Business
Distribution Channels’ll Deepen Insurance Penetration -NAICOM
The National Insurance Commission (NAICOM) has said that the introduction of distribution channels would help in deepening insurance penetration in the country.
Head, Corporate Affairs of NAICOM, Mr Rasaaq Salami, said this in an interview with newsmen in Abuja, yesterday.
Salami said that the channels were measures by the commission to enhance penetration that would cut across all strata of the economy.
“We know the distribution channels of insurance,they are the brokers, agents and the insurance companies.
“But we tried to look for ways of enhancing penetration through distribution that will cut across all strata of the economy
“We feel that if we have other segments or sectors of the economy, having to play a role in insurance distribution, enhance insurance penetration in the country,’’ he said.
According to Salami, the channels are not meant to sell insurance products to act like referral agents of insurance products.
He further said the channels would work in partnership with the various insurance companies and operators, with the approval of the commission.
“For instance, as a stock broker, you have your already existing clients and its possible that some of these your clients are not doing insurance of their assets and their property.
“A lawyer who has a law firm with clients all over the country you could collaborate with an insurance company based on this expansion.
“You could also refer those clients to the insurance companies to do insurance with. Your duty is to refer your clients; you are not selling insurance to them.
“This is because these distribution channels do not have the technical knowledge of insurance, so they cannot sell insurance but can refer their clients to the insurance companies to buy insurance.
“This collaboration is done based on agreement between the parties and NAICOM will register that channel as a referral agent to the insurance company.
According to Salami, insinuations on the ills of the distribution channels are mainly as a result of ignorance of the essence of the initiative.
According to him, by the time those who are pessimistic about the distribution channels see the guidelines, they will understand that the move is not to take people out of business, but enhance it.
Reports say that some Nigerians are of the opinion that the introduction of the distribution channels will “chase some insurance operators out of insurance business”.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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