How to Start A General Insurance Company in Nigeria
Establishing your general insurance company in Nigeria or elsewhere is just one of the greatest ways to become wealthy and make residual income indefinitely. The idea is that with your insurance business you get richer with time over the accumulation of many clients’ premiums especially when they file in few claims over time.
General insurance companies earn their money yearly, bi-yearly, or quarterly through the premiums clients pay to them. And payment of premiums is a matter of necessity or “obligatory” of clients who aim to stay insured against possible losses, thereby making sure money for the general insurance company and its owners. General insurance brokers additionally earn fat commissions by bringing in more business.
But beginning a standard general insurance company takes times, it takes experience that is technical, it demands ruthless efficacy and company experience, and the government agencies must approve it to ensure regulation and compliance. See below for some steps you may take to Start your insurance business today.
Basic Guidelines For Starting A General Insurance Company
Register Your Business With The Authorities
You must officially register your organization with the Corporate Affairs Commission (CAC) as a limited liability company (LLC) or as a Public Liability Company (PLC). You are beginning a company and cannot just register a company name alone, there’s more to it than that. A walk to the Corporate Affairs Commission will tell you more.
Get Enrolled With Regulatory Agencies
The Nigeria General insurance agent (NAICOM) is the regulatory agency for general insurance company in Nigeria. Whichever other country you hare domiciled, get guidelines and details about the best way to practice the business there and the regulatory practices governing general insurance company in your country.
Get Insured Using A Re-General Insurer
Another insurance consortium called an insurance provider must insure your or insure your general insurance company. Though your insurance provider provides clients, in the event of a claim with compensations, an insurance provider provides reimbursement to your general insurance company in the event that the claim is too big for you to cover up. Clients save money with banks who save money with the bank, exactly like in banking where you have the other banks banking with the central bank.
You must be accredited to begin a general insurance company. This means you become an insurance broker professionally. To begin your own general insurance company, you have to have the right to sell insurance under the cover of your firm that is registered to the public.
Based upon your state regulations (as is applicable in the United States), you should have at least a minimum of $1,000,000 to $5,000,000 minimal capital to kick start. This amount does factor out the prices for necessary infrastructure, cost of advertising, staffing, and other forms of expenditures required to start your general insurance company. This is excluding the minimum capital base or the deposit you’ll have to start up with.
In Nigeria, you’ll require the approval of the Central Bank of Nigeria (CBN) along with that of the Nigerian General Insurance Commission (NAICOM) before you may set up a general insurance company. You might also must fulfill the funding base necessary to open a general insurance agency – discussed already. Just ensure that you obtain all the necessary licensing service that is required.
In addition, you require a letter of credit from a financial institution or resources and assets equivalent to the amount you need for acquiring the general insurance company from the state license board. This is required according to state legislation, so that in the event that you default payment, your customers can be paid compensations from it.
Since insurance is a service which most individuals purchase for eventualities in their lives, with very little risk, you can develop a company that’s profitable and provides your customers with quality service.
Acquire All Necessary Licenses And Permits
You have to obtain all permits and licenses necessary for the take-off of your insurance company. This varies from country to country and from region to region.
Determine The General Insurance Risks To Insure
You have to be careful and ensure that you know the frequency and degree of damage potential under every risk before you include to cover, although you will find more than 50 kinds of insurance risks you’re able to cover in your company. You may opt to do fire, automobile theft/auto accidents, life assurance and burglary such as health, travel insurance, freight, buildings, land and a plethora of others.
Have Residual Money For First Take-Off And Asserts
However, you are going to put the cash together, you will need money to rent/buy an office space, hire workers, cover wages and claims, publish brochures and documents, keep agents on the area, and settle recurring expenditures.
Become A Certified Broker, Franchise, Or Sell Your Own Service
At some time of preparation for this company, you might opt to begin as a certified agent to some other general insurance provider to comprehend the marketing and underwriting technicalities of the business; and you might also develop into a franchise in which you operate independently under the title and security of some other firm; and you will establish your agency or firm with the liberty to decide on any product to insure for your clients.
Compose A Killer Business Plan For The Planned General Insurance Company
When writing a business plan to get your general insurance company started, you should employ an expert to write it if you lack the competence to do so, particularly due to the simple fact that you would have to submit an application in front of a bank along with the state regulatory board. This is also particular if you’re interested in getting a business startup loan from financial houses or lending organizations.
Determine what you would like the company to be perceived as. Each company type has its merits and demerits. This impacts the sort of license you’d be given.
Agency Licenses are awarded to Businesses, Limited Liability Companies (LLC) and Partnerships. Sole Proprietors are issued Individual Licenses. You have to make sure that whatever license you hold is exactly what you do business with; as failure to do so would only meet the frown of the law.
Plan on Advertising and Marketing
General insurance is just like any other kind of business. Therefore, it has to be marketed to pull in sales and generate profits. Many folks purchase their insurance from general insurance agents, insurance brokers or the insurance company itself. Most insurance businesses promote their services through email advertising media, print media, direct mail and phoning people. Most times, they advertise their business on the TV and Radio. Thanks to the internet, you can also market your business there too.
Make The Move!
Perhaps you have considered starting a general insurance company. Or are you searching for a way to put money into a general insurance company? Consider these strategies and do it. You won’t understand how it works unless you try.