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Operational Guidelines 2011-Insurers and Reinsurers

Category: Regulators


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Operational Guidelines 2011-Insurers and Reinsurers

 

1.0 Accounts and Returns
1.1 Filing of Annual Returns and Accounts:
a) All Insurance and Re-insurance companies shall submit to the Commission three copies each of duly audited financial statements and annual returns in prescribed forms (See Insurance Regulations 2003 and the approved financial reporting standard). In respect of operation of the company for 2010, returns shall be filed on or before 30th June, 2011.              
b) The following items shall accompany audited annual returns:
i.   Copy of management letter and the response of the management to the issues raised therein;
ii.   Certificate of solvency issued by the external auditors in the case of non-life;
iii.   Certificate of solvency issued by the actuary in the case of life
iv.   Two copies of actuarial valuation report;
v.   Schedule of unexpired risk for general business presented in the format of form G.3;
vi.   Schedule of outstanding claims at the year end according to age analysis and in the format of form G.2C;
vii.   Schedule of outstanding premium debt at the year end according to age analysis and in the format of form G.2P;
viii.   Schedule of investments hypothecated according to the funds and supported with relevant proof of existence and ownership;
ix.   Schedule of fixed assets purchased during the year supported with verifiable evidence;
x.   Personnel returns for the year presented in the format of form G.4, and;
xi.   Evidence of payment of filing fees and penalties for late submission, if applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
c) In rendering annual returns, composite insurers shall adhere strictly to the provision of Section 19 of the Insurance Act 2003 regarding separation of accounts and reserve funds.
d) Late filing of annual returns shall in accordance with section 26(3) of the Insurance Act, 2003 attracts a fine of N5000.00 per day for each day of default.
e) Failure to file annual returns as prescribed by Section 26 of the Insurance Act, 2003 constitutes a ground for cancellation of      operating license.
e) 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.
g) Cash flow statements shall be prepared and presented on Direct Method Basis.
 
1.2 Accounting Period:
For purposes of compliance with 1.1 above, accounting period shall run from 1st January to 31st December, 2010.
1.3 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         N200,000
b) Life or General        N100,000
c) Reinsurers                N200,000
1.4 Approval of Annual Returns:
a) All Insurers and Re-insurers shall obtain approval of their annual returns and accounts from the Commission before consideration by the shareholders at their annual general meeting (AGM) and distribution of dividends to shareholders.
b) Insurers and Re-insurers shall not publish their                                                                     financial statements in any national newspaper except as stipulated in Sections 26 (4) & 27 (6) of the Insurance Act 2003 and in compliance with 2.1 above.
1.5 Solvency Margin:
 For the purpose of determining the solvency margin of any insurer or re-insurer, the paid up share capital as contained in the recapitalization Guidelines of 2005, shall mean the minimum capital base defined as follows:    
a.   Issued and paid
 b.   Statutory Reserves
 c.   Share Premium
 d.   General Reserves
 e.   Bonus Issue Reserves
 Less: - Goodwill
-    Other intangible and fictitious assets
-    Under- provisions as per audited accounts
-    Premium Debts
1.6 Admissible Assets and liabilities:
a) For purposes of calculating the solvency status of insurance and reinsurance companies, the admissible assets and liabilities shall be as prescribed in section 24 of the Insurance Act, 2003 and shall include:
o   Deferred acquisition cost;
o   Prepaid reinsurance cost.
b) For avoidance of doubts, the following shall not form part of admissible assets under Section 24 of the Insurance Act, 2003.
1. All investments / assets not in the name of the insurance company;
2. Investments in excess of the limits prescribed in section 1.10 (b) (vi) of this guideline;
3. Revaluation surplus of assets/ investment properties that have not stayed in the books for three years;
4. Good will; and
5. Deferred tax assets
6. Investment in foreign securities. . (For the purpose of 1.6 (b) (6), foreign investment shall be any investment in securities outside Nigeria whether quoted or unquoted)
c) Liabilities for the purpose of section 24 of the Insurance Act, 2003 shall exclude deferred tax.
 1.7 Net Premium:
Net premium shall be defined as “Gross premium written less re-insurance paid during the year under review”.
1.8 Minimum Solvency Margin:
a) 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 Base whichever is higher.
b)   In computing the solvency margin of reinsurance companies, the minimum capital base applicable to general business shall be N6 billion.
1.9 Revaluation of Fixed Assets/Investment Properties
 Without prejudice to the provisions of Companies and Allied Matters Act 2004, reserves arising from revaluation of Fixed Assets of Insurance and Reinsurance Companies shall not be recognized as part of the assets of the company except approved by the Commission and incorporated in the books for not less than 3 (three) years prior to the reporting year.
1.10 Investments
The following shall apply with respect to investments.
a) Investment Policies
All Insurers and Reinsurers shall have investment policies duly approved by the board. Such policies shall recognize the nature and differences between funds available to the insurers/ reinsurers.
b) Asset Allocation:
All Insurer/Reinsurers shall structure their 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:
i. Not more than 20% of the total current accounts balances   and bank placements shall be placed in any one bank
ii. 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.
 Quoted equity, not more 50%
 Unquoted equity, not more than 10%
 Equipment leasing, not more than 5%
 Property:
- In the case of Life insurance funds, not more than 35%
- In the case of Non- life insurance funds, not more 25%
iii.   No insurer/ reinsurer shall invest in its parent company
iv.   Insurance funds shall not be invested in any subsidiary
v.   Investment of shareholders funds in associates, subsidiaries and related companies should be limited to 25% of such funds.
vi.   Not more than 20% of the total equity investment shall be placed in the security of one company.
c) Investment Selection
a)   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.
b)   No Insurer/Reinsurer shall invest in any company that either has not reported profits or paid dividend in the preceding three years.
c)   Insurers/Reinsurers may invest in bankers acceptance and commercial papers guaranteed by an issuing bank.
d) Investment of proceeds of capital raisings
No Insurer/ Reinsurer shall invest more than 25% of the proceeds of public offers and private placements of shares in non-insurance related companies or ventures.
e) Investment Accounting and Reporting
1)   Valuation of Investments
Investments held by insurance and re-insurance Companies shall be valued as follows:
i. Quoted stocks held on long term basis shall be at market value.
ii. Unquoted stocks shall be at the lower of cost or net realizable value
iii. Short term investment (including quoted stocks) shall be at the lower of cost or net realizable value.
2)   In line with section 17(1) (f) of the Insurance Act 2003, all insurers/ Reinsures shall keep and maintain a register of all investments.
3)   All Investments relating to insurance funds shall be distinguished from those representing other funds in the financial statements.
4) All investments representing insurance funds shall be specifically indicated in the records of the custodians/registrars.
1.11 Age Analysis of Outstanding Claims:
a)   All Insurers and Re-insurers 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. 365 days and above.
b)   Form G2 of this guideline shall be the acceptable presentation format.
 
1.12 Premium Debtors
a) Statement of Accounts:
All insurers and reinsurers shall prepare and forward to the Commission quarterly statement of accounts in respect of premium transactions with brokers, insurers and reinsurers as the case may be.
b)   Age Analysis of Outstanding Premium Debts:
i. All Insurers and Re-insurers shall disclose in their audited annual returns to the Commission, the sum outstanding as premium debts as at the end of the year according to age analysis as follows:
S/No. Age of Debt
1 Under 90 Days
2 91 – 180 Days
3 Above 180 Days
ii.   Also to be included in the audited annual return is the details of brokers whose individual indebtedness is more than N500, 000 as at the end of the period of report.
iii.   Form G2 (P) of this Guidelines shall be the acceptable presentation format.
1.13   Provisions:
a) The following mandatory minimum provisions for bad debts shall be made in respect of Premium debtors:
S/No Age of Debt Provisions
1 Under 90 Days Nil
2 91 – 180 Days    50%
3 Above 180 Days 100%
b) Provision for outstanding premium debts shall take into account relevant premiums received after the year end.
c) Amount of outstanding premium received after year end shall be disclosed in the financial statements and relevant details submitted along with annual returns.
1.14 Quarterly Returns:
All Insurers and Re-insurers shall within thirty (30) days from the end of each quarter file management account of their operations as at the end of the quarter with the Commission as follows:
 
a. Insurers & Reinsurers (General Business)
i. Statement of premium transaction by class of business (in line with form 11a items 1 – 10)
ii. Statement of commission by class of business (in line with form 11b items 1 – 5)
iii. Statement of claims by class of business (in line with   form 11c items 1 – 5: 9-10)
iv. Statement of management expenses (in line with form   11d)
v. Quarterly balance sheet (in line with form 9)
vi. Revenue account in line with Form 11
vii. Profit and loss account
b. Insurers and Re-insurers: (Life)
i. Quarterly revenue account (in line with form 12)
ii. Quarterly balance sheet (in line with form 8)
iii. Quarterly statement of claims (in line with form 12a).
iv. Quarterly statement of policy exhibit stating only:-
• Number of policies
• Sums assured
• Related annual premium
v. Quarterly statement of pension business including deposit administration stating:-
• Type of pension and annuity business
• Number of policies / contracts
• Total premium/contribution.
vi. Profit & loss account.
d) The first quarter return shall reflect the position of the audited financial statements of the preceding year. For avoidance of doubts subsequent quarterly returns shall reflect the position of the immediate preceding quarter.
e) All quarterly returns shall be accompanied by the schedule of outstanding claims in the format of form G5.
 
1.15 Personnel Returns:
a. All Insurers and Reinsurers shall each file with the Commission the personnel status of its establishments as at the end of each quarter in line with the format set out in form G4.
b. Every member of staff of all Insurers and Reinsurers, including executive directors, must be full time employees on the company’s pay roll.
1.16 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 shall 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.
1.17   Disclosure of 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.
1.18 Fraud & Related Malpractices:
All Insurers and Re-insurers shall each file with the Commission on quarterly basis, details of financial malpractices established against its staff, clients or any other persons. The details shall include but not limited to the following:
a. Identity of perpetrator
b. Nature of malpractice
c. Amount involved
d. Penalty
e. Preventive measures
1.19 Insurance Levy Returns:
a) All Insurers and Re-insurers shall not later than 31st of March 2011 file with the Commission a duly completed assessment forms 1A & 1B of Insurance Regulations 2003 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 financial statement as at 31st December, 2010. Any amount assessed must be fully settled on or before 30th September, 2011.
 
b) Every sum payable by any Insurer or Reinsurer by way of insurance levy that remained unpaid after 30th September of the year of assessment shall attract interest at the rate of 2 ½% above the Central Bank of Nigeria Monetary Policy Rate (MPR).
 1.20 False Returns and Information
All Insurers and Re-insurers are reminded of the provisions of Section 81 (2) of Insurance Act 2003 and Section 30 (1a) of the    National Insurance Commission Act 1997, that making false return and/ or recklessly giving false information to the Commission attracts fine of N100, 000.00.      
2.0 TECHNICAL
2.1 All Insurers and Re-insurers shall obtain approval of their annual returns and accounts from the Commission before consideration by the shareholders at their annual general meeting (AGM) and distribution of dividends to shareholders.
2.2 Submission of returns shall be made not less than 30 days before proposed date of notification for the annual general meeting.
2.3 All Insurers and Reinsurers shall forward to the Commission along with their annual returns, a copy of management letter and management response to the issues raised therein.
2.4 Insurers and Re-insurers shall not publish their financial statements in any national newspaper except as stipulated in Sections 26 (4) & 27 (6) of the Insurance Act 2003 and in compliance with 8.1 above
2.5. Failure to obtain prior approval as in 8.1 to 8.4 above shall attract sanction as prescribed under the provisions of the Insurance Act, 2003.
2.6. In compliance with S. 20(1) (a) of Insurance Act 2003, a class-byclass schedule of unexpired risks for general business presented in the format of Form G3 shall form part of an insurer’s annual returns. The presentation for each class shall be month-by-month in order of commencement dates.
2.7. All financial reports of all Insurers and Re-insurers shall disclose existing off- balance sheet items.
2.1 Rates and Rebates:
a) It shall be illegal for any Insurer or Re-insurer to grant any rebates in the transaction of insurance business except as stipulated by law.
b) An Insurer or Re-insurer, who grants a rebate contrary to 2.1 above, may in addition to the penalty prescribed by Section 49 of National Insurance Commission Act 1997 be liable to suspension from writing that class of business for a period of not more than six months.
 
2.2 Re-Insurance Treaties and Retrocession Arrangements:
a) All reinsurance arrangements must be considered and approved by the    Board of Directors.
b) All reinsurance and retrocession arrangements must be concluded and a copy filed with the Commission on or before 31st December of the preceding year (i.e. 2011 arrangement shall be filed on or before 31st December 2010).
2.3 Details of Foreign Reinsurers:
All Insurers and Reinsurers dealing with foreign reinsurers and retrocessionaires shall file with the Commission details of such foreign operators indicating their;
a) Names
b) Addresses
c) Telephone number
d) E-mail address
e) Website
f) Any other relevant information
2.4 Actuarial Department:
 Every Insurer or Re-insurer that offers life business shall establish an Actuarial department to be manned by an actuary or person with relevant qualification and experience.
2.5 Risk Management Department:
Every Insurer and Re-insurer shall establish a Risk Management Department to be manned by a person with relevant qualification and experience.
2.6 Product Development and Approval:
a) All Insurers and Re-insurers are encouraged to establish Research and Business Development department for their operations.
b) An application for new product shall be accompanied by:
i.   Specimen copies of proposal forms;
ii.   Specimen copies of policy forms;
iii.   The policy wordings/documentations together with any riders and endorsements;
iv.   Specimen copies of claims forms;
v.   Actuarial statements (Life Products);
vi.   Letter of consent from reinsurer;
vii.   Marketing Brochure; and
viii.   Application fee.
c) In order to encourage new product development, the Commission is waiving payment of processing fee for 2011.
d) Approval of any advertisement by the Commission shall attract a processing fee of N50, 000.00 only.
2.7 Distribution Channel:
a) Every Insurer is encouraged to establish at least a branch office in each of the geo-political zones of the federation for effective service delivery.
b) Approval by the Commission must be obtained before the establishment of any branch office.
2.8 Heads of Departments:
a) In addition to such other departments as may be required to be maintained by Insurers and Re-insurers by any law and/or regulation for the time being in force, all Insurers and Re-insurers shall have and maintain the following departments: Audit; Actuarial (in case of life office); Risk Management; and Information Technology
b) In all cases, the Heads of departments must be persons having professional qualification and experience in the relevant fields.
2.9 Off-Shore Operations:
a. Any Insurer or Re-insurer operating or intending to operate an off-shore or subsidiary shall seek and obtain approval from the Commission to commence or continue business.
b. Quarterly and annual returns on the operations of such off-shores or subsidiaries shall be filed with the Commission in line with paragraphs 1.1& 1.13 above.
2.10 Returned Premium
a)   All Insurers and Reinsurers shall keep and maintain a register of returned premiums.
b) All payments for returned premium shall be made in the name of the original insured or proposer.
CORPORATE GOVERNANCE
The Board of Directors of all Insurers and Re-insurers shall ensure sound business practice and effective compliance with all statutory requirements and the Code of good corporate governance for the Insurance Industry.
3.1 NAICOM Relations Officer (NRO)
a) All Insurers and Re-insurers are required to appoint a senior member of staff not below the rank of Assistant General Manager as NRO whose duties shall include:
i) Vetting of all returns to the Commission
ii) Ensure compliance with all statutory requirements.
iii)   Ensure 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.
a) The NROs who shall report directly to the Chief Executive Officer shall be at liberty to report to the Commission any observation or conducts which are inconsistent with the statutory provisions and / or standard practice within the Insurance Industry.
 
b) The NROs shall file quarterly reports to the Commission.
3.2 Audit:
a. The tenure of an appointed External Auditor in an insurance company shall be for a maximum of 5 years. All appointments for External Auditor shall be communicated to the Commission.
b. All Insurers and Re-insurers shall establish an Internal Audit unit to be headed by a professionally qualified Accountant who must be a senior management staff.
c. The Internal Audit report of all Insurers and Re-insurers shall be filed with the Commission every quarter.
3.3 Change of Name:
         The following shall apply with respect to change of name:
a). Before filing any application for change of name at the Corporate Affairs Commission (CAC) the company shall:
i)   Submit to the Commission an extract of Board Resolution as to the    decision to change the name;
ii) Submit to the Commission the proposed name for ‘no objection’ certification; and
          iii) Pay the appropriate fee as determined by the Commission.
 
         b). Upon securing a new name from the CAC the company shall:
i)    Submit to the Commission certified copy of certificate of change of name;
ii)   Publish the change of name in at least two widely read national newspapers; and
iii) Surrender certificate earlier issued by the Commission bearing the former name(s).
3.4 Changes in Ownership/Directorship:
a) All changes in ownership of any insurance and re-insurance company that will entitle any individual to control (directly or indirectly) up to 25% holding of its shares must be cleared with the Commission before such transactions are concluded.
b) A proposal to appoint a Chief Executive Officer (CEO) for an Insurer or Reinsurer must be filed with the Commission before any appointment is made. Upon filing such proposal the Commission shall not later than 30days approve or decline the proposal and give reason(s) for declining. Where the Commission approves the proposal, the appointment shall be concluded and details forwarded to the Commission.
4.0 COMPLIANCE WITH ANTI MONEY LAUNDERING LAWS:
All Insurers and Reinsurers shall each file with the Commission the personnel status of its establishments as at the end of each quarter in line with the format set out in form G4.
4.1 Every member of staff of all Insurers and Reinsurers, including executive directors, must be full time employees on the company’s pay roll.
4.1 Display of Provisions of Money Laundering Act
All Insurers and Re-insurers shall display visibly in all their operation centres nationwide the provisions of the Money Laundering (Prohibition) Act 2004 regarding their duty to file cash transaction reports (CTRs) and suspicious transaction reports (STRs) with the Nigeria Financial Intelligence Unit (NFIU) and forward copies to the Commission.      
4.2 Customer Identification:
a)   In line with the provisions of the Money Laundering (Prohibition) Act 2004, it is mandatory for all Insurers and Re-insurers to identify their customer and their customer’s businesses before entering into or establishing any business relationship with the customer.
b)   Customer identification shall be in compliance with the     provisions of the Know Your Customers Guidelines (KYCG)   issued by the National Insurance Commission and other    guidelines/regulations which may be issued or made by     the Economic and Financial Crimes Commission (EFCC) from   time to time.
4.3 Cash Transaction Reports (CTR):
All Insurers and Re-insurers shall report to the Nigeria Financial Intelligence Unit (NFIU) within 7 (seven) days any single cash transaction, lodgements or transfer of funds in excess of:
a. N1,000,000 or its equivalent in the case of an individual, or
b.   N5, 000,000 or its equivalent in the case of a corporate body.
Form AML-001 shall be the accepted format for the report.
Failure to file CTR will attract various penalties as contained in the relevant laws.
4.4 Suspicious Transactions Report (STR):
a) All suspicious transactions, the amount involved notwithstanding, shall be filed with the NFIU within 7 (seven) days of such transaction.   Form AML-001 shall be the accepted format for the report.
b) Failure to file STR will attract various penalties as contained in the relevant laws.
4.5   Filing of Nil Return:
For the purpose of effective industry compliance, where neither cash      transaction in excess of the limit prescribed nor any suspicious transaction is recorded, the Insurer or Reinsurer in question is nevertheless required to file a nil return on a monthly basis to NFIU and copy the Commission.                                                                      
4.6   Appointment of Compliance Officer:
a) All Insurers and Re-insurers shall appoint a Compliance Officer not     below the rank of an Assistant General Manager who shall be responsible for monitoring and ensuring compliance with all anti-money laundering laws, regulations and guidelines.
b) The details of the appointed compliance officer and any changes thereof shall be filed with the Commission.
c) Annual report of activities of the Compliance Officer shall be filed with the Commission not later than 31st January following the year of report.
 
4.7 Training:
a) Every Insurer and Re-insurer shall organise regular in-house               training on AML/CFT in line with the provisions of Section 9 (1b) of    the Money Laundering (Prohibition) Act 2004.
b) Failure to organise the required training will attract various penalties   under the relevant provisions of the Money Laundering (Prohibition) Act 2004 and the Economic and Financial Crimes Commission (Establishment) Act 2004.
5.0 Miscellaneous Provisions
5.1 Letter of attestation and approval in principle:
 In line with Section 72 (4) of the Insurance Act 2003 no person shall transact insurance or reinsurance business with a foreign insurer/reinsurer in respect of any life; asset, interest or other properties in Nigeria businesses classified as domestic insurance without first obtaining Approval in Principle and Letter of Attestation / Certificate to Reinsure Abroad.
5.2   Approval in Principle to Reinsure Abroad:
All requests for approval in principle to place a specified proportion of risk abroad shall be accompanied with the following:
a) Risk details: this may be in form of quotation stating all the content of the risk, the subject matter of the insurance and the insured event;
b) Sum insured;
c) Proportion of the risk to be retained in the Nigeria market;
d) Proportion of the risk to be ceded abroad;
e) Details of intending foreign reinsurer and / or brokers such as:
?   Name of the companies;
?   Addresses;
?   Proportion of risk to be taken; and
?   Phone numbers / email addresses of contact persons.
f) Schedule of local underwriters (if available).
g) The cadent / applicant shall provide the following contact addresses for ease of communication:
? Mobile contact numbers, direct lines / extension and email address (s) of the officer (s) endorsing letter;
? Contact address of the Abuja office of the ceding company.
i. Details of the placement shall be made available on conclusion of the placement;
ii. An undertaking to remit the 1% ISS levy to the Commission within 15 days from the date of receipt of the AIP.
5.3 Letter of Attestation / Certificate to Reinsure Abroad (LOA/CRA):
 All requests for letter of attestation / certificate to reinsurance abroad shall be accompanied with the following:
a) Risk details: This may be in form of quotation stating all the content of the risk, the subject matter of the insurance and the insured event.
b) Sum insured;
c) Premium calculation sheet;
d) Proportion of the risk to be retained in the Nigeria market;
e) Signed slip of local underwriters;
f) Proportion of the risk to be ceded abroad;
g) Policy documents which will include the policy wordings, conditions and exceptions / exclusions, etc
h) Details of foreign brokers (where the business is not placed directly) and commissions payable.
i) Details of foreign reinsurers such as:
? Name of the companies;
? Addresses;
? Proportion of risk to be taken; and
? Phone numbers / email addresses of contact person.
j) Schedule of local underwriters including the endorsed placement slip;
k) Cheque or Bank Draft equivalence or 1% of Gross premium ISS levy due to the Commission;
l) The cadent shall provide the following contact addresses for ease of communication;
? Mobile contact numbers, direct lines / extension and e-mail address(s) of the officer (s) endorsing the letter;
? Contact address of the Abuja Office of the ceding company.
m) For aviation placements, the policy must conform to the Nigerian Civil Aviation Authority (NCAA)’s US$100,000 minimum passenger liability per passenger.
 
 
5.4 Commission Payable on Group Life
 In line with section 53 (1) of the Insurance Act 2003, Commission payable to an Insurance Agent, Broker or any Intermediary on Group Life Assurance Business shall not exceed 8% of the premium.
6.0     ADOPTION OF IFRS
6.1 For the purpose of determining the solvency margin of any insurer or re-insurer, the paid up share capital as contained in Section 24(2) of the Insurance Act 2003, shall mean the minimum capital base defined as follows:
a. Issued and paid
b. Statutory Reserves
c. Share Premium
d. General Reserves
e. Bonus Issue Reserves
    Less: - Goodwill
    - Other intangible and fictitious assets
    - Under- provisions as per audited accounts
    - Premium Debts
6.2 Admissible Assets and Liabilities
For the purpose of calculating the solvency status of insurance andre-insurance companies the following shall continue to apply:
6.3 Non Admissible Assets
Off-shore investments shall not qualify as admissible for the purpose of determining the solvency margin.
6.4 Admissible Assets shall include:
a. Office Equipment
b. Furniture and fittings
c. Motor Vehicles
d. Land & Building:
i) Land and building are not recognized as investment properties except as defined by the Nigeria Accounting Standard Board (NASB) SAS 13, paragraph 28.
ii) Improvement to leasehold properties. In all cases, satisfactory evidence of ownership must be
provided.
e. Investments:
i) Statutory Deposits
ii) Real Estate (i.e. Investment Properties)
iii) Mortgage Loans
iv) Federal and State Government Securities
v) Quoted Stocks at Market Value as at balance sheet date
vi) Unquoted stocks and Shares at cost
vii) Bonds at cost
viii) Cheques and Cash in Hand
ix) Cash on Deposit
x) Commercial loans, including loans to subsidiary subject
to section 5 (1) of this guideline
xi) Other Investments subject to acceptance by the commission.
f. Capital work in progress
g. Plant and machinery
h. Other Assets:
i) Staff Loans and Advances (Staff debts but excluding loans to Directors except as provided in the Conditions of Service).
ii) Deposits for purchase of shares / stocks other than own shares.
iii) Deposits for purchase of Assets (evidence of deposit to be supplied)
iv) Claims recoverable from reinsurers. Copies of duly executed debit notes shall be required as evidence of claims receivable.
i. With respect to Re-insurers, all outstanding premiums due from insurance companies and relating to the reporting year shall be recognized as admissible assets. This is in due recognition of the special nature of reinsurance business.
j. Investments in real property over and above the statutory limit i.e. more than 35% of total assets in the case of life business and 25% in the case of Non-life business and all encumbered
assets shall not be recognised for purposes of solvency determination.
6.5 Liabilities: These shall include:
a. Insurance Funds
i) Reserves for un-expired risk
ii) Reserves for outstanding claims
iii) Reserves for claims incurred but not reported
b. Other Liabilities:
i) Amounts owed and / or accrued for settlement of debtsowed third parties (i.e. Insurers, Re-insurers and Insurance Intermediaries )
ii) deposit for shares
iii) Provisions for taxation.
iv) Sundry liabilities.
 
6.6 Net Premium:
Net premium income shall be defined as “Gross premium income
less re-insurances during the year under review”.
6.7 Minimum Solvency Margin:
Margin of solvency shall be defined as “total admissible assets less
total liabilities”. This shall not be less than either 15% of net
premium or the minimum paid up share capital whichever is higher.
6.8 In computing the solvency margin of reinsurance companies, the
minimum capital base applicable to general business shall be N6
billion. 
6.0     ADOPTION OF IFRS
Following the announcement of the Adoption of the Nigeria Road Map to IFRS by the federal government, the Commission expects insurance and reinsurance companies to take appropriate steps to ensure a seamless transition to the new financial reporting regime. To this end, the Commission hereby directs as follows:
All insurance and reinsurance companies are to submit their plan, for conversion to IFRS, by 1st April, 2011. Thereafter, information on the progress made in the implementation of the said plan should be provided in the quarterly return to the Commission.
This should include, but not limited to, information on the following issues, accompanied with timelines, where necessary:
• IFRS awareness and knowledge acquisition
• Conversion management and outline of conversion plan
• Detailed Gap and IFRS impact analysis
• Draft IFRS-compliant financial reports
• Communication channel with relevant stakeholders
The financial statement for the years ending 31 December, 2010 should disclose this plan and possible impact of IFRS on the opening balances for the year 2011. In particular, the opening balance sheet for the year 2011 and their reconciliation to the closing for the year 2011 should be submitted to the commission not later than 1st September, 2011.
The IFRS opening and closing Balance sheets, which should form the comparatives for 2012 financial reporting, shall be audited.
In order to facilitate this change, the Commission in collaboration with Nigerian Accounting Standard Board (NISB) will commence IFRS awareness session for relevant stakeholder in the insurance industry in January, 2011.
     Form G1
 

S/No.
Type of Investment
Amount
Location
Tenure
Annual Return on Investment
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
FORM G2 (C)
 
AGE ANALYSIS OF OUTSTANDING CLAIMS
 

OUTSTANDING CLAIMS PER CLAIMANT
TOTAL OUTSTANDING CLAIMS
0 - 90 DAYS
91 - 180 DAYS
181 - 270 DAYS
271 – 365 DAYS
365 DAYS +
TOTAL
1                –     250,000
 
 
 
 
 
 
250,001     –     500,000
 
 
 
 
 
 
500,001     – 1,500,000
 
 
 
 
 
 
1,500,001 – 2,500,000
 
 
 
 
 
 
2,500,001 – 5,000,000
 
 
 
 
 
 
5,000,001 – ABOVE
 
 
 
 
 
 
GRAND TOTAL
 
 
 
 
 
 

 
 
FORM G2 (P)
 
AGE ANALYSIS OF OUTSTANDING PREMIUM
 

OUTSTANDING PREMIUM PER CLAIMANT
TOTAL OUTSTANDING PREMIUM
0 - 90 DAYS
91 - 180 DAYS
Over 180 -DAYS
Total
100,001      –      500,000
 
 
 
 
500,001      –   1,500,000
 
 
 
 
1,500,001   –   5,000,000
 
 
 
 
5,000,001   – 10,000,000
 
 
 
 
10,000,001 – 25,000,000
 
 
 
 
25,000,001 - ABOVE
 
 
 
 
GRAND TOTAL
 
 
 
 

 
 
FORM G 3
 
 
Class of Business:………………………………………………………………………………
 

Policy No.
Insured
Gross Premium
Net Premium
Period of Cover
Expired Risks
Unexpired Risks
From
To
Gross Premium
Commission
Net Premium
Gross Premium
Commission
Net Premium
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve for Unexpired Risks: N

 

Note: Please note that form G3 should be completed by class of business. In the case of motor insurance class, it should be further broken down according to usage (i.e. Private, Commercial, Motor Trade, Cartage for Own Goods, and Cartage for Commercial).

 
 
FORM G4
 
a.      Staff Position as at the end of the Quarter

Category
Male
Female
Total
Executive Directors
 
 
 
Management(Manager & above)
 
 
 
Senior Staff
 
 
 
Junior Staff
 
 
 

 
 
b.        Changes during the Quarter
 

 
Executive
Directors
Management
Senior Staff
Junior Staff
Additions
 
 
 
 
Withdrawals
 
 
 
 
 
 
 
 
 

 
 
 
FORM G5                                    QUARTERLY CLAIMS RETURNS:
 

Period
Quarter
Class
Policy No.
Claim Nos.
Date of Loss
Date of reported Loss
Amount of Claim
Date of Discharge Voucher not/issued
Amount Settled
Outstanding amount
Remarks
1st
 
 
 
 
 
 
 
 
 
 
2nd
 
 
 
 
 
 
 
 
 
 
3rd
 
 
 
 
 
 
 
 
 
 
4th
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 

 
 
FORM AML 001
NFIU STR AND REPORTING FORMAT FOR THE INSURANCE INDUSTRY
 
NAME OF INSTITUTION:......................................................................................................................................
HEAD OFFICE ADDRESS:......................................................................................................................................
REPORT TYPE: ............................................................      REPORT PERIOD:........................................................
REPORT DATE:............................................................       NAICOM REG. NO:.....................................................

COLUMN 1
COLUMN 2
COLUMN 3
COLUMN 4
COLUMN 5
COLUMN 6
COLUMN 7
S/NO.
POLICY NUMBER
ENTITY /FIRST NAME
MIDDLE NAME
TITLE
D.O.B. / INC
OCCUPATION/TYPE OF BUSINESS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COLUMN 8
COLUMN 9
COLUMN 10
COLUMN 11
COLUMN 12
COLUMN 13
COLUMN 14
IDENTITY/RC NO.
FIRST LINE ADDRESS
SECOND LINE ADDRESS
CITY
STATE
TYPE OF INSTITUTION
INSTITUTION CODE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COLUMN 15
COLUMN 16
COLUMN 17
COLUMN 18
COLUMN 19
COLUMN 20
COLUMN 21
INSURED VALUE
PREMIUM PERIOD
ANNUAL
POLICY / PRODUCT
POLICY STATUS
TRANSACTION BRANCH
E-MAIL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COLUMN 22
COLUMN 23
COLUMN 24
COLUMN 25
COLUMN 26
COLUMN 27
TELEPHONE NO.
TRANSACTION DATE
TOTAL CLAIM
MODE OF PAYMENT
INSTRUMENT
DETAILS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Source: NAICOM


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