Establishing your own insurance company in Nigeria or any parts of the world is one of the best ways to become rich and earn residual income forever. With your own insurance company, you get richer with time; the more customers you acquire over the coming years the richer you become with their premiums when they file less claims.
Insurance companies make money monthly, quarterly, and annually through the premiums customers pay to them. And payment of premiums is a matter of necessity or “force” for customers that aim to remain covered against potential losses, generating sure money for the insurance company and its owners. Insurance agents also earn fat commissions by bringing in more business.
But starting an insurance business takes times, it requires technical expertise, it requires ruthless business experience and efficiency, and it must be approved by the necessary government agencies to ensure regulatory and compliance with government policies for the industry. Here are the steps you might take to begin your insurance business in Nigeria –
Register your business with the government
You must formally register your business with the Corporate Affairs Commission (CAC) as a limited liability company (LLC) or a public liability company (PLC). You can’t just register a business name and then begin business, there is more to it than that.
Get registered with regulatory agencies
The Nigeria Insurance Commission (NAICOM) is the regulatory agency for insurance business in Nigeria. If you’re located in the United States, you have to register with the Insurance Commissioner in your own state and obtain guidelines on how to practise the business without flouting the law.
Get insured with a re-insurance company
Your insurance company must be insured or protected by another insurance consortium known as a re-insurance company. While your insurance company provides compensations to customers in the case of a claim, a re-insurance company provides your own insurance company with compensation if the claim is too large for you alone to pay out. Just like in banking, customers save money with commercial banks who in turn save deposits with the central bank.
Acquire all necessary permits and licenses
This may differ from state to state if you’re in the US, but you need to obtain all necessary permits and licenses necessary for the take-off of your insurance business.
Determine the insurance risks to cover
There are over 50 types of insurance risks you can cover in your business, but you must be very careful that you know the frequency and extent of damage possible under each risk before you add it to your product list. Generally speaking, you can choose to do life assurance, car theft/auto accidents, fire and burglary for buildings, travel insurance, cargo, health, property and a host of others.
Have money on reserve for initial take-off and claims
Whether you secure a business loan or pool together the money, you need money to acquire office space, office equipment, hire employees, pay wages and benefits, print documents and brochures, maintain agents on the field, and settle initial claims that arise.
Become a licensed agent, franchise, or be your own agency
At a point of planning for this business, you may choose to start as a licensed agent to another insurance company to understand the marketing and underwriting aspects of the business; and you may also become a franchise where you operate independently under the name and protection of another company; and you may establish your own agency or company with the freedom to choose any products to insure for customers.