How to Establish General Insurance Business in Nigeria

Filed in BUSINESS, RECRUITMENT by on November 2, 2019 0 Comments

Establishing your own general insurance company in Nigeria or any parts of the world is one of the most ideal approaches to become stupidly rich and keep earning till you die. This is because Insurance like most other lucrative businesses is a game of numbers – the more customers you have over the coming years, the richer you become and the faster you transmit from richness to wealth.

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How do you gain this wealth? It is from the insurance premiums you charge your clients against loss. So, when they record fewer damages, you make more gains. The reverse, however, is the case if the tables turn in the favour of your clients.

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Like I said above, General insurance organizations profit month to month, quarterly, and yearly through the premiums customers pay to them. And installment of premiums involves need or “constraint” for customers that intend to stay secured against potential misfortunes, creating definite cash for the general insurance company and its proprietors. General insurance specialists additionally acquire sizeable commissions by getting more business to buy insurance premiums from them.

Steps to Start General Insurance Business in Nigeria

In any case, beginning a general insurance business takes times, it requires specialized mastery of the industry especially here in Nigeria, concrete business experience and proficiency, and it must be approved by the relevant government authorities to guarantee administrative rights and consistency with governmental laws for the industry. Below are the steps you may take to start your general insurance business in Nigeria.

Learn the Trade

At the start, you may begin as an authorized operator to another general insurance company to understand things like the marketing and administrative parts of the business. During this period, too, you can as well operate autonomously under the name and security of the parent insurance company and make money for yourself as you are making money for them. After this, you may set up your own insurance company with the benefit of having ready customers from those of the proprietary insurance firm you worked for.

Decide the General Insurance Risks You Wish to Cover

There are more than 50 types of general insurance risksyou can cover in your business; yet you should be highly conscious and cautious and also know the level of recurrence and degree of harm conceivable under each hazard or risk you wish to cover before you add it to your product list. Generally, you can do life assurances, auto robbery/car collisions, fire and theft for structures, travel general insurance, wellbeing insurance, property insurance, and many others.

Put Together a Formal and Composite Business Plan for Your Proposed General Insurance Company

When putting together a business plan for a general insurance company, you should get an expert to work with you in writing it, particularly in view of the fact that you would need to present the business plan before a bank, the CBN, NAICOM and other legal and administrative boards for approval or support.

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Since you will be running this business as a company, it must not have elements of entrepreneurship in its business plan. Everything should be kept formal and corporate. Organization Licenses are given to Corporations, Limited Liability Companies (LLC) and Partnerships. You should have this at the back of your mind while developing your insurance business plan.

Register Your Insurance Firm As A Company With The Government

You should formally register your Insurance Firm with the Corporate Affairs Commission (CAC) of Nigeria as a Public Liability company (PLC) or a Limited Liability Company (LLC). You can’t simply register a business name and then start business, there is a whole lot to it than that.  So, you must register the business as a company and specifically as a PLC or LLC.

Register and Get Approval From Insurance Regulators in Nigeria

The Nigeria General insurance Commission (NAICOM) is the administrative organization or regulatory body for general insurance business in Nigeria.You need to register with them and get the necessary licenses before you can begin operating an insurance firm in Nigeria

Get Insured (Protected)By a BiggerInsurance Company

Your general insurance company must be insured by another general insurance firm which is bigger than yours. While your general insurance company paysinsurance premiums to customers on account of a loss, the bigger insurance company would help you pay premiums if the insurance claim or loss is too expansive for only you to pay out. This is similar to the banking system where customers bank with commercial banks who subsequently bank with the Central or national bank.

Meet the Necessary Financial and Legal Requirements

You should have at least N300,000,000 as capital to start an insurance company in Nigeria. The amount would cater for startup expenses, cover advertising, staffing, marketing and different costs expected to launch your general insurance company as well as serve as your base capital (unknown).

In Nigeria, you will require the endorsement of the Central Bank of Nigeria (CBN) and the Nigerian General insurance Commission (NAICOM) before you can setup a general insurance firm. Likewise, you would need to meet the base capital required to open a general insurance organization. Please, contact the CBN and NAICOM to know the current base capital.

Additionally, you would require a letter of credit from a bank to attest to the availability of these funds, that is, the sum you require to obtain the general insurance company. This is required so that in a situation that you default payments ofcustomers’ insurance premiums, legal action can be taken against your company to retrieve the customers’ insurance premiums.

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Prepare For Take-Off

Regardless of whether you secure a business loan or pool together the cash from friends and relatives, you will require cash to obtain an office space, buy office equipment, recruit workers and pay their salaries, print reports and pamphlets, keep up field operations, and settle starting cases that emerge.

Lease an office space

Your office ought to be situated in vicinity that is both appropriate and very self-informing. The inside of the workplace should be perfect with private workplaces, a meeting or conference room, convenience, etc. There must be proper lighting and ventilation to make the place comfortable for both staff and customers.

It is preferable to site your general insurance offices in the business areas so that people can easily see and consider stopping by. General insurance business at times is about the appearances and the impression made. What your office premises look like could rouse customers to stop by or just keep moving. Nobody wants to buy general insurance from a shady looking business environment with uninviting staff and administrators.

Advertisement and Marketing

General insurance is a service and like other services, it must be appropriately advertised keeping in mind the end goal which is to make profits. Quite a number of people purchase their general insurance from general insurance operators, general insurance dealers or the general insurance company itself. Most general insurance organizations showcase their services through well-tailored advertisements, email marketing, print media, online marketing using social media platforms, post office mail, etc.you can leverage on all or any of these to make your general insurance business stand out.

Conclusion

Have you considered starting up a general insurance company? Or, on the other hand, searching for an approach to make your a general insurance firm standout and begin making the most anticipated profits? If that’s the case, consider these tips discussed in this article again. They will greatly help you in your quest.

Since general insurance is a service individuals buy continually for different occasions in their lives, with little hazard and preparation, you can develop a business that is beneficial and additionally gives awesome service to the customers.

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