How insurers can increase stake on annuity – Ilori

Mrs Ilori

Chuks Udo Okonta

The Chief Executive Officer (CEO) Mansard Insurance Plc, Mrs Yetunde Ilori, who is also a life insurance expert, said insurers need collaboration, sustained awareness and cohesion to make significant progress in annuity business.

She disclosed this at an event organised by the Chartered Insurance Institute of Nigeria (CIIN) in Lagos, stressing that insurers need to be proactive in marketing the product to retirees.

She said: “I quite agree that insurers’ participation in annuity is still low, there are few things we need to do, for us to make progress in the business. We need collaboration and cohesion, starting from the regulators. At a time, the National Insurance Commission (NAICOM) started by helping us by rolling out joint agreement with the National Pension Commission (PenCom).  But I think, what we need from them is sustained publicity.

“I know NAICOM alone cannot do this, the Nigerian Insurers Association (NIA) should join hands with NAICOM to promote this agenda.  To champion the agenda for the NIA is the Life Committee, which has some money set aside for the purpose. We have being on this for about two years, and are yet to see any advert published.  We need to create massive awareness.”

She called on insurers to be proactive and take advantage of fora organised by government for would-be retirees.

“Many a time, the Federal Government did send out publications on when prospective retirees will be meeting with them, we all need to be proactive, and take advantage of such meetings.

“Because the money at the moment is with the Pension Fund Administrators (PFAs), it will be tough for them to let go the business that belongs to us. We need to do something about pre-retirement programmes, because a PFA will not take it upon itself to educate a client that is retiring about programmed withdrawal and annuity, for some of them do not understand what annuity is and how it works and would not make promises on our behalf.  So, we need to take it up on ourselves and change the situation.”

Ilori cautioned operators to be wary of risks associated with the business, adding that only competent operators should venture into the business.

“At the moment, not too many companies are licensed by NAICOM to do annuity because of its technicalities. Life operators should make the work of the regulator easier by having the right skills and also be wary of the business, for it is not just taking the fund, for it was one of the businesses that wrecked the   United Kingdom’s pension market.

“I do not suggest that it is something everybody should go into, for the right skills, actuaries, investment officers are required to be successful in the business.”

She publicity, awareness creation must be sustained if operators are to make progress in the business. 

Pension Fund Administrators (PFAs) have continued to dominate pension benefits business as beneficiaries on Programmed Withdrawal stood at 86,628 as at March, while annuitants, managed by life insurers are 9,212.

According to PenCom, a cumulative lump-sum of N115.71 billion and average monthly withdrawal of N24.72 billion are made on Programmed Withdrawal managed by 20 PFAs, while a cumulative lump-sum N20.48 billion, premium of N45.27 billion and average monthly payments N465.13 million are made on life annuity offered by about 27 life insurers.