Photo caption: NAICOM logo
The National Insurance Commission will be issuing supplementary guidelines on annuity business in Nigeria.
This was disclosed by Mr Moruf Apampa, the Vice Chairman, Subcommittee, Communication and Stakeholder Engagement of the Insurers Committee at its 18th meeting on Wednesday.
Earlier in the year, NAICOM issued fresh regulations on annuity business with effect from February 1, 2025, in a bid to sanitise that segment of the market.
Speaking on Wednesday, Apampa said, “NAICOM has brought out a supplementary guideline again on the business of annuity. We’re all aware of what has happened in the last couple of months, and also to forestall that to build further confidence in the market.
“So NAICOM is coming up with additional guidelines to ensure that annuitants are adequately protected. We know the existing guidelines are currently running. NAICOM will take proactive measures to ensure that no company goes under or annuitants are not paid their normal monthly allowance. This is being guided against. NAICOM has come up with additional guidelines to ensure failure will never happen in that sector again, and I think this is very critical.”
Also speaking, another member of the subcommittee, Abba Inuwa, who is also the spokesperson for NAICOM, said the commission, with these new guidelines, was responding to the shifts in the industry.
“You should know that regulation is dynamic. As the environment changes, certain things change. “When you see a loophole, you just have to do something to cover it in order not to have a problem,” he said.
Inuwa asserted that the new guidelines are being worked on to close gaps and forestall further damage to the annuity business.
An annuity is a contract between an insured and an insurance company that requires the insurer to make payments to the insured, either immediately or in the future. The insured get a fixed amount of money for the rest of their lives in return for a lump sum payment or a series of instalments.
In its last guideline, NAICOM mandated insurance companies to have at least one qualified actuary responsible for asset-liability matching analysis and implementation of its adoption by the investment team of the company.
A part of the guidelines read, “An insurer that does not have an in-house qualified actuary shall make arrangements for a qualified one from an external actuarial firm to take on the ALM responsibility on its behalf for an interim period of no more than two years, subject to the Commission’s approval for an extension for two or more years thereafter.
“The appointment of an in-house or external qualified actuary, who shall sign off all ALM reports as required by the provisions of paragraphs 3.4.3, 7.3.1, and 8.1.5(m) of the Prudential Guidelines, shall be subject to the prior approval of the commission.”
Apampa also revealed that, in addition to the new guidelines on annuity business, the regulator would be unveiling guidelines to support the initiative of the government in improving the economy.
“One of such is actually the market guidelines on InsureTech. We are all aware that so many tech companies are around now, so there’s a need to work with them and see how we can streamline the processes around them, which is very key.
“Cyber risk insurance guidelines will be coming out very soon, and it’s also being finalised. We are all aware of the risk associated with cyber risk, and the only industry that can actually provide that support is the insurance industry.”
Also on the agenda for the industry stakeholders was the issue of claims payment, an issue that the Commissioner for Insurance, Olusegun Omosehin, has been passionate about addressing since he came into office last year.
On claims payment, Apampa said, “As much as NAICOM raised the issue of a backlog on outstanding claims, which they said they are monitoring, one thing that came out was the fact that the commissioner said he has seen significant improvement in terms of claim payments, and he commended the industry, and he said we must improve on this.”
He added, “Again, on enforcement of third-party insurance, as much as we are giving significant visibility and communication on third-party insurance, NAICOM is also streamlining the process around claims for third-party insurance.”
