HOW TO OBTAIN THE WEB AGGREGATOR LICENCE IN NIGERIA

Information technology has greatly improved not only the means of disseminating information but has also galvanized innovations in the ways products and services are delivered in the financial service industry. For instance, a new crop of business has emerged in the insurance sector acting as intermediaries between the insurance companies and consumers. These companies in themselves are not insurance companies but they play critical role as intermediaries between insurance companies and the public. These companies are known as Web Aggregators.

The National Insurance Commission (NAICOM) being the regulatory authority for the insurance sector in Nigeria, is saddled with the responsibility to ensure not only that all insurance products and services are approved before they are offered to the public but also to protect consumers against exploitation. It is for the foregoing reason that NAICOM came up with the Insurance Web Aggregators Operational Guidelines (“Guidelines“). Prior to the issuance of the Guidelines by NAICOM, the business of insurance web aggregation was unregulated. This lacuna exposed potential policy holders had to unscrupulous and fraudulent intermediaries in the insurance industry.

The Guidelines are the compass for regulatory supervision and monitoring of Web Aggregators as insurance intermediaries in Nigeria. These Guidelines regulate the quality of information on the products offerings of various insurers and promulgated in pursuance of NAICOM’s powers under its enabling laws.  

Who is a Web Aggregator?

The Guidelines define a Web Aggregator as a company registered under the Companies and Allied Matters Act (CAMA) and approved by the NAICOM, which maintains/owns a website and avails information pertaining to insurance products and price/features comparison of products of different insurers and offer leads to an insurer.

A Web Aggregators are insurance portals that enable consumers to compare products and create a direct link amidst you and the insurer for purchase.

What are the Non-Permissible Activities of a Web Aggregator

1. Web Aggregators are prohibited from using multiple websites. They are equally precluded from collaborating with other entities (whether licensed or unlicensed) for the generation of leads.
2. They are prohibited from using other social media site other than their website for the conduct of their business.
3. They are not allowed to promote the product of only one insurer. As a matter of fact, the website of the Web Aggregator must be a level playing field for all insurers to avoid monopoly by a particular insurer.
4. Web Aggregators are prohibited from displaying on their websites, any information pertaining to the products and services offered by financial or Fast Moving Consumer Goods Companies (FMCGC) or other products or services other than insurance products.
5. Web Aggregators are not permitted to display adverts of any kind on their website including that of insurance companies.

Does a Company Require any kind of permit to operate as a Web Aggregator?

Yes. The business of a Web Aggregator cannot be undertaken in Nigeria without of NAICOM’s licence. The Guidelines provides that any insurer who intends to carry on the business of a Web Aggregator is required to obtain a grant of “no objection” from the NAICOM.

Please note that an applicant other than an insurer is required to obtain a licence as a Web Aggregator from NAICOM before carrying on the business of Web Aggregators.

What Laws Regulate Web Aggregators in Nigeria?

The following are the laws that regulate the activities of Web Aggregators:

1. The Companies and Allied Matters Act (CAMA) 2020.
2. The Insurance Act, 2003.
3. The Nigerian Communications Commission (“NCC”) Act, 2003.
4. National Information Technology Development (“NITDA”) Act 2007.
5. The Cybercrime (Prohibition and Prevention) Act, 2015
6. The Nigerian Data Protection Regulation, 2019.

What are the Requirements for a Grant of the Operational Licence for Web Aggregators

The requirements for licence to operate as Web Aggregators will depend on whether the applicant is an insurance company or other type of company as the requirements are different for both companies.

Requirements for Obtaining the Notice of “No Objection” from NAICOM

The requirements for obtaining a notice of “No Objection” by Insurance companies and Brokers from NAICOM are as follows:

1. Application for issuance of Licence to Web Aggregator by NAICOM. 
2. Application to the Commission.
3. Service Level Agreement (SLA) signed with a Web Aggregator,
   which it intends to partner with.
4. A copy of the Appointment letter issued by the insurer to the Web Aggregator.
5. Board approvals or resolutions in support of such partnership.
6. A copy of Risk Management framework on Web Aggregator operations.

Requirements for Obtaining the Operational Licence by Companies Registered as Web Aggregators

An applicant who intends to be licensed as a Web Aggregator shall make an application to NAICOM. The application shall be in three stages. 

Stage One

Stage one requires the submission of the following documents: 

1. Copy of No Objection/approval issued by Nigerian Communications Commission (NCC)
2. Copy of letter of appointment issued to the Web Aggregator from named
   Insurer( s)/Broker( s)
3. Copy of SLAs with named Insurers/Brokers
4. Copy of Certificate of incorporation issued by Corporate Affairs Commission (CAC)
5. Certified True Copy of Memorandum and Articles of Association of the Applicant
6. Copy of Board resolution in support of partnership with named Insurers/Brokers
7. Payment of non-refundable application fee

Stage Two

Stage Two shall require submission of the following:

1. Organisational chart showing functional responsibilities.
2. Board Resolution to commence a Web Aggregator operation
3. Curriculum Vitae (CV) and Credentials of Principal Officers and Directors.
4. Principal place of business of the Web Aggregator and confirmation of place of hosting the website.
5. Snapshots of contents of proposed website along with proof of domain name registration.
6. Details of infrastructure including IT infrastructures available.
7. Detaiis and experience of the platform authorised Verifiers
8. Copy of the Risk Management Framework.
9. List of persons who have control over or responsibility for the website contents in relation to insurance web aggregation.
10. A user 1.D. and temporary password (with only view permission) to verify the aggregator’s website.
11. Business plan with five years financials projection
12. Sworn declaration of non-disqualification by the proposed directors in line with Section 12(1) of the Insurance Act 2003.
13. Professional Indemnity Cover of not less than N20 Million limit of liability.
14. Copy of Letter of appointment and acceptance of same of the proposed MD/CEO.

 Stage Three

The requirements for the third and final stage of obtaining the licence are as follows:

1. Physical verification of web aggregator’s head office address and IT
   infrastructure to be deployed.
2. Payment of Licence fee.
3. Issuance of licence.

What are the Eligibility Criteria for Grant of the Final License to a Company 

For the Grant of Licence of the Web Aggregator, the Applicant shall ensure the fulfillment at minimum of the following conditions;

1. The Applicant must be registered with the Corporate Affairs Commission (CAC).
2. The Memorandum of Association of the Company shall have the business of Web Aggregation as its main objective.
3. The Applicant is not engaged in any other business other than the main objects of the company as stated on the Memorandum of Association of the company.
4. The Applicant shall employ/designate a Principal Officer to manage the Company on a full time basis. The Principal Officer shall possess a minimum qualification and must have relevant University first degree qualification or its equivalent and IT related qualification and/or relevant training experience.
5. The Principal Officer must satisfy the conditions of Fit and Proper persons criteria set out by the Commission.
6. The Applicant must have the necessary infrastructure, such as, adequate and conducive office, adequate customer base and necessary IT equipments to effectively discharge its duties.

Note that the above listed requirement will also be considered upon renewal of the licence.

Is there any Minimum Share Capital Requirements for Operating as a Web Aggregator

A Web Aggregator is required to be registered with CAC with a minimum share capital of Five Million Naira.

What is the Applicable Cost for Obtaining the Web Aggregator Licence from NAICOM

 Is the Requirement for Physical Inspection of the Applicant’s Place of Business a Compulsory one?

Physical inspection of the applicant’s office by NAICOM is compulsory. The Guidelines makes inspection a prerequisite for a grant of the final licence. Where NAICOM is not satisfied with the state of things upon physical inspection, the applicant may be required to rectify any deficiency in its office and facilities otherwise this may result in the delay in granting the final licence.

 What is the Validity of Licence

1. A licence once issued shall be valid for a period of two (2) calendar years from the date of issuance, unless same is suspended or cancelled by NAICOM.
2. A renewal application and documentation shall be submitted at least 45 days prior to the date of expiration of license.
3. Thirty (30) days of grace from the date of expiry may be allowed for renewal of licence only and any business transacted after the grace period shall attract a minimum penalty of N1 Million or 10 times NAICOM received on such transaction(s), whichever is higher.
4. Where the licence issued to a Web Aggregator is not submitted for renewal after expiration of the thirty (30) days of grace, the licence is deemed as lapsed and re-registration may be required after three years of what the guidelines described as a cool-off period.

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ABOUT KORIAT & CO.

We are a growing commercial law firm in Lagos, Nigeria with network of lawyers and consultants in Ghana, Kenya and Rwanda. We assist clients on business registrations and licensing across multiple jurisdictions.

The above article is not legal advice and does not automatically make our readers our clients unless they specifically instruct us to act or represent them in any way.

Please contact Koriat & Co. through admin@koriatlaw.com or 09067842241 if you require additional information about or assistance in making the application for a Web Aggregator’s licence in Nigeria.