Monday 31 August 2015

PenCom creates multi-billion mortgage business for insurers

Chuks Udo Okonta

The national Pension Commission (PenCom) in its anticipated Retirement Savings Account (RSA) holders mortgage finance, has created a multi-billion Naira business for insurance companies.

In a draft guidelines on Withdrawals from Retirement Savings Account (RSA) Towards Equity Contribution for Payment of Residential Mortgage, PenCom said properties to be acquired by RSA holders shall have comprehensive insurance policy and carry professional indemnity insurance with an insurance company licensed by the National Insurance Commission (NAICOM).

This is expected to generate stable businesses for underwriters whose covers are backed by law.

"An eligible RSA holder shall use the proceeds of the mortgage loan to purchase either a single-family home or an apartment in a multi-unit building, which must be owner-occupied.

"The property shall have comprehensive insurance policy in the name of the borrower, to cover the replacement or reinstatement cost of the property. The insurance policy must note the RSA fund as one of the first loss payees, to cover the equity contribution released by the PFA.

"The valuation of the property to be purchased with the mortgage loan shall be carried out by a licensed, independent valuer who is a member in good standing with the Nigerian Institution of Estate Surveyors & Valuers (NIESV) and must carry professional indemnity insurance with an insurance company licensed and in good standing with National Insurance Commission (NAICOM)," the draft said.

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