultative reinsurers.
.
b) Where AIP has been granted to the Lead Insurer/Reinsurance Broker and the
participating coinsurer is constrained to secure additional capacity from foreign
facultative reinsurers, sequel to its inability to manage its acceptance as a result of

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

rejection/declinature from facility providers and/or pre-agreed local facultative

reinsurers.
c) Where there is no available capacity in the local market for a particular risk and the
Local Insurer is obliged to secure support for 100% of the risk offshore. The
Insurer shall issue a Primary Policy in respect of the risk to the insured.
d) Requests for “No Objection” to place an accepted proportion of a risk offshore,
shall be accompanied by:
i) Evidence of declinature from the Reinsurance Facility Providers stating the
reasons for the declinature or reasons for recourse to facultative reinsurers.
ii) Evidence of declinature from other Local Insurers not currently participating in
the risk.

4.7 Requirements for Letter of Attestation (LOA):

All requests for Letter of Attestation must be accompanied by the following:

a) Debit note from the Foreign Broker/Reinsurer

b) Confirmation of Receipt of Premium from the Insured.

c) Signed Schedule/Slip of local underwriters.

d) For short term policies, a copy of the Renewal Endorsements must also be
submitted along with the request.

e) Such other requirements as may be prescribed by the Commission from time

to time.

4.8 Requirements for Post Placement Report and Certificate for Offshore
Reinsurance (COR):
All requests for Certificate for Offshore Reinsurance must be accompanied by the
following:

a) Final Policy or Endorsement Issued by the Local Insurer not excluding the
Signed Schedule of Local Underwriters (Where not earlier provided at the
Letter of Attestation stage);

b) Schedule attaching to the Policy or Cover Note issued by the Reinsurers or

the Foreign Brokers, which must amongst others state the Reinsurers' Order
Hereon and each Reinsurers' signed proportion;
c) Evidence of full Premium Collection;
d) Evidence of Premium Remittance to Local Insurers;
e) Evidence of Premium Remittance to Foreign Reinsurers;
f) Evidence of Payment of 1% ISS Levy; an
g) Any other relevant information.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

5. AVIATION INSURANCE

5.1 Background
In furtherance of the National Insurance Commission's responsibility of establishing
standards for the conduct of insurance business in Nigeria and protecting
Policyholders/members of the public, it has become necessary to provide
supplementary standards for Aviation Insurance business in Nigeria.
Consequently, the National Insurance Commission, in the exercise of the statutory
powers conferred on it by the enabling laws, hereby issue the following requirements
for compliance by all insurance institutions in Nigeria

5.2 General Requirements

All Aviation Insurance business shall be conducted in accordance with insurance laws
and other relevant regulations.
a) The establishment of underwriting terms and conditions for any Aviation and
its associated risks in Nigeria shall be the responsibility of an Insurer duly
licensed to transact insurance business in Nigeria. This is without prejudice to
an Insurer's need to seek expert advice from its facultative reinsurers for
appropriate risk rating/pricing.
b) An Insurer shall ensure that all Aviation Insurance transactions are conducted
in compliance with Contract Certainty principles and requirements.
c) An Aviation Insurance Liability policy for any Nigeria domiciled risk shall
conform to the minimum Passenger Liability Limit as required by the Nigerian
Civil Aviation Authority.

5.3 Underwriting/Due Diligence

a) Every Insurer and/or Coinsurer shall, prior to accepting, signing and/or
stamping any Aviation Insurance policy/schedule of coinsurers, carry out Risk
Measurement and Exposure Assessment vis-a-viz its available capacity (net
retention and aviation reinsurance treaties).

b) The risk measurement/exposure assessment shall be documented and

ratified by an appropriate authority (CEO, DGM, AGM, Controller or Head of
Department/Unit) not later than 24 hours from the time the risk was accepted,
signed and/or stamped by the Authorized Persons (Aps).
c) An Insurer shall designate professionally qualified and experienced
personnel(s) as its Authorized Person(s) for the purpose of underwriting,
accepting, signing and/or stamping of all Aviation Insurance risks. All Aviation
slips/policies shall be signed, stamped and dated by the AP(s) who shall not
sign, stamp or accept any Aviation Insurance risk without complying with the
requirement of this guideline.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

d) An Insurer shall file with the Commission the profile of its AP(s) .

e) At a minimum, the profile shall contain:

i) Full names of the designated Authorized Person(s)
ii) Designation and Location
iii) Qualifications (professional/educational)
iv) Years of experience
v) Years of experience in Aviation Insurance or related field

vi) Evidence of CIIN professional qualification

vii) Specimen Signature of the Authorized Persons.

viii) Contact details (mobile numbers and email addresses)

f) An Insurer shall file with the Commission any subsequent change or

replacement of the Authorized Person(s) prior to the coming into effect of the
change.

5.4 Reinsurance/Exposure Limits

a) An Insurer's Treaty and/or facultative reinsurance arrangements with a
foreign reinsurer shall not be placed with a company having a Financial
Strength Rating (FSR) lower than “A-” (S&P) or “A” (A.M. Best).

b) The Aviation Insurance Treaty shall allow automatic acceptance by the

Reinsurers. For the avoidance of doubt, a facultative reinsurance
arrangement, facility or line slip subject to declaration or to be agreed shall
neither be categorized/recognized nor accepted as Treaty.

c) The Net Retention/Deductible of an Insurer under any treaty, on per risk basis,
shall not constitute more than 5% of its Shareholders' Fund.
d) Where an insurer decides to write an aviation insurance risk for its net account
only without reinsurance treaty, the insurer shall not accept nor commit more
than 5% of Shareholders' Fund determined under prior year audited accounts
approved by the Commission.

e) An Insurer shall submit to the Commission its Board Approved Maximum

Exposure Limit/Risk Appetite (in numeric terms) on all aviation risks
acceptances and its Aviation Insurance Treaty for the following year on or
before the 15th of December of every year or 15 days before the effective
renewal date for those whose treaty renewal dates do not fall on 1st of
January. The submission shall be accompanied by a copy of the Board
Resolution.

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

f) The Board Approved Maximum Exposure/Risk Appetite for Aviation

Insurance shall clearly indicate the Net Retention/Deductible of the Insurer
which shall not be more than 5% of its Shareholders' Fund.

g) The Board Approved Maximum Exposure Limit/Risk Appetite (in numeric

terms) shall not exceed the Insurer's gross capacity and categorized into each
of the following:
i) Hull and Spares
ii) Liability
iii) War, Hijacking and Allied Perils
iv) Excess War
v) Etc
vi) It shall also clearly indicate any excluded aviation insurance
risk/policy and/or insured.

h) An Insurer's maximum acceptance on any aviation related risk shall not

exceed its Gross Capacity which shall be its Net Retention/Deductible and/or
its Treaty limit/capacity as approved by the Board except where, prior to
accepting, signing and/or stamping that particular Aviation Insurance
policy/schedule of coinsurers, the Lead Insurer/Coinsurers had obtained
Approval in Principle and/or where the Insurer/Coinsurer had obtained formal
offer of local facultative support from other Local Insurers that is not
participating in the risk.

i) Where an Insurer does not intend to transact aviation insurance risk for
the following year, the insurer is required to formally notify the Commission
on or before the 15th of December of every year.

5.5 Submission of Aviation Insurance Returns

a) An Insurer/Coinsurer shall submit to the Commission, on occurrence basis,
returns on any Aviation Insurance Policy/Certificate and/or Endorsement
issued thereto. The returns which shall be in electronic (Microsoft Excel)
format as per the Template that may be issued by the Commission from time
t o t i m e s h a l l b e s e n t t o a v i a t i o n @ n a i c o m . g o v. n g , a n d
[email protected], not later than 72 hours from the date of
accepting, signing and/or stamping the insurance document,/and/or
endorsement, certificate. Submission in other Microsoft format or media
other than as specified above shall be deemed as incomplete/resurer
submission

b) The hard copy of the above returns shall be aggregated in a single form using
the above Form and submitted to the Commission not later than 14 days from
the end of every Quarter. The returns must be signed by the Authorized
Person and Chief Compliance Officer or the Managing Director/CEO. Where
the insurer is the lead insurer, the returns shall be accompanied by the
following

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i) Copies of all Certificates of Insurance and endorsements issued to the

Insured.

ii) Evidence of receipt of premium from the insured/Credit Note from the
Broker.

iii) Schedule of Premium Remittance to Coinsurers by the Lead

Insurer/Broker

iv) Evidence of premium remittance to other coinsurers by the Lead Insurer.

v) Evidence of premium remittance to Reinsurers (If any) by the Lead

Insurer.

c) The Lead Insurer shall inform the Commission through the designated emails,
not later than 72 hours where an aviation insurance policy/certificate earlier
issued is cancelled. The notification of cancellation shall be accompanied by
a copy of the Cancellation Endorsement while the hard copy of the
endorsement shall be forwarded to the Commission along with the Insurer's
submission in respect of the aggregated quarterly returns on Aviation
Insurance.

d) Where an Insurer does not transact an aviation business in the quarter, the
Insurer shall file a “Nil Return”.

e) Where the insurance placement and premium payment was through an

Insurance Broker, it shall be the duty of the Broker to submit to the
Commission the proposed schedule of premium remittance to the insurers,
not later than 72 hours from the date of receipt of the premium from the
Insured.

5.6 Compliance
a) Nothing in this guideline shall preclude an insurer from compliance with any
other regulations and returns rendition requirement as may be required by the
Commission unless specifically stated as such.
b) Failure to comply with the provisions of this guideline, shall in addition to
imposition of penalties, result in the Insurer being banned from writing further
business in this class and may lead to the suspension or withdrawal of its
license.
c) All Insurance Institutions are required to ensure strict compliance with this
guideline by formally directing its staff to comply as the Commission will not
hesitate to impose severe sanctions on erring insurance institutions in
Nigeria.

d) Reference to an Insurer in this guideline also refers to a Reinsurer.

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6. RISK MANAGEMENT FRAMEWORK FOR INSURERS AND

REINSURERS IN NIGERIA

6.1 Introduction

a) This guideline is issued in the exercise of the powers conferred on the

National Insurance Commission (the Commission) under the Insurance Act
2003, and the National Insurance Commission Act 1997.

b) For the purposes of this guideline, risk is the possibility that an event will
occur and adversely affect the achievement of a company's objectives
thereby decreasing value for the company's stakeholders. Risk Management
is the process of identification, assessment and mitigation of risk to which the
company is exposed.

c) For the purposes of this guideline, a risk management framework is the totality
of systems, structures, policies, processes and people within the company by
which the company identifies, assesses, mitigates and monitors all internal
and external sources of risk that could have a material impact on the
company's operations.

d) The guideline sets minimum standard required from each and every insurer
and reinsurer by which they can provide a reasonable assurance to the
Commission, policyholders, shareholders and other stakeholders that the
risks to which they are exposed are being soundly and prudently
managed.

e) This guideline shall be used by the Commission as a tool for conducting

ongoing assessment of the risk management systems of all insurers and
reinsurers.

f) Nothing in this guideline shall prevent an insurer or reinsurer from applying a

risk management framework that is also used within its group company,
provided that such framework has been approved and adopted by the Board
of the insurer or reinsurer for its purpose and meets the requirements of this
guideline.

g) This guideline may be revised from time to time by the Commission.

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6.2 General Requirements

a) All insurers and reinsurers shall establish and maintain a Risk Management
Framework. The Risk Management Framework must, at a minimum, include
the following:
i) Documented Risk Management Strategy
ii) Documented Risk Management Policies, Procedures and
Controls
iii) A written Business Plan that is approved by the Board
iv) Chief Risk Officer
v) Enterprise Risk Management Committee
vi) Up-to-date Risk Register
vii) A Review Process
viii) A well defined Risk Governance and Responsibilities
ix) A system for Independent Review

b) The Risk Management Framework must address all material risks (material
risks are explained in the guidance notes attached to this guideline), and
should at a minimum, cover the following areas:

i) Market risk/Investment risk

ii) Credit risk
iii) Operational risk

iv) Liquidity risk

v) Reinsurance risk

vi) Underwriting risk

vii) Provisioning risk/Reserving risk

viii) Claims management risk

ix) Group risk

x) Reputational risk
xi) Legal/Litigation risk
xii) Such other risks to which the company may be exposed

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 Prudential Guidelines for Insurers and Reinsurers in Nigeria

c) All insurers and reinsurers shall establish a process for identifying, assessing,
controlling, mitigating and monitoring all material risks. This must be
developed having regard to the company's risk management philosophy, set
of shared beliefs, attitudes, values, culture and operating style. Accordingly:
i) There must be defined risk appetite which should state the
amount of risk the company is willing to accept.

ii) The company must be clear about who is in charge of risk

oversight, assign authority and responsibility and set out an
appropriate organizational structure.

iii) The company must set standards for Integrity, Ethical Values and a Risk
Culture.
iv) The company must secure commitment to competence, knowledge and
skill of staff in relation to the management of risk.

d) The Board of Directors shall have responsibility for:

i) Ensuring an adequate Risk Management Framework including principle
for how risks should be identified, assessed, monitored and controlled
or mitigated within the company's operations.

ii) Defining the company's risk appetite in line with the company's financial
resources, business strategies, management expertise and overall
willingness to take risk.
iii) Reviewing and approving the Risk Management policies and
procedures.

iv) Re-evaluating the framework and risk appetite at least annually,

considering changes in the risk profile of the business (changes in
products, markets, operating environment).

v) Ensuring that the Risk Management Framework is regularly audited by

appropriately trained and competent personnel that are operationally
independent of the risk management activities.

e) The Senior Management shall have responsibility for implementing the

framework for risk management approved by the Board. In implementing the
framework, the Senior Management shall have responsibility for:

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i) Ensuring an appropriate organisational structure, with appropriate level

of independence between staff responsible for risk management and
those responsible for insurance operation.

ii) Ensuring an appropriate level of skilled resources for managing risk, with
clearly assigned responsibilities.

iii) Developing policies and procedures for identifying, assessing,

monitoring and controlling or mitigating risks that reflect the principles set
by the Board. The policies and procedures must cover material risk that
affects insurance business.

iv) Translating the risk appetite expressed by the Board into a system of risk
limitation strategies and controls.

f) All insurers and reinsurers shall establish a Risk Management

Department/Unit.

i) The Risk Management Department/Unit shall be responsible for

measuring, monitoring and controlling risk, consistent with the
established policies and procedures.

ii) The Risk Management Department/Unit shall be headed by a Chief Risk

Officer.

iii) The Chief Risk Officer shall be responsible for establishing the risk
culture throughout the company.

iv) The Chief Risk Officer shall possess all necessary skills and shall have
access to all resources relevant for attaining complete understanding of
the risks associated with the insurance business.

v) The Chief Risk Officer shall submit a periodic report to the senior
management and to the Board on key aspects of the operation of the
Risk Management Framework and significant risk exposures.

vi) The reporting must include any significant breaches of risk

management policies or risk limits and any material loss incidents, and
address all material risk classes as well as considering the overall risk
profile.

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vii) The Risk Management Department/Unit shall on regular basis re-assess

the methodologies, models and assumptions used to measure and limit
risk.

g) All insurers and reinsurers shall, at a minimum, adopt the 'three lines of
defence' model of risk governance with clearly defined roles and
responsibilities..

h) All insurers and reinsurers shall ensure that the Risk Management
Framework is subject to effective and comprehensive review by operationally
independent, appropriately trained and competent persons. The frequency
and scope of the review should be appropriate to the company, having
regards to such factors as the size, business mix, complexity of the
company's operations and the extent of any change to its business profile or
its risk appetite.

I) The Board of all insurers and reinsurers shall provide the Commission with a
declaration on risk management (Risk Management Declaration), relating to
each financial year of the company, signed by at least two directors. This
declaration must be submitted to the Commission yearly along with the
annual returns and accounts of each company and the declaration must
conform to the Acceptable format as may be prescribed by the Commission
from time to time.

6.3 Guidance Notes on the Guideline for Installing Risk Management Framework
for Insurers and Reinsurers

6.3.1 Elements of a Risk Management Strategy

a) The risk management strategy is a high level document which
contains:
i) The company's strategy for managing risk;

ii) The extent and circumstances under which the company is

prepared to accept risk; and

iii) The key elements of the risk management framework, which gives
effect to the strategy for managing risk.

b) A company's risk management strategy must therefore, at a minimum:

i) Detail the company's approach to the matters listed in a - c above;

ii) Identify the policies and procedures for dealing with the following
matters:

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a) The process for identifying and assessing material risks;

b) The process for establishing and implementing mitigation and

control mechanisms for material risks;

c) The process for monitoring and reporting of risk issues

(including communication and escalation mechanisms);

d) The process for monitoring and reporting and ensuring

continual compliance with the requirements of this guideline;

e) The company's approach to management of capital; and

f) The company's approach to disaster recovery/business

continuity management;

iii) Describe the relationship within the risk management framework

between the Board, Board committees and senior management;

iv) Identify those in position with managerial responsibility for the risk
management framework and instilling an appropriate risk culture
across the life of the company; and

v) Describe the process by which the risk management framework is

reviewed and the intended coverage and timing for these reviews.

6.3.2 Risk Management Process

Enterprise Risk Management (ERM) is defined by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) as "a process, effected by an
entity's board of directors, management and other personnel, applied in strategy-
setting and across the enterprise, designed to identify potential events that may
affect the entity, and manage risk to be within its risk appetite, to provide
reasonable assurance regarding the achievement of entity objectives." Below is a
summary of a risk management process.

a) Risk Identification
Risk identification involves itemising specific occurrence which will have
material impact on financial condition, capital and/or sustainability of a
company. At this stage, it is vital that all potential categories of risk are
identified. The objective is to achieve a comprehensive risk list or risk register
which contains details of all types of risks, their assessment, owners and
status of the risks. Companies are able to identify the risks they are exposed
to through a detailed process of examining their operational activities.

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b) Risk Assessment and Control

Risk assessment is vital to determine the probability of a risk occurring and the
frequency and severity or impact on the business. The frequency of
occurrence and impact can be measured in “High”, “Medium” and “Low”
terms. Risk assessment can use qualitative and quantitative methods
although quantitative methods can be more precise. A risk map should be
designed that highlights the findings of risk assessment. The map should
indicate key risks faced and factored into the risk appetite of the company. At
the same time, the company should perform a comprehensive information
and communication technology (ICT) risk assessment. The goal of this
assessment is to ensure that the company's critical information systems can
fully support and further the company's operations. The risk assessment
outcome must be complemented with a risk control mechanism. This must be
done in close consultation with the various departments associated with each
risk. The report generated must detail out how each risk will be treated.
Having assessed relevant risks, management should determine how it will
respond by reviewing likelihood and impact, evaluating costs and benefits,
and selecting options that bring residual (remaining risk) within the entity's risk
tolerances. The response may be through any or all of the following:
i) Avoidance or not participating in events that give rise to risk.

ii) Forbidding certain “risky business” e.g., company not authorized to

invest in certain risky investment instruments.

iii) Reduction in specific actions taken to reduce likelihood or impact or

both e.g. disaster recovery plan in place to reduce the impact of a
natural disaster.
iv) Sharing portions of the risk (co-insurance or pool).

v) Acceptance and coping with the risk.

c) Risk Monitoring and Risk Reporting

Companies should monitor the actual risk taken relative to the established risk
appetite and risk limits. This will require a basis for measuring the level of
risk in each risk class being taken. Risk monitoring may be achieved by
regular management approaches such as variance analysis, comparisons of
information with disparate sources and dealing with unexpected occurrences.

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Risk reporting involves periodic reporting on key aspects of the operation of

the risk management framework and significant risk exposures. The reporting
must cover significant breaches of risk management policies or risk limits and
any material loss incident.

6.3.3 Material Risks in Insurance

The following are typical material risks in insurance business.

a) Market risk/Investment risk

This is the risk to a company's financial condition resulting from adverse
movements in the level or volatility of market prices. All insurers and
reinsurers should establish a basis for measuring and calculating the
probability of loss and possible impact on the company's capital resources
caused by adverse changes in the price of stock and shares, property,
exchange rates and other market conditions that are relevant. Companies
should have regards to investment limits set in the Operational guidelines for
insurers and reinsurers and diversify assets to prevent overconcentration and
overexposure to any particular market.

b) Credit risk
This is the risk that counterparty will default on payment or fail to perform an
obligation to the company. Insurer and reinsurers should establish a system
for conducting due diligence on the credit worthiness of any party to which
they have credit exposure. Companies should set limits of credit exposure
and should have a process for monitoring and controlling such exposure.

c) Operational risk
This is the risk of loss from inadequate or failed internal processes,
from people and systems or from external events which arises from the
potential that inadequate information systems, operational problems,
breaches in internal controls, fraud, or unforeseen catastrophes will result
in unexpected losses. Companies should have policies that cover risk that
may arise from staffing issues, for example, failure to address areas such as
reporting line, delegation, suitability of employee, compliance culture, HR
practice, employee remuneration, quality of training and outsourcing
staff arrangement. Companies' policies should also cover process and
systems issues to address areas such as measures for preventing system
failure, measures to comply with regulatory requirements, measures for
business continuity, internal and external documentation process and

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review, dependency and reliability of IT systems, quality of IT support and

maintenance, IT security confidentiality, data integrity and authorised access.
Companies should assess their vulnerability to operational risks and prioritise
their action accordingly. A robust control environment should be put in place,
which must include documented policies and procedures which incorporate
appropriate checks and balances and a risk register which identifies
potential and actual operational risks and controls are put in place to mitigate
those risks.

d) Liquidity risk
This is the risk that the company will have insufficient cash flow to meet its
operational and financial payment obligations because of inability to liquidate
assets or obtain funding. Companies should prepare a report to be
submitted to their management on a regular basis providing a liquidity
overview, covering an appropriate period of time, comparing expected
inflows and outflows and specifying the assumptions. Management should
consider the actions that would be taken in the event of liquidity squeeze and
document the contingency plans that will be used.

e) Reinsurance risk
This is the risk of inadequate reinsurance cover which may be triggered by a
situation such as the insolvency of a reinsurer, discovery of exposures
without current reinsurance coverage, or exhaustion of reinsurance covers
through multiple losses. Insurance companies must ensure that they
maintain adequate reinsurance arrangements and treaties in respect of the
classes or category of insurance business the insurer is authorized to
transact. It must have a documented policy stating:

i) systems for the selection of reinsurance brokers and other

reinsurance advisers;

ii) systems for selecting and monitoring reinsurance programmes;

iii) clearly defined managerial responsibilities and controls;

iv) presence of a well resourced reinsurance department that prepares clear
methodologies for determining all aspects of a reinsurance programme.

v) Senior management should review an insurer's reinsurance

management systems on a regular basis.

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f) Underwriting risk
Underwriting is the process by which an insurer determines whether and
under what conditions to accept a risk. Weaknesses in the systems and
controls surrounding the underwriting process can expose an insurer to the
risk of unexpected losses which may threaten the capital adequacy of the
insurer. All insurers must have an underwriting policies and procedure
manual. The company's underwriting process must be subject to internal
audit and there should be a peer review of policies underwritten. In addition,
companies should have a process for assessing brokers' procedures and
systems to ensure that the quality of information provided to the insurer is of a
suitable standard; and in the case of re insurers, audits of ceding companies
to ensure that reinsurance assumed is in accordance with treaties in place.

g) Provisioning/Reserving risk
Reserving risk is the risk that insurance liabilities recorded by the Insurer, net
of reinsurance and other recoveries in respect of those liabilities, will be
inadequate to meet the net amount payable when the insurance liabilities
crystallise. Companies should maintain appropriate systems, controls and
procedures to ensure that the provision for insurance liabilities is, at all times,
sufficient to cover any liabilities that have been incurred, or are yet to be
incurred on contracts of insurance accepted by the Insurer, as far as can
be reasonably estimated.

h) Claims Management risk

This is the risk that the insurer may be unable to manage the settlement
process by which insurers fulfil their contractual obligation to policyholders. All
insurers should have in place a claims management policy and procedure for
ensuring that claims are handled fairly and promptly. In establishing and
maintaining effective claims handling systems and procedures, senior
management of insurers should consider factors including the following:

i) appropriate systems and controls should be in place to ensure that

all liabilities or potential liabilities notified to the insurer are recorded
promptly and accurately. Accordingly, the systems and controls in
place should ensure that a proper record is established for each
notified claim;

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ii) suitable systems should be in place for claims handling procedures,

timeliness of processing and dealing with backlogs;

iii) suitable controls should be maintained to ensure that estimates for

reported claims and additional estimates based on statistical
evidence are appropriately made on a consistent basis and are
properly categorised;

iv) regular reviews of the actual outcome of the estimates made should
be carried out to check for inconsistencies and to ensure that
procedures remain appropriate. The reviews should include the use
of statistical techniques to compare the estimates with the eventual
cost of settling the claims, after deducting the amounts already paid
at the time the estimates were made;

v) appropriate systems and procedures should be in place to

ensure that claim files without activity are reviewed on a regular
basis;

vi) appropriate systems and procedures should be in place to

assess the validity of notified claims by reference to the
underlying contracts of insurance and reinsurance treaties;

vii) suitable systems and procedures should be in place to

accommodate the use of suitable experts such as loss adjusters,
lawyers, actuaries, accountants etc. as and when appropriate, and
to monitor their use; and

viii) there should be suitable systems and procedures in place to identify

and handle large or unusual claims, including systems to ensure that
senior management are involved from the outset in the processing of
claims that are significant because of their size or nature.

i) Business risk
This is the risk that a company's market position may be eroded resulting in
the future profitability of the company being reduced. Companies are to
ensure that such risk are clearly identified and taken into account when
setting or revising corporate strategy.

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j) Reputational risk
This is the risk of events that undermine public trust in a company's
brand. Trust and integrity are essential for maintaining longstanding
customer relationship and for building new ones.

k) Legal risk
This arises from the potential that unenforceable contracts, litigations, or
adverse judgments can disrupt or otherwise negatively affect the operations
or condition of the company.

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RISK MANAGEMENT: APPENDIX 1

Three lines of defence model

Risk Ownership
1st Line of Defence Responsible for identifying and assessing the risks
BOARD, SENIOR faced in the business in line with the set risk apettite
MANAGEMENT FRONT- and ensuring that appropraite controls are
LINE MANAGEMENT established and maintained
AND STAFF

Responsible for designing risk framework

Risk Control methodologies and tools which supports the
2nd Line of Defence busness in analysing and managing risks and
RISK MANAGEMENT providing early warning of adverse trends.
DEPARTMENT Responsbile for consulting and advising the Board,
Management and staff on identification, control
and mitigation of risk.

Risk Assurance Responsible for providing independent and

3rd Line of Defence objective assurance on the effectiveness and
AUDIT adequacy of risk mangement control and
governance process.

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RISK MANAGEMENT: APPENDIX 2

Risk Management Declaration

The Board must provide the Commission with a Risk Management Declaration stating that, to
the best of its knowledge and belief, having made appropriate enquiries:

a) The company has systems in place for the purpose of ensuring compliance with this
guideline;

b) The Board is satisfied with the efficacy of the processes and systems surrounding the
production of financial information of the company;

c) The company has in place a Risk Management Strategy, developed in accordance

with the requirements of this guideline, setting out its approach to risk management;
and

d) The systems that are in place for managing and monitoring risks, and the risk
management framework, are appropriate to the company, having regard to such
factors as the size, business mix and complexity of the company's operations.

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7 IFRS HARMONIZATION CARVE-OUTS & REGULATORY

REQUIREMENT FOR NIGERIAN INSURANCE INDUSTRY

7.1 Introduction
a) The adoption of International Financial Reporting Standards (IFRS) offers the
Nigerian Insurance Industry a unique opportunity to enhance international
acceptability of its financial statements and increase its relative
attractiveness to International investors. It is in the light of this that the
National Insurance Commission (Commission) is taking both a
developmental and regulatory approach to its role in the implementation of
IFRS in the industry.
b) This document is the outcome of interactions with different stakeholders in the
Nigerian Insurance Industry during which the need for a harmonized financial
reporting framework was identified. It characterizes the reporting context for
financial reporting practices by Nigerian Insurance institutions, analyses
options permitted by IFRS and documents proposed harmonized choices
for the industry. It also specifies related regulatory requirements and filters
that the Commission will apply in the discharge of its supervisory functions in
the wake of IFRS.
c) It is important to point out that the responsibility for the form and content of
financial reports rests with the Board of Directors of each company.
Harmonization of accounting choices only seeks to enhance the quality of
information presented to users by facilitating the comparability of the financial
reports issued by different Insurance Companies. It will also minimize the
difference between public and regulatory reporting requirements thereby
optimizing the cost of compliance.

7.2 Background Information

a) IFRS provide a framework for general purpose financial reporting which
seeks to meet the information needs of existing and potential investors,
lenders and other creditors in making decisions about providing resources to
the reporting entity. While acknowledging the interest of other users
(including regulators) it encourages them to complement IFRS-based
financial statements with other sources of information to meet their unique
needs. In the light of this, it is universal practice for regulators they devise
methodologies for deriving their unique information needs where the bases of
recognition and measurement applied to items in general purpose financial
statements do not sufficiently address their prudential concerns.

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b) While IFRS offers a significant number of benefits, it also suffers from the
possible lack of homogeneity in the financial reports arising from accounting
treatment options it permits. In order to avoid the loss of comparability of
financial statements that could arise from each reporting entities applying
differing accounting treatments for same item, there is need for options
adopted by reporting entities in each jurisdictions to be harmonized. This
solution has particular relevance to the Insurance industry because of the
challenges many users have in comprehending the financial statements of
insurance entities.
c) The need for harmonization of IFRS options in the Nigerian Insurance
industry was agreed as part of the resolutions reach at one of the learning
events arranged for Insurance Company Chief Finance Officers and the
IFRS Consultants by the National Insurance Commission to address this
issue. This document which has been issued in furtherance of the position
agreed with the industry on the harmonization of practices, has been
previously exposed to the industry. It has considered the input and
suggestion made by parties in the financial reporting supply chain that shared
their opinions of some of the issues contained in the exposure draft version.
d) It is important to note that this document does not contradict the filters issued
by the Financial Reporting Council of Nigeria and will not impair, in any way,
the confidence of External Auditors in affirming that the financial statements
of Nigerian insurance companies are compliant with IFRS.

7.3 Benefits of Harmonisation

In addition to minimizing the inconvenience and cost of lack of homogeneity, the
Nigerian Insurance Industry will derive the following further benefits from the adoption
of harmonized financial reporting practices
a) The harmonized format presented in this document will drive regulatory
reporting requirements. It will facilitate the alignment of data and reporting
specifications for Information technology solutions applied by Insurers.
b) It will also facilitate the attainment of the highly desirable goal of developing a
uniform system of accounts and standard chart of statistical codes for the
Nigerian Insurance Industry.

7.4 Applicability of the Framework

The provisions of this framework are applicable to all insurers licensed under the
Insurance Act 2003 in the preparation of own and consolidated financial statements.
The use of the term insurers include reinsurers licensed under the act.

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7.5 Harmonization Carve-Outs and Regulatory Requirements

a) The harmonization carve-outs specified in this document seek to limit choices
from the measurement, presentation and disclosure options permitted by
IFRS, without limiting the ability of each Insurer to give effect to the impact of
its business and management models on its financial reporting practices. It
also addresses certain areas which, while not being matters in which options
have been expressly mentioned in IFRS, are subjects that Insurers could
report differently on if relevant issues are not clarified and harmonized.
b) The regulatory requirements communicate the position that the Commission
will adopt in the use of data derived from IFRS-based financial statements in
the calculation of prudentially significant metrics and additional disclosures
that are considered relevant. It also specifies reports that Insurers will be
required to provide on their implementation of IFRS.
c) The structure of their presentation is as follows
i) Apart from the section on mandatory exceptions and optional
exemptions (IFRS1), all others are in the order of IFRS starting with IAS
1.
ii) For each issue or options considered, the permitted accounting
treatments are first identified before
iii) The harmonization carve-outs given and the regulatory/prudontial
requirements, where relevant.

7.6 Mandatory exceptions and optional exemptions

7.6.1 Filters Issued by Financial Reporting Council (FRC) of Nigeria.
7.6.1.1 Issues/Options
a) In order to facilitate the transition to IFRS, IFRS 1 provides for a number of
optional exemptions.
b) FRC Filters: The Financial Reporting Council of Nigeria has the following
filters on Mandatory exceptions and optional exemptions.
i) Mandatory Exceptions - De-recognition of Financial Assets and
Liabilities: The first time adopter is required to consolidate the
financial statements of all the SPEs so identified on the date of
transition and the consolidation procedure shall be followed as
provided in IAS 27. However, if the SPE itself has subsequently
transferred the assets and achieved the derecognition of the item
concerned under the previous GAAP, then the items remain
derecognized on transition to IFRS.

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ii) Optional Exemptions:

a) Business Combinations (Option 1): The options given to
first time adopters are not to restate business combination
that occurred before the transition date.
b) Fair Value or Revaluation as Deemed Cost (Option 2):
the permitted options are
(i) To measure an asset at Fair Value at the date of
transition and elect to use as deemed cost, or
(ii) Treat a previous GAAP Revaluation of an asset as
deemed cost at date of transition.
c) On Lease: (Option 12): First time adopters may use the
transitional provisions in IFRIC 4: Determining Whether an
Arrangement contains a Lease and by extension, based
on the existing facts and circumstances determine whether
IAS 17: Lease, applies
For the purpose of applying this option, only items of
Property, Plant and equipment (PPE) are to be considered.
d) Borrowing Costs (Option 15): The effective date for the
application of the transitional provisions of paragraphs 27
and 28 of IAS 23 (Borrowing Costs) as revised in 2007,
shall be the date of transition to IFRS (ie no retrospective
application is allowed).
7.6.1.2 Harmonization carve-outs: In addition to the items covered under the regulatory
filter issued by Financial Reporting Council, the following exemptions shall be
elected:
a) Insurance contract - Application of transitional provision in IFRS 4 which
restricts changes in accounting policies for Insurance contract.
b) Employee Benefits - Recognition of all cumulative actuarial gains and
losses at the date of transition
c) Cumulative Translation Differences – These, for all foreign operations,
are deemed to be zero at the date of transition to IFRS.
d) Assets and liabilities of subsidiaries, associates and joint ventures -
If a subsidiary becomes a first time adopter later than its parents, the
subsidiary shall, in its financial statements, measure its assets and
liabilities as the carrying amount based on the subsidiary's date of
transition to IFRS.
e) Compound financial instrument - If the liability component of a
compound financial instrument is no longer outstanding at the date of

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transition, the entity needs not separate the instruments into liability and
equity components.
f) Investments in subsidiaries, jointly-controlled entities and
associates - An entity shall measure its investments in subsidiary, jointly
controlled entity or associates using Nigerian GAAP carrying amount at
the date of transitions to IFRS as deemed cost.

7.7 Presentation of Financial Statements (IAS 1)

7.7.1 Structure and Content of Accounting policies

7.7.2 Harmonization carve-out:

a) Accounting policies should be relevant to each company's business and
management model, operations and circumstances.
b) Accounting Policies should explain the basis of accounting for items in the
financial statements and be properly sequenced. For each area covered, the
information should be presented in the following sequence as much as
relevant: classification, recognition, measurement, impairment, etc.
c) All reporting entities should provide information on key assumptions, sources
of estimation in the preparation of their financial statements and ensure
completeness in their disclosure.
d) The tendency to copy and use accounting policies from template where they
are not relevant should be avoided.

7.8 Title of the financial statements ((IAS 1)

7.8.1 Harmonization carve-out: The titles of the financial statements used in the insurance
industry shall be as used in the standard , namely:
a) Statement of Financial Position
b) Statement Profit or Loss and Other Comprehensive Income
c) Statement of Changes In Equity
d) Statement of Cash Flows
e) Notes to the Financial Statements:
i) The Notes providing information about the basis of preparation of the
financial statements and specific accounting policies; and
ii) The Notes containing sub-classifications of line items in the financial
statements.

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7.9 Frequency of reporting

7.9.1 Harmonization Carve-out: Financial statements of insurance companies shall be
prepared for at least one-year period
7.9.2 Prudential requirements: Although Companies are required to render quarterly
returns to the Commission; they may be required to produce monthly management
accounts.

7.10 Line Items in Statement of Financial Position.

7.10.1 Harmonization Carve-out: It is necessary to strike a balance between overburdening
financial statements with excessive detail that may not assist users of financial
statements and obscuring important information as a result of too much aggregation.
Similarly, an entity shall not disclose information that is so aggregated that it obscures
important differences between individual transactions or associated risks.

7.10.2 Prudential requirements:

a) There is no specific regulatory requirement on presentation as the
Commission shall use the medium of quarterly and annual return to obtain
additional presentation requirement.
b) Only the Assets admissible for solvency margin purpose under the Insurance
Act 2003, any regulation issued thereon and guidelines issued by the
Commission shall be recognized for purposes of solvency margin
computation.

7.11 Addition of Line items In Statement of Financial Position

7.11.1 Prudential requirements: None

7.12 Description Of Line Item In Statement Of Financial Position

7.12.1 Harmonization Carve-out: Description of line items in the statement of financial
position shall, as far as possible, use generic titles and technical terms in the sub-
classifications which shall be given in the notes. The details of the sub-classification
should, however, reflect the requirements of IFRSs and the size, nature and function of
the amounts involved. For instance , where there is an item required to be disclosed by
an IFRS , such item should, as far as material, be disclosed as a sub-classification of a
line item ; where it is not itself a line item. This shall make the statement of financial
position more comparable and understandable.

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7.12.2 Prudential requirements: None

7.13 Classification of Current/non-current items:

7.13.1 Harmonization Carve-out: All insurance companies should present items in the
financial statements in decreasing order of liquidity.
7.13.2 Prudential requirements: None

7.14 Disclosure of sub-classification of line items:

7.14.1 Harmonization Carve-out: Sub-classification of line items shall not be presented in
the statement of financial position. Rather, they shall be disclosed in the notes.
7.14.2 Prudential requirements: None

7.15 Disclosures of elements of equity:

7.15.1 Harmonization Carve-out: Features of capital and description of the nature and
purpose of each reserve within equity, required by IAS1.79 should be disclosed in the
notes to the financial statements.
7.15.2 Prudential requirements: None

7.16 Financial statements of Composite Insurers:

7.16.1 Harmonization Carve-out: There shall be only one set of company financial
statements for composite insurance companies. The existing practice where life and
non-life profit and loss accounts and balance sheets are produced in columnar
presentation shall be discontinued. The results of financial performance and position
by lines of businesses shall be presented in section on segment reporting in the notes.
7.16.2 Prudential requirements: None

7.17 Presentation of all Items of Income and expense recognized in a period (IAS 1)
7.17.1 Harmonization Carve-outs: Only a single statement of profit or loss and other
comprehensive income shall be prepared.
7.17.2 Prudential requirements: None

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7.18 Expense Classification: (IAS 1)

7.18.1 Harmonization Carve-outs: Expenses should be classified either by nature or by
function. Where the classification is by function, the nature of expenses and basis of
their allocation should be disclosed in the notes to the accounts.
7.18.2 Prudential requirements:

7.19 Income tax relating to each component of other comprehensive income(IAS 1):
7.19.1 Harmonization Carve-outs. An entity shall disclose the amount of income tax relating
to each component of other comprehensive income, including reclassification
adjustments in the notes.
7.19.2 Prudential requirements: None

7.20 Analysis Of Other Comprehensive Income(IAS 1):

7.20.1 Harmonization Carve-outs: The analysis of other comprehensive income by item
required in IAS 1.106 shall be presented in the statement of changes in equity.
7.20.2 Prudential requirements: None

7.21 Disclosure on dividends(IAS 1):

7.21.1 Harmonization Carve-outs: The amount of dividends recognized as distributions to
owners during the period, and the related amount of dividends per share shall be
disclosed in the statement of changes in equity.
7.21.2 Prudential requirements: None

7.22 Presentation of the performance of life business.

7.22.1 Harmonization Carve-outs
a) Life business Accounting: Life business shall be accounted for on annual
basis with the changes in fund as determined and advised by a qualified
Actuary being presented as a line item (as adjustment of Gross Premium
written), before the determination of gross premium income. The
increase/decrease in fund shall be made up of the following elements:
i) The unearned premium
ii) The increase/decrease in fund attributable to long term and with-
profit contract.

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b) Investment contract: Accounting policies and classification of investment

contract should reflect relevant product profile (including their features).
c) Description of line items: The description of line items shall be simplified
with indication (as much as possible) as to whether they are income or
expense items as follows:
i) Gross Premium Income
ii) Reinsurance premium expenses
iii) Net premium Income
iv) Fees and Commission income
v) Claims expense
vi) Claims expense recovery from reinsurance
vii) Underwriting expenses
viii) Investment income attributable to insurance fund
ix) Underwriting profit/loss
x) Investment income attributable to shareholders' funds
xi) Net realized gains and losses
xii) Fair value gains and losses
xiii) Administration expenses
xiv) Other operating and administrative expenses
xv) Finance costs
xvi) Share of associate profit
xvii) Income tax expense
d) Investment Income attributable to policyholders' fund: Portion of
Investment Income attributable to Policyholders’ Funds and those attributable
to Shareholders’ Funds shall be presented as a sub-note under the Note on
Investment Income
7.22.2 Prudential requirements : None

7.23 Presentation of Notes

7.23.1 Issue: IAS1.116 permits an entity to present notes providing information about the
basis of preparation of the financial statements and specific accounting policies as a
separate section of the financial statements.

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7.23.2 Harmonization carve-out: The Notes providing information about the basis of
preparation of the financial statements and specific accounting policies shall be
presented before the accounts (statement of financial position, statement of profit or
loss and other comprehensive income, statement of changes in equity and statement
of cash flows) while Notes containing the sub-classifications of line items should come
after the accounts.
7.23.3 Prudential Filter: None

7.24 Management Commentary

7.24.1 Harmonization carve-out: All financial reports issued by insurance companies
should include management commentary that incorporates all the elements listed in
the pronouncement by IASB on the subject.
7.24.2 Prudential requirements: All quarterly and annual statutory returns should be
accompanied by relevant management commentary.

7.25 Statement of Cash Flows (IAS 7)

7.25.1 Presentation of Cash Flows(IAS 7)
7.25.2 Harmonization Carve-outs
a) Cash flow from operating activities shall be reported in line with IFRS (either
direct or indirect method). However, where statement of cash flow is prepared
using the indirect method, the company shall be required to reconcile the net
cash flow from operating activities to the direct method.
b) The following shall be classified as cash flows from operating activities:
i) interest received and paid
ii) Dividends received
iii) Dividends paid shall be classified as part of financing activities.
7.25.3 Prudential requirements: None

7.26 Properties, Plant and Equipment (IAS 16) - Measurement after recognition
7.26.1 Harmonization Carve-outs: Cost model shall be the basis for subsequent valuation
of items under PPE; except for Land and Building which shall be measured using the
revaluation model.

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7.26.2 Prudential requirements: Proportion of Land & Building and Investment property
admissible for solvency margin purposes shall not constitute more than 1/3 of the
required solvency margin of the company for life and non-life businesses.

7.27 Depreciation Property, Plant And Equipment:

7.27.1 Issues and Options
7.27.2 Harmonization Carve-outs
a) Rates: Straight Line method of depreciation shall be adopted ( IAS 16.62)
b) Depreciable Component:
i) Each part of an item of PPE with a cost that is significant to the total
cost of the item should be depreciated separately (IAS 16.43.
ii) Components of an item whose cost are insignificant individually
will be depreciated together as a group
7.27.3 Prudential requirements: None

7.28 Property, plant and equipment without Perfected title documents:

7.28.1 Harmonization Carve-outs The fact of affected property not being in the name of the
reporting Insurer, the risk attributable and the estimated cost of perfecting its title
should be disclosed in the Note. The effort being made towards perfection of the title
should also be disclosed.
7.28.2 Prudential requirements: Properties not in the name of the reporting insurer shall not
be admissible for purposes of assets covering policyholders' funds and solvency
margin.

7.29 Investment Properties (IAS 40) - Measurement after recognition

7.29.1 Issues and Options:
a) IAS 40.30 gives entities option to choose between cost and fair value models
as their accounting policy.
b) With regards to fair value, there are different methodologies for determining
same. It will be necessary for a uniform method to be adopted industry wide.

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7.29.2 Harmonization Carve-outs:

a) Fair value model shall be the basis for subsequent valuation of Investment
properties.
b) A choice of a uniform methodology will be made in consultation with the
Nigerian Institute of Estate Valuers and Surveyors.
7.29.3 Prudential requirements: Proportion of Land & Building and Investment property
admissible for solvency margin purposes shall not constitute more than 1/3 of the
required solvency margin of the company for life and non-life businesses.

7.30 Basis of Determination of Fair Value

7.30.1 Harmonization Carve-outs: The fair value of Investment property shall be
determined by an independent Valuer registered with the Financial Reporting Council
of Nigeria.
7.30.2 Prudential requirements: None

7.31 The Effect of Foreign Exchange Rates (IAS 21) - Presentation Currency
7.31.1 Harmonization Carve-outs :The presentation currency for insurance institution shall
be the NAIRA
7.31.2 Prudential requirements: None

7.32 Consolidations and Separate Financial Statement (IAS 27) - Presentation of

consolidated financial statements
7.32.1 Harmonization Carve-outs: All insurance and reinsurance entities with subsidiaries
shall prepare consolidated financial statements.
7.32.2 Prudential requirements: None

7.33 Measurement after recognition:

7.33.1 Harmonization Carve-outs : When an entity prepares separate financial statements,
it shall account for investments in subsidiaries, jointly controlled entities and
associates at cost and test for impairment at each reporting date.

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7.33.2 Prudential requirements: None

7.34 Interests in Joint Venture (IAS 31) - Basis of consolidation

7.34.1 Harmonization Carve-out: Insurers and Reinsurers with interest in a jointly
controlled entity shall be recognized in the consolidated accounts using the equity
method. ( IAS 31.38)
7.34.2 Prudential requirements: None

7.35 Separate financial statements of the venture

7.35.1 Harmonization Carve-out: Insurers and Reinsurers with interest in a jointly
controlled entity shall account for same in their separate financial statements at cost
and test for impairment
7.35.2 Prudential requirements: None

7.36 Financial Instruments: Recognition and Measurement (IAS 39) - Insurance

Premium Receivable:

7.36.1 Harmonization carve-outs:

a) Valid Premium Receivable: Only premiums confirmed as having been
received on the insurers behalf by brokers or co-insurers (in the case of co-
insurers) shall be accepted as insurance premium receivables.
b) Disclosure of Premium Receivable: Premium receivable should be
included as the first item in the note on trade and other receivables. In
addition, a comment should be included to the effect that such premium
receivables are not accepted by the regulator for solvency margin purposes.
The amount of such premium that has been received after the year end
should be disclosed.
c) Impairment test: Impairment will be determined in accordance with 1AS 39.
It is important to note, however, that consideration of impairment does not
arise in the cases of non-existent premium receivable.

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7.36.2 Prudential requirements

a) Only premium that has been received and confirmed as been held on insurers
behalf by insurance brokers and duly certified thereto will be acceptable for
solvency margin purposes.
b) Premium received by lead insurers awaiting remittance to co-insurers should
be held in trust account and not co-mingled with the insurers own assets.
Relevant balances will not be considered as admissible assets for the
determination of assets covering policyholders' funds.
c) Insurers will be required to provide the following details in their regulatory
returns:
i) Premium receivable from brokers:
ii) Premium receivable from agents:
iii) Premium receivable from policyholders:
iv) Premium receivable from leading insurance companies
v) Premium receivable from insurance companies on account of
own policies and insurance inwards.

7.37 Unquoted investment:

7.37.1 Harmonization framework:
a) The basis of valuation of unquoted investment should be disclosed. In order to
avoid delays in the confirmation of financial statements, the basis of valuation
of all unquoted investment should be submitted to the Commission for review
and agreement not later than 28 February of the subsequent year.
7.37.2 Prudential requirements: For the purpose of cover for policy holders' funds
and solvency margin computation,
a) Any investment in unquoted equity, subsidiary or jointly controlled
operation/entity that has neither made profit nor yielded any return for the past
three (3) years shall not be admissible.
b) Investment in unquoted equity, subsidiary or jointly controlled operation/entity
shall be valued at the lower of cost or fair value for solvency margin purposes.

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7.38 Financial Instruments – Presentation (IAS 32) - Presentation of Dividend

7.38.1 Harmonization Carve-outs: Dividends classified as expense (eg, preference share
dividend) shall be presented in the statement of comprehensive income as a separate
item (IAS 32.40)
7.38.2 Prudential requirements: None

7.39 Disclosure of Treasury shares

7.39.1 Harmonization Carve-outs: The amount of treasury shares held should be
disclosed in the notes, in accordance with IAS 1 Presentation of Financial Statements
(IAS 32.34)
7.39.2 Prudential requirements: None

7.40 Earnings Per Share (IAS 33) - Earnings Per Share for the discontinued operation
7.41.1 Harmonization Carve-outs: An insurer that reports a discontinued operation shall
disclose the basic and diluted amounts per share for the discontinued operation in the
notes.
7.42.2 Prudential requirement: None

7.41 Provisions, Contingent Liabilities and Contingent Assets (IAS 37) - Presentation
of reimbursed/ reimbursable expense
7.41.1 Harmonization Carve-outs: Items of expenses shall not be offset against amounts
recognized for reimbursements. It should be noted that in addition to reinsurance
recovery, this requirement will also apply to subrogation and salvage recovery, the
related assets of which must be disclosed.
7.41.2 Prudential requirement: None

7.42 Insurance Contracts (IFRS 4) - Unbundling of deposit components in an

insurance contract:
7.42.1 Harmonization Carve-outs: The deposit component of an insurance contract shall
be unbundled if it can be measured separately. However, if it cannot be measured
reliably, reason should be disclosed in the Note to the financial statements.
7.42.2 Prudential requirements: None

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7.43 Current market interest rates:

7.43.1 Harmonization Carve-outs: Until the Standard on insurance contract is finalized and
effective, no insurer shall change its accounting policies so as to re-measure
designated insurance liabilities to reflect current market interest rates and recognize
changes in those liabilities in profit or loss.
7.43.2 Prudential requirements: None

7.44 Continuation of existing practices:

7.44.1 Harmonization Carve-outs: The following practices will not be adopted by Insurers:
a) Measuring insurance liabilities on an undiscounted basis.
b) Measuring contractual rights to future investment management fees at an
amount exceeding their fair value, based on comparisons to market related
fees.
c) Using non-uniform accounting policies for insurance contracts of
subsidiaries.
d) Measuring its insurance contracts with excessive prudence.
e) Incorporating future investment margins in the measurement of insurance
contracts
f) Shadow accounting ( Except for long term life insurance business)

7.45 Insurance contracts acquired in a business combination or portfolio transfer:

7.45.1 Harmonization Carve-outs: In accounting for contracts and rights acquired in a

business combination or portfolio transfer, no insurer will use an expanded
presentation permitted but not required under IFRS 4.31.
7.45.2 Prudential requirements: None

7.46 Discretionary Participatory Features (DPF) in Insurance Contracts

7.46.1 Harmonization Options

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a) Both the guaranteed and the DPF elements of relevant insurance contract or
financial instrument shall be accounted for as liability. Furthermore, all
premium received in respect of contract with DPF shall be treated as revenue
without separating any portion that relate to the equity component.
7.46.2 Prudential requirements: None

7.47 Information on Sensitivity to Insurance Risk:

7.47.1 Harmonization Carve out:
a) Either the qualitative or quantitative information about sensitivity shall be
provided in line with the requirement of IFRS4.34(c)(i) and IFRS4.39A. This
shall be provided for assumptions not supported by observable market prices
or rate and shall be required for all variables that have a material effect.

b) If an insurer chooses to disclose a quantitative sensitivity analysis, and that

sensitivity does not reflect significant correlations between key variables, the
insurer shall explain the effect of those correlations.
c) If an insurer chooses to disclose qualitative information about sensitivity, it is
required to disclose information about those terms and conditions of
insurance contracts that have material effect on the amount, timing and
uncertainty of cash flows
7.47.2 Prudential Requirement: None

7.48 Information on Claims Development

7.48.1 Harmonization carve out: Only information relating to claims development that
occurred within five (5) years before first application of the IFRSs will be disclosed
7.48.2 Prudential Requirements: None

7.49 Liability Adequacy Test

7.49.1 Harmonization Carve-outs:
a) The adequacy of the liabilities on both life and non-life insurance contracts
shall be based on valuation carried out on annual basis by an Actuary
recognized by the Commission and registered with the Financial Reporting
Council.

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b) The disclosures on liability adequacy testing shall include the following:

i) The accounting policy for liability adequacy testing, including the
frequency and nature of the testing
ii) The cash flows considered;
iii) Valuation methods and assumptions
iv) The discounting policy; and the aggregation practices
c) The rate of discount to be applied in the LAT will be agreed by the market and
cleared with the Commission.
d) The test should determine the gross position. The reinsurance elements can
be derived but disclosed separately.
7.49.2 Prudential requirement:
Where market agreed rate for discount of liabilities is, in the views of the
Commission, not prudent enough, the Commission shall determine rate to be
applied for its regulatory purposes

7.50 Non-Current Assets Held For Sale and Discontinued Operations (IFRS 5) -
Presentation of certain information on discontinued operations
7.51.1 Harmonization Carve-outs: Presentation of the analysis of revenue, expenses,
taxes, cash flows etc. from discontinued operations shall be made in the notes to the
financial statements.
7.52.2 Prudential requirement: None

7.51 Financial instruments: Disclosure (IFRS 7) - Disclosure of categories of

financial assets and financial liabilities
7.51.1 Harmonization Carve-out: The carrying amount of identified categories of financial
instruments shall be disclosed in the notes.
7.51.2 Prudential requirement: Hypothecated assets shall be disclosed in the notes to the
financial statement, with reference to the section of the law limiting the use of the
assets.

7.52 Disclosure of specified items of income, expense, gains or losses

7.52.1 Harmonization Carve-out: Details of items of income, expense, gains or losses shall
be specified in the notes

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7.52.2 Prudential requirement: None

7.53 Information about the nature and the risks arising from financial instruments
7.53.1 Harmonization Carve-out: The required disclosure shall be made in the notes to the
financial statements
7.53.2 Prudential requirement: None

7.54 Loans or receivables designated as at fair value through profit or loss (IFRS 7):
7.54.1 Harmonization Carve-out: Option a(i) shall be adopted.
7.54.2 Prudential requirement: None

7.55 Sensitivity analysis (IFRS 7)

7.55.1 Harmonization Carve-out: None: Alternatives only relevant to (re)Insurers using
Value at Risk (VaR). Since it is model-driven, options are left open.
7.55.2 Prudential requirements: None

7.56 Capital management

7.56.1 Harmonization Carve Out:
a) Insurers shall be required to disclose information on their compliance with
statutory minimum capital base for life, non-life, composite and Reinsurance
businesses
b) Also, insurer shall disclose information on their compliance with solvency
margin requirements during the period and make reference to the relevant
Section of the Insurance Act, 2003.
c) Insurer that did not comply with any one of the above requirements shall
disclose the consequences of such non-compliance and actions being taken
to make good the shortfall.
7.56.2 Prudential Requirements: None

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7.57 General Regulatory Requirement

a) Insurer shall disclose in the financial statements that they are regulated by
National Insurance Commission (NAICOM) and also disclose all relevant
sections of the Insurance Act and Guideline issued by the Commission that
have financial reporting implication e.g hypothecation.
b) Human Capital Readiness: Experience shows that IFRS competence is
significant in ensuring reliability of the financial reporting system. In the
absence of this, the risk of material errors and misstatement is high and may
lead to additional cost. Consequently, in order to ensure each company has
necessary skills, every insurance company is required to have not less than
two qualified accountants who are IFRS-certified by a recognized certificate
issuing authority. In addition to this, evidence of having equipped Board,
Management and staff with the level of IFRS awareness and competence
required for the effective discharge of their role in financial reporting is
required.
c) External Actuary: In addition to the role that actuaries have historically
played in financial reporting in Nigeria, they now have added responsibilities
of facilitating the valuation of insurance liabilities. All Insurers are required to
send a profile of the external actuary to the Commission not later than two (2)
months prior to the commencement of the valuation. In addition to other
information that such document will typically contain, it should contain
evidence of registration with the Financial Reporting Council of Nigeria.

7.58 Other Issues

7.58.1 Compliance with Financial Reporting Council Act 2011- All insurers are required to
ensure compliance with the requirements of the Financial Reporting Act 2011 as this
will satisfy the Commission's other supervisory interests.
7.58.2 NAICOM IFRS Help Desk - The Commission has set up a help desk to deal with
issues that insurance institutions may have on the implementation of IFRS. We
encourage them to access this facility in order to prevent any delays in the finalization
of their financial statements within deadlines prescribed by law. Companies wishing to
access this facility should contact the Director, Supervision.

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8 DIVESTMENT

8.1 Insurance Companies

a) No transfer of shares of non-quoted insurance company shall be made except
in accordance with the extant laws.
b) All transfer of shares in quoted companies shall be in accordance with the
Investment and Securities Act.
c) Transfer of shares in insurance companies that are not quoted shall be
subject to approval of the Commission and must satisfy “fit and proper
person” test.
d) Divestment plans involving a merger with, or an acquisition by other
insurance companies are allowed subject to the Commission's extant
guidelines.
e) Proposed changes in management of the affected insurance company must
be approved by the Commission.
f) All insurance companies being divested from shall include their proposed
new identities in their submissions to the Commission.
g) From the effective date of these guidelines, until the final approval and
issuance of fresh license, no movement of funds and/or any other form of
transfer of funds other than in the ordinary course of insurance business shall
be permitted in any of the affected companies.

8.2 Insurance Brokers

a) All divestment from an insurance broking firm shall be by sale or any other
mode of transfer approved by the Commission.
b) All investors must guarantee that all collected premium must be remitted to
the underwriters.

8.3 Investment Through Holding Company (HOLDCO):

For the purposes of the divestment process, NAICOM shall treat HOLDCOs as
institutional investors and they shall be required to:
a) Put in place an independent governance structure for the insurance
institution.
b) Have Board of Directors consisting of at least two (2) independent directors
c) Subject all board members and management to NAICOM's 'fit and proper
person' tests.

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d) Make available to the Commission a new business plan.

8.4 Foreign Investors

All foreign investors must be guided by the existing laws, rules and regulation.

8.5 No Objection
a) Except the shares are acquired on the floor of the Nigeria Stock Exchange, all
affected entities shall apply to the Commission for a “No Objection” on behalf
of the parties involved before proceeding with the divestment plans.
b) Request for a “No Objection” shall be contained in a Memorandum of
Information, addressing the following;
c) Description of preferred divestment route
d) A business continuity plan
e) Proposed management structure post-divestment
f) Identity of potential investors (proxies or trusts are not acceptable)
g) Declarations as to the following;
i) That all insurance funds are adequate and related qualifying
investments required under the Insurance Act are being and will
continue to be maintained.
ii) That there are no pending regulatory sanctions (supported by
clearance documents from relevant regulators).
iii) That all outstanding claims have been declared and will be honoured
by new owners

8.6 Procedure and Timelines

a) Request for No Objection for divestment shall be made to the Commission not
later than Thirty (30) days of the Board's resolution.
b) Parties to the divestment transaction shall provide monthly update of the
investment status to the Commission.
c) Upon final approval, the Commission shall issue new registration documents.

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9 OUTSOURCING

9.1 Introduction
a) Insurers in Nigeria are increasingly using outsourcing, as a means of both
reducing cost and accessing expertise, not available internally and achieving
strategic aims. 'Outsourcing' is “insurer's use of a third party (either an
affiliated entity within a corporate group or an entity that is external to the
corporate group) to perform activities on a continuing basis that would
normally be undertaken by the insurer itself, now or in the future”. These
outsourcing arrangements are becoming increasingly complex.

b) Joint Forum set up by Basel Committee on Banking Supervision, International

Organization of Securities Commissions and International Association of
Insurance Supervisors has devised high-level principles on outsourcing in
financial firms which gives guidance to firms, and to regulators, in effectively
managing risks involved in outsourcing without hindering the efficiency and
effectiveness of firms.

c) These Guidelines are issued based on best practices adopted internationally

as outlined in above documents and under the provisions of the Insurance Act
2003 and National Insurance Commission Act 1997. The aim is to provide
direction and guidance to insurers and ensure proper corporate and
regulatory oversight over their outsourcing of activities.

d) Except otherwise stated, in these Guidelines, reference to Insurer also

include Reinsurer.

9.2 General Requirements

An insurer shall ensure that:
a) Outsourcing arrangements neither diminish its ability to fulfill its obligations to
policyholders nor impede effective supervision by the Commission.

b) The service provider employs the same standards in performing the services as
would be employed by them if the activities were conducted in house.
Accordingly, insurers shall not engage in outsourcing that would result in their
internal control, business conduct or reputation being compromised or
weakened

9.2.1 Broad classification of activities of Insurers

In these Guidelines, the activities of insurers are broadly classified into two categories
namely-”Core” and “Non-Core.”

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a) Core Activities
All activities relating to the following shall be deemed as core activities:-

I) Underwriting,

ii) Enterprise Risk Management

iii) Investment and related functions

iv) Accounting functions

v) Claims Management

vi) Complaint Management

vii) Compliance with AML/CFT Requirements

An Insurer shall not outsource any of the core activities listed above

b) Non Core Activities

Any activity not listed above may be outsourced, provided that the following
activities may not constitute outsourcing for the purposes of this guideline:
i) Sale of insurance policies by agents or insurance brokers, and
ancillary services relating to those sales

ii) Reinsurance cession

iii) Independent advisory and consultancy services

iv) Loss adjusting service

v) Independent audit review

vi) Medical examination by assigned medical and health clinics and

centres

vii) Market information services

viii) Purchase of goods and commodities

ix) Repair and maintenance of fixed assets

x) Maintenance and support of licensed software

xi) Specialized recruitment and procurement of specialized training

xii) Employment of contract or temporary personnel

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xiii) Common network infrastructure (e.g. VISA, MasterCard)

xiv) Banking services

xv) Printing services

xvi) Transportation services

xvii) Mail and courier services

xviii) Cleaning services

xix) Utilities and telephone

xx) Any other services as the Commission may from time to time prescribe

9.2.2 An insurer shall, prior to the outsourcing any services, have a written Board approved
outsourcing policy, which at a minimum shall provide for the following:

a) The objectives of outsourcing and criteria for approving an outsourcing

arrangement;

b) The framework for evaluating the materiality of outsourcing arrangements;

c) The framework for a comprehensive assessment of risks involved in

outsourcing and management of the risk

d) The framework for monitoring and controlling outsourcing arrangements;

e) The identities of the parties involved and their roles and responsibilities in
approving, assessing and monitoring the outsourcing arrangements, and
how those responsibilities may be delegated and details of any authority
limits; and

f) The review mechanism to ensure the outsourcing policy and the monitoring
and control procedures are capable to accommodate changing
circumstances of the insurer and cater for market, legal and regulatory
developments.

9.2.3 An insurer shall have in place, appropriate documented procedure manual and ensure
that the procedures are such that all relevant staff of the insurers are fully aware of, and
comply with, the outsourcing policy.

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9.2.4 The Board of Directors of an insurer shall review the performance of all third party
service providers every year with respect to compliance with provisions of extant laws
and regulations.

9.2.5 In case of termination of contract between insurer and third party service provider, the
compensation or penalty or any payment in lieu of foreclosure shall be reasonable and
shall not be excessive.

9.2.6 An Insurer shall establish a comprehensive outsourcing risk management framework

to address the outsourced activities and the relationship with the service provider,
which at a minimum shall cover the following:

a) The financial, reputational and operational impact on the insurance company

of the failure of a service provider to adequately perform the activity

b) Cost Benefit Analysis;

c) Potential losses to policyholders and their counterparts in the event of a

service provider failure;

d) Consequences of outsourcing the activity on the ability and capacity of the

insurer to conform with regulatory requirements and changes in
requirements,

e) Interrelationship of the outsourced activity with other activities within the

Insurance Company.

f) Affiliation or other relationship between the insurer and the service provider;

g) Regulatory status of the service provider; degree of difficulty and time

required to select an alternative service provider or to bring the business
activity in-house, if necessary;

h) Complexity of the outsourcing arrangement. For example, the ability to

control the risks where more than one service provider collaborates to deliver
an end-to-end outsourcing solution; and

i) Data protection, security and other risks management capacities of the

service providers.

9.2.7 Outsourcing arrangement shall be governed by a written contract that clearly

describes all material aspects of the outsourcing arrangement, including the rights,
responsibilities, and expectations of all parties. The outsourcing contracts shall, at a
minimum, contain the following components:-

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a) Clearly defined activities to be outsourced, including appropriate service and

performance levels. The service provider's ability to meet performance
requirements in both quantitative and qualitative terms should be assessable
in advance;

b) A statement that the contract shall neither prevent nor impede the insurer from
meeting its respective regulatory obligations, nor the regulator from
exercising its regulatory powers of conducting inspection, investigation,
obtaining information from either the insurer or the third party service provider.

c) A provision which confers on the insurer right of access to all books, records
and information relevant to the outsourced activity in the third party service
provider;

d) A provision for continuous monitoring and assessment by the insurer of the

service provider to enable prompt remedial actions where necessary;

e) A termination clause and minimum periods to execute a termination provision.

The termination clause shall allow the outsourced services to be transferred
to another third-party service provider or to the insurer. Also the clause shall
include provisions relating to insolvency or other material changes in the
corporate form, and clear delineation of ownership of intellectual property
following termination, including transfers of information back to the insurer
and other duties that continue to have an effect after the termination of the
contract.

f) Insurer and its third party service providers shall establish and maintain
contingency plans, including a plan for disaster recovery and periodic testing
of backup facilities.

g) The insurer shall take appropriate steps to require that third party service
providers protect confidential information of both the insurer and its clients
from intentional or inadvertent disclosure to unauthorized persons.

h) The insurer shall ensure that the third party service provider does not have
any conflict of interest. The third party service provider or any of their group
entities shall not be able to derive any benefit by causing loss to the insurer or
policyholder. For instance the third party service provider shall not have the
responsibility of repairing the damaged vehicle, supply of spare parts and
marketing of the policy. In case of existence of conflict of interest among group
entities, the insurer shall avoid outsourcing to such entities.

I) No employee of the insurer shall be directly or indirectly involved in (i) creation

of or (ii) any outsourced activity of the outsourced entity.

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j) The insurer shall ensure that there is no risk of loss of control over outsourced
activity and potential impersonal treatment of policy holder / agents, before
outsourcing any activity.

k) Where the third party service provider is either a group entity and having a
common director with the insurer, the insurer shall ensure that the transfer
pricing is done according to the sound principles and or all such transactions
shall be disclosed to the Commission as soon as the agreement is completed
and before payment is made to the third party service provider.

l) Provisions relating to dispute resolution, liability and indemnity, insurance etc.

9.2.8 Outsourcing of activities allowed in these guidelines is subject to following general

principles.

a) Subject to the provisions of these Guidelines, insurance brokers, agents and

other regulated entities and professionals shall not be contracted to perform
any outsourced activity other than those permitted by the respective rules and
regulations governing their licensing and functioning.

b) In considering or renewing an outsourcing arrangement, appropriate due

diligence should be performed to assess the capability of the service provider
to comply with obligations in the outsourcing agreement. The due diligence
shall take into consideration qualitative and quantitative, financial,
operational and reputational factors.

c) An insurer shall ensure that the service provider's systems are compatible
with its own and also their standards of performance are acceptable to it.
Where possible, the insurer should obtain independent reviews and market
feedback on the service provider to supplement its own findings.

d) The due diligence shall involve an evaluation of all available information about
the service provider, including but not limited to:-

i) Past experience and competence to implement and support the

proposed activity over the contracted period;

ii) Financial soundness and ability to service commitments even under

adverse conditions;

iii) Business reputation and culture, compliance, complaints and

outstanding or potential litigation;

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iv) Security and internal control, audit coverage, reporting and

monitoring environment, business continuity management;

v) External factors like political, economic, social and legal environment

of the jurisdiction in which the service provider operates and other
events that may impact service performance.

vi) Ensuring due diligence by service provider of its employees.

9.2.9 Reporting Requirements:

The activities outsourced under these guidelines shall be reported to the Commission
within 30 days from the date of entering into outsourcing agreement and thereafter bi-
annually. The report shall be filed using Form OF1.

9.2.10 Remedies for Grievances related to Outsourced Services

a) Every insurer shall have an in-house complaint management machinery to

deal with grievances relating to services provided by the outsourced
agencies. Wide publicity should be given through print and electronic media
on this. The complaint management machinery shall deal with every
grievance in a fair, objective and just manner and provide detailed explanation
in writing to the policyholder, beneficiary or third-party for every grievance
denied. It shall also analyze grievances received to help identification of the
problem areas in which modifications of policies and procedures could be
undertaken with a view to making the delivery of services easier and more
expeditious.

b) Where the services of a service provider are terminated by an insurer on

grounds of mischief, fraud and non compliance with terms and conditions of
outsourcing agreement, the insurer shall promptly notify Commission and
providing reasons for such termination.

c) These guidelines shall not be construed to be authorizing any activity which

otherwise is prohibited by extant laws and regulations.

d) An insurer shall terminate all existing outsourcing contracts entered into in

contravention of these guidelines within ninety (90) days from the date of
commencement of these guidelines.

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Form OF 1

S/N Particulars First 6 months Up to 12 months

1. Activity out sourced (detailed

description)

2. Name of the Vendor

3. Total Amount Agreed

4. Amount Paid so far

5. Whether vendor belongs to

insurer group
6. %of outsourcing payments to
Operating Expense

Date : Signature of CEO

Commissioner for Insurance

Federal Republic of Nigeria
July 2015

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