NAICOM pushes operators to engage actuary for annuity uptake
The National Insurance Commission (NAICOM), has warned that firms operating without in-house actuary would soon be denied the opportunity to underwrite the annuity business in Nigeria.
This, the Commission is considering to help boost underwriters’ benefit from an annuity, which is presently facing challenges of return on investment due to the drop in interest rates and restriction on some investable financial securities.
According to the Acting Commissioner for Insurance, Sunday Thomas, who spoke at the Chartered Insurance Institute of Nigeria (CIIN) 2020 Business Outlook, in Lagos, NAICOM has taken the step to raise about 100 actuaries in the next five years.
He noted that the industry would soon get to the point where firms operating without in-house actuaries will be debarred from underwriting annuity business.
He explained that due to the technical nature of annuity business, it requires experts with analytical minds, which actuaries provide, saying: “Part of plans is that within the next five years, we want to produce at least 100 Certified Actuarial Analyst and we will take responsibility for the commitment.
“We must analyse our job, role and the need to change focus on how to develop the market, and ensure compliance to regulatory policies.
“Part of the development is human capital development, as the growth potential of the industry is built on the capacity to have the required capital that will drive it forward.
“The issue of measuring and taking the necessary step for effective pricing has made the actuarial profession more pertinent than ever before.
“There is a need to develop young professionals and give them a future in the insurance industry, and we are determined to develop their potential and make them relevant to the sector,” he posited.
According to him, only a few insurance companies have in-house actuaries, which is why the Commission has intervened to stem the tide.
Thomas said actuaries are needed to manage the annuity business, which is becoming quite significant, and almost accounting up to 35 to 40 per cent of the insurance industry portfolio.
According to the Nigerian Insurers Association (NIA), life insurers generated N77.93billion, which is 44 per cent of the total N178.83billion life business premium from the annuity in 2018.
The NIA stated that N61.24billion was derived from benefits annuity, and N16.14billion from annuity guarantee, while 31 per cent of the N94.91billion total life claims went to annuity amounting to N29.44 billion.
On profit made on an annuity, NIA said five firms posted losses, while six posted a profit.
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