This article will be focused on Insurance Agents under the Insurance Act of Nigeria, particularly the topics of :-
– Persons qualified to be Insurance agents
– Duties of an Insurer & Agent
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– The requirement of registration for insurance brokers
– Cancellation of registration
– Requirements as to indemnity cover and staff.
What are the provisions of the Insurance Act on insurance agents?
– No person shall transact business as an insurance agent unless he :-
a). Possesses a certificate of proficiency issued in the name of the individual applicant by the Chartered Insurance Institute Of Nigeria (or “The Institute”).
b). Is duly appointed by an insurer and licensed in that behalf under this Act.
– An application for a license as an insurance agent shall be made to the National Insurance Commission (NAICOM) in the prescribed form and be accompanied by the prescribed fee and such other documents as prescribed, from time to time.
– If NAICOM is satisfied that the applicant has satisfied the requirements of this section or such other requirements as may be prescribed, it shall license the applicant as an insurance agent.
– A license issued under this section shall entitle the holder to act as an insurance agent for the insurers named in the license and shall , subject to this section, be renewable every year on payment of the prescribed fee.
Who is not allowed to be an insurance agent under the Insurance Act?
– A minor
– A person not certified by the Institute
– A convict on grounds of criminal misappropriation or funds or breach of trust or cheating, shall not be qualified for appointment as an agent under the Insurance Act.
What are the duties of insurer & agent under the Insurance Act?
– An insurer who employs the services of an insurance agent and every person who acts for an insurer in that behalf shall maintain a register showing the name and address of every insurance agent & the date on which his services were employed and where applicable, terminated.
– Where an insurance business is transacted through an insurance agent, the agent shall immediately pay to the insurer any premium collected by him.
– A person who transacts business as an insurance agent with being duly appointed commits an offence and is liable on conviction to a fine of 100,000.00 Naira or to imprisonment for a term of 3 years or to both such fine and imprisonmentand in addition, the court may make an order requiring the person to refund any sums collected by him, while so transacting the business, to the rightful owner or other persons entitled thereto.
What does the act say on the requirement for insurance brokers in Nigeria to be registered?
– No person shall transact business in Nigeria as an insurance broker unless he is registered under the Act.
– Applications for registration as insurance brokers shall be made to the commission in the prescribed form & accompanied by the prescribed fee and such other documents as may be prescribed,from time to time.
– No form or company shall be registered under the act unless each partner, chief executive and executive director is registered as an insurance broker by the Institute.
– Every insurance broker shall pay to the commission, not later than the 30th of June every year, a levy equivalent to 1% of its gross commission or 25 Thousand Naira, whichever is higher.
What does the act say on the cancellation of an insurance broker’s registration?
– If NAICOM is satisfied that a registered insurance broker +
a). has knowingly or recklessly contravened the provisions of the Insurance Act;
b). practices as a loss adjusters;
c). has, for the purpose of obtaining a license or paying a levy to the commission made a statement which is false in any material particular;
d). has been found guilty by a court of competent jurisdiction of fraudulent or dishonest practices (including misappropriation of clients’ money).
What is the extent of the requirements regarding indemnity cover and staff under the Act?
– An insurance broking firm or company shall –
a). Maintain a professional indemnity cover of not less than 10 Million Naira or 50% of its annual brokerage income for the preceding year, whichever is greater.
b).Have as a member of its senior management at least one person who has a professional qualification in insurance or at least a 7 year experience span at senior management level with an insurer or Insurance broking firm.
c). Not hold directly or indirectly , financial interest :-
(i). in excess of 10% in an insurance company,or
(ii). in a loss adjusting company in Nigeria.
d). Keep s register of business transacted by him on an annual basis.
What are the provisions of the act on registration suspension for brokers?
– Where an insurance broker fails to comply with the provisions of this act, the commission may, without prejudice to any further sanction suspend him for a period of not more than 6 months.