Understanding Insurance: Key Terms Explained
A Practical Glossary for Nigeria’s Evolving Insurance Landscape
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The federal agency responsible for regulating and supervising the insurance industry in Nigeria.
The payment or compensation made by the insurer to the policyholder or beneficiary.
A licensed intermediary who helps clients find suitable insurance policies from various insurers.
A formal request by a policyholder to an insurer for compensation for a covered loss.
A company licensed by NAICOM to provide both life and non-life insurance services.
The protection provided by the insurance policy, specifying what is included and excluded
The amount the policyholder must pay out-of-pocket before the insurer covers the remaining amount.
Specific risks or circumstances not covered by the insurance policy.
Compensation for loss or damage, typically restoring the policyholder to their pre-loss financial position.
A financial interest in the subject matter of the insurance policy.
A financial interest in the subject matter of the insurance policy.
The person or entity protected by the insurance policy.
A digital platform that allows consumers to compare and select insurance products from multiple providers.
Low-cost insurance targeted at low-income populations to provide financial protection against specific risks.
A contract between the insurer and policyholder outlining the terms and conditions of coverage.
An individual or entity that holds an insurance policy and is entitled to its coverage and benefits.
The payment made by the policyholder to the insurer for coverage under an insurance policy.
Insurance coverage purchased by an insurer from another insurer to protect against large losses.
An amendment or addition to the insurance policy that modifies its terms or coverage.
Risk-Based Capital is a framework that requires insurance institutions to hold capital proportional to their risk exposure. It:
Assesses risk levels (e.g., asset, credit, operational)
Calculates required capital buffers
Ensures institutions can absorb potential losses
Risk-Based Supervision is a regulatory approach that focuses on assessing and managing risks within insurance institutions. It involves:
Identifying potential risks
Evaluating their likelihood and impact
Implementing measures to mitigate or manage risks
The financial buffer that ensures an insurer can meet its future liabilities and obligations.
The insurer’s right to pursue a third party for damages after paying a claim.
The process of evaluating risk and determining the appropriate premium and terms for an insurance policy.
A professional who assesses and decides on the risk and coverage terms of insurance policies.
A provision for future claims on existing policies.
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