Startups generally must comply with insurance requirements relevant laws provide. This post essentially seeks to identify and highlight these insurance requirements for startups.
Companies, start-ups especially, need to comply with insurance requirements, particularly as they relate to the insurance space in Nigeria.
The National Insurance Commission Act (Naicom)
The key regulatory provisions on insurance matters in Nigeria are the National Insurance Commission Act (NAICOM Act), the NAICOM Code of corporate governance, as well as a variety of other laws with material provisions on insurance in Nigeria.
These laws provide mandatory insurance requirements for individuals, businesses and companies and so, we would be assessing these requirements as it applies to Startups in general.
Let’s delve into examining these requirements subsequently.
Importantly, startups within the first two years of commencing business are to make minimum monthly contributions of 1 % of their total monthly payroll of employees to the Employee Compensation Fund with the Nigeria Social Insurance Trust Fund (NSITF). This is by virtue of the Employee Compensation Act.
Additionally, the Pension Reform Act mandates employers having 5 or more employees to maintain a Life Assurance policy in favour of the employees for a minimum of three times the annual total emolument of each employee.
Startups in the health and medical industry are to comply with the National Health Insurance Scheme Act on professional indemnity insurance.
Real Estate startups and Engineering firms also need to take note of building insurance requirements. Here, the Insurance Act provides for mandatory insurance covers for public buildings. Also, buildings higher than two storeys are to be insured against construction risks.
Players in the aviation and marine space are to undertake insurance policies against risks as provided by the applicable laws.
Other Guidelines Or Insurance Requirements For Startups In Nigeria
Other than the aforementioned, insurance companies are also required to comply with guidelines on corporate governance issues such as Board composition, membership, share capitalization, etc.
Startups need to know that failure to comply with the aforementioned insurance requirements and others as may be introduced by the relevant regulations would attract sanctions and possible jail terms. It is recommended that you seek detailed advisory on the mandatory requirements on this matter for maximum compliance.
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References
- Ebere Nwoji, “NAICOM and Challenge of Compulsory Insurance Implementation” available at https://www.thisdaylive.com/index.php/2023/02/08/of-naicom-and-challenge-of-compulsory-insurance-implementation accessed on September 27 2023
- FinancierWorldWide, “Improving Nigeria’s Insurance Penetration; Legal, Regulatory and Market Considerations” available at https://www.financierworldwide.com/improving-nigerias-insurance-penetration-legal-regulatory-and-market-considerations accessed on September 27 2023
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