From Uche Usim, Abuja
In a strategic move to deepen insurance penetration and financial inclusion through innovation, the National Insurance Commission (NAICOM) has released the insurance regulatory sandbox operational guidelines, designed to determine insurance solicitation or distribution; insurance products; underwriting; policy & claims servicing and any other activity within the insurance value chain before making them public.
Also released are Market Conduct Guidelines for Takaful and Retakaful Insurance Operators and Enterprise Risk Management Framework for Takaful and Retakaful Operators in Nigeria.
A sandbox is an isolated testing environment that enables users to run programmes or open files without affecting the application, system or platform on which they run.
On the other hand, Takaful is a type of Islamic insurance wherein members contribute money into a pool system to guarantee each other against loss or damage; while Retakaful is an arrangement to risk of retention limit funding takaful. Similarly, risk arrangements are operated by reinsurance to insurance funding.
Software developers use sandboxes to test new programming code. Cybersecurity professionals use sandboxes to test potentially malicious software. Using a sandbox to detect malware offers an additional layer of protection against security threats, such as stealthy attacks and exploits that use zero-day vulnerabilities.
NAICOM stated that these guidelines take effect May 1, 2023, explaining that it provides insurance institutions, other firms and persons the opportunity to test business models, products and services that will enhance efficiency in meeting consumers’ needs; encourage innovation that will drive financial inclusion and positive competition and promote and deliver economic benefits, by lowering the cost of business operations.
NAICOM further stated that an applicant would be eligible to be considered for the sandbox after meeting these criteria: Must demonstrate the potentia to advance inclusive insurance -The proposed product, service or solution is genuinely innovative with clear potential to advance the objectives of Inclusive Insurance by improving accessibility, efficiency, security and/or quality in the provision of insurance services to consumers in Nigeria.
“The Applicant shall be a registered business in Nigeria; must have a Fit and Proper Management and Leadership; must demonstrate that it has conducted sufficient diligence to understand the potential risks and/or legal and regulatory requirements for deploying the proposed insurance product, service or solution,” it said.
NAICOM noted that it accepts applications from the following categories of applicants: Insurers; insurance brokers; loss adjusters and any other applicant as the Commission deems fit.
The insurance industry regulator said approval to participate in the sandbox shall be in three stages: application stage, stressing that application to participate in the sandbox can be filed at any time either through the Commission’s online sandbox portal or manually and that the application shall be accompanied with a proposal and fee as may be prescribed by the Commission from time to time.
