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| Thomas |
Chuks Udo
Okonta
The
Director-General Nigerian Insurers Association (NIA) Sunday Thomas, has said
the retention of annuity business in the recently signed Pension Reform Act (PRA)
2014, is a plus to the insurance industry.
He told Inspen in a telephone interview that retention
of the business will enable underwriters continue to explore opportunities in pension
business.
He further
urged underwriters to intensify efforts in raising their stake in annuity business
as provided in the Act.
From available
statistics, Pension Fund Administrators (PFAs) have continued to dominate
pension benefits business as beneficiaries on Programmed
Withdrawal stood at 86,628 as at March 2014, 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.
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| Ilori |
On how underwriters can deepen annuity business,
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.
Ilori who spoke at an event organised by the Chartered Insurance Institute
of Nigeria (CIIN) in Lagos, said 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 to educated 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 also 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.
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