New Jersey asks to take pension funding appeal to top state court

(Reuters) - New Jersey Governor Chris Christie's administration on Tuesday sought to take its argument about public pension funding directly to the state's highest court, saying it is the first case of its kind in the state with billions of dollars at stake.

The administration is defending Christie's decision to strip $1.6 billion from the state's 2015 contribution into its public employee retirement system.

Labor unions sued after Christie reduced the contributions last year because of a huge revenue shortfall. The unions won, with Superior Court Judge Mary Jacobson ruling that bi-partisan reforms in 2011 specifically mandated full contributions as a contractual right.

Through a spokesman, Christie, a possible 2016 Republican presidential candidate, had vowed to appeal.

In a briefs filed on Tuesday seeking to take appeal directly to the New Jersey Supreme Court, the state Attorney General's office said that the lower court "fabricated a constitutional right to pension funding and effected a wholesale reordering of the state's constitutionally enshrined fiscal process."

Uganda Insurance Penetration Lags Behind Neighbours

allAfrica

Kampala — Compared to its East African Community (EAC) counterparts, Uganda's insurance sector has failed to penetrate due to mistrust and lack of information.

According to reports, Uganda has penetrated on 0.8% of the population, Tanzania 2.3% Rwanda 1% while Kenya has the biggest penetration at 3.8%.

According to Insurance Regulatory Authority, (IRA) communications officer, Mariam Nalunkuuma, the failure by companies is due to the mistrust held by the general public concerning the sincerity of the insurance companies.

"There is very limited information concerning insurance companies in Uganda, the limited information that is out there is actually not favorable to the sector. The public still questions the genuineness of the insurance companies claiming that in most cases, one never gets to be paid even after the loss of the property insured. This is because the insurance companies have not done enough in educating the public about insurance policies and terms and this is costing them a lot of clients" Nalunkuuma said recently.

She was speaking during a press conference to announce the 7th annual Banking Finance Insurance expo due on 26th march 2015 intended to help insurance companies and financial institutions interact with their customers and showcase the different products and services they have.

Nalunkuuma said the fears held by most Ugandans are baseless since IRA, which is a government body independent from the insurance companies is open to the public for any complaints concerning failure by an insurer to compensate a genuinely lost property.

"As the regulatory body, we were responsible to make sure that insurance companies do not cheat their customers and that's why they normally bring in independent assessors to make sure that the companies that have fulfilled all requirements for insurance payment is paid without delay. There are a lot of insurance packages that Ugandans can take advantage of to avoid any risks. For example the newly introduced agriculture insurance that helps farmers in case of a bad season due to climate change. There are very few farmers who are taking up this insurance package and yet it's helpful for the economy like Uganda's" Nalunkuuma said

Dodo Singh, the marketing manager, UAP insurance disputed claims by the public that insurance companies are not trustworthy saying that although they are face insurance companies that cheat the public by offering empty insurance packages, the registered insurance companies like UAP work with IRA to regulator and ascertain that compensations are paid.

"In most cases when customer losses property and fills he form to be compensated, we send a group of assessors from IRA to assess the situation and confirm if the accidents wasn't intentionally or human negligence and depending on the terms of the insurance offered, if the assesses say you are supposed to be paid, then you get your full payment.,"

IRA was established under section 14 of the Insurance Statute 1996 now The Insurance Act,(Chap213) Laws of Uganda, 2000(Insurance Act)which came into effect on 4th April 1996 and commenced operations in April 1997. The main object of the Authority is to ensure the effective administration, supervision, regulation and control of the business.

Jewelry expert testifies in $20M insurance fraud-fires case

The Telegraph

DOYLESTOWN, PA. — A local GOP fundraiser charged in a $20 million insurance scheme after three mansion fires in five years cursed and discussed the Mafia while meeting with a jewelry appraiser about her claims, the appraiser testified Tuesday.

Claire Risoldi's "salty language" was humorous until it became threatening, appraiser Don Palmieri testified at a hearing over the racketeering case filed against Risoldi, her adult children and three others.

He noted one instance when she called him a "rat bastard."

"You don't normally hear women of her stature (talk that way)," Palmieri said. "There was a lot of discussion about Mafia. I thought that was meant to maybe intimidate us."

Risoldi, 67, is known as a colorful character in Bucks County who threw lavish political fundraisers at a 10-acre estate she called Clairemont. Her insurance claims included $2 million for Swarovski crystal-inflected drapes and $10 million for jewelry purportedly moved to the house from her bank when she surprised guests at an October 2013 fundraiser by getting married. The mansion burned for a third time weeks later.

Risoldi said the jewelry went missing during the fire — and pointed the blame at firefighters. But a January grand jury report charged that some of the same pieces were later found in her safety deposit box.

Palmieri, working for her insurer, said at least some of the pieces found were custom, challenging defense suggestions that she had duplicates.

No one is charged with arson in the case, and the defense maintains that all three fires were accidental. Three insurance companies honored claims for fires in 2009, 2010 and 2013.

A fire marshal is expected to testify about his findings Tuesday afternoon. The grand jury report alleges that a large supply of hair spray found near the 2013 fire's origin could have served as an accelerant. Risoldi typically sports teased, bouffant hair.

The racketeering case took a dark turn in February, when her husband, retired sheriff's deputy Thomas French, fatally shot himself. In a note, he said the stress of defending himself against false accusations had become too great. He wrote lovingly of his wife, saying, "There is no one like her."

Risoldi — who grew up in Trenton, New Jersey, across the river from bucolic Bucks County — greeted guests at his church funeral in a sporty fur jacket, spike-heeled boots and aviator sunglasses.

The others charged in the case are Risoldi's son Carl, a turnpike employee, and his wife, Sheila; her daughter Carla, a local lawyer; and a private investigator and drapery vendor. The preliminary hearing to determine if the case goes to trial is expected to last all week.

Defense lawyers have called the charges by the Democrat-led state attorney general's office politically motivated.

Africa Re: 2014 Total Investments hit USD89

By Islam Abdelhameed

The African Reinsurance Corporation (Africa Re) registered a growth in total investments to US$893 million by end of 2014 according to initial indicators, regional director for North East Africa and MENA said.

Speaking to Amwal Al Ghad on Thursday, regional director Omar Gouda said Africa Re had posted total premiums worth US$718 million by 2014-end, while the total paid compensations at value of US$350 million.

In addition, Africa Re's total assets reached US$1.4 billion, Gouda noted, saying the reinsurer's profits hit US$69 million before return on investment. It has registered US$120 million in profits after return on investment.

Gouda also referred that AXA, the French insurance company, had recently has acquired a 7.15% stake in Africa Re, the leading reinsurance company in Africa1, for a total consideration of USD 61 million.

The transaction would allow AXA to increase its exposure to the fast growing reinsurance and insurance markets in Africa, in line with its Ambition AXA strategy, by participating in the successful and profitable development of Africa Re.

Africa Re's current shareholding comprises 41 member states, the AfDB and more than 100 African insurance and reinsurance companies, together holding a 75 percent stake in the company, as well as other development finance institutions and strategic partners.

The African Reinsurance Corporation plans in the coming phase to expand operations into Angolan and Algerian markets, the reinsurer official noted.

© Amwal Alghad 2015

China to Begin Deposit Insurance in May

The Wall Street Journal

BEIJING—By moving to insure bank deposits at home, China’s leadership has its eyes abroad.

China on Tuesday detailed a plan to launch a deposit-insurance system in May, a long-awaited move that is aimed at better disciplining its lenders and their customers. Deposit insurance also is seen as a prelude to freeing up government-controlled interest rates on bank deposits—a step Zhou Xiaochuan, governor of China’s central bank, has said could be taken as soon as this year—and eventually allowing money to flow freely into and out of the country.

Under the plan released by the State Council, China’s cabinet, up to 500,000 yuan ($80,550) in deposits made by businesses and individuals per bank will be insured. More than 99% of depositors would be covered, according to central-bank officials. The program will start May 1 and will be backed by a fund run by the People’s Bank of China.

China currently has more than 122 trillion yuan ($19.654 trillion) in bank deposits, among the world’s largest totals. 

The plan has little detail on how banks would be charged to fund the insurance program, though central-bank officials say all banks would be required to pay a fee according to the size of their deposit bases and risk profiles.

RELATED 

• China’s Challenge on Deposit Insurance: Create Risk, Not Panic

China has plenty of domestic reasons to insure bank deposits, a long-established arrangement in many Western countries, including the U.S. Soured loans in the banking system continue to rise as China’s economic growth slows. Local government and state-run companies still are burdened with debt from a post-2008 lending binge. 

The number of countries that provide bank-deposit insurance has been growing, particularly since the financial crisis. A group of researchers said in a study last year that 112 countries have adopted such insurance, up from 84 in 2003. The list includes countries ranging from Austria, the U.K. and Denmark to Germany, South Korea and Japan. Five countries added insurance programs in 2008, including Australia. The study—by Asli Demirgüç-Kunt,Edward J. Kane and Luc Laeven—found that nearly all European countries have adopted this backstop. By contrast, only about one-quarter of African countries had deposit insurance.

The insurance system is aimed at “preventing and resolving financial risks in a timely manner,” according to the State Council plan. But the move also comes as China seeks a greater international role for its currency, the yuan. 

The Chinese leadership is gunning for the International Monetary Fund to declare the yuan an official reserve currency later this year, like the U.S. dollar, the euro and the Japanese yen. A designation from the IMF could help China’s effort to elevate the yuan’s role in international trade and finance, as Beijing increasingly seeks to challenge Washington on the world stage.

The IMF bid is being used as “a goal post to catalyze domestic financial-sector reforms, especially interest-rate liberalization and China’s capital-account opening,” said Tao Wang, China economist at UBS AG. 

China has kept a tight grip on its financial system. That has limited the surges of money in and out of the country that have bedeviled other economies, but it makes the yuan less appealing as a tradable currency because its moves don’t fully follow market dynamics. 

For the yuan to become more widely traded abroad, Beijing would have to lift some of those controls, a process that has begun already. Two years ago, China removed controls on lending rates. It also has moved in recent years to widen the band within which the yuan can be traded on a daily basis. 

Yet the government continues to cap the rate of interest banks may pay on deposits—the current limit on one-year funds is 3.25%—shielding lenders from competing among themselves for money. Policy makers have allowed depositors and the investing public to assume that all banks are implicitly backed by Beijing. 

Deposit insurance would make it possible for banks to compete via higher rates without putting customers’ money at risk, and for the government to shift away from the implicit guarantee of all lenders, pressing ahead with a pledge to give the market a bigger role in deciding winners and losers. Basing interest rates on market factors, rather than government policy, also could make the financial system more robust and better able to handle capital moving freely into and out of the country. 

ENLARGE

Many Chinese officials and analysts warn, though, that Beijing might be inclined to put off liberalizing deposit rates if the economy weakens further. They say that if banks have to pay more for deposits, they may charge borrowers more for loans, at least in the near term. Banking regulators also have expressed concern that relaxing deposit rates too fast could lead Chinese banks to make riskier loans to cover their increased funding costs, a scenario that could end badly, according to officials with knowledge of the matter.

“Slower economic growth and interest-rate liberalization are among the factors that are curbing our profit growth,” Jiang Jianqing,chairman of Industrial & Commercial Bank of China Ltd., China’s largest bank by assets, told reporters last week. 

To help relieve banks’ funding pressure, the central bank is expected to free up more money for banks to lend by lowering the proportion of deposits they have to hold as reserves with the central bank, according to banking officials and analysts.

—Liyan Qi contributed to this article.

Insurance contributes 15% to local GDP

Money Web

More than 15% of South Africa’s gross domestic product (GDP) was accounted for by insurance premiums in 2013, making it the country with the second-highest insurance penetration in the world, according to PwC.

With a very mature insurance market, products remain concentrated among a much smaller proportion of the population than in other countries.

Notwithstanding, South Africa’s insurance market accounted for nearly 75% of the total premium written across Africa in 2013.

With a population of 171 million and a GDP in 2013 of $509 billion (South Africa’s GDP was $351 billion that year), Nigeria generated just $1.9 billion in insurance premiums – a mere 0.6% of its GDP.

Kenya’s insurance market generated $1.5 billion of insurance premiums in 2013, contributing 3.4% to its $53 billion GDP.

At $72.4 billion, insurance premiums across Africa accounted for a little more than 3% of the world market, which in 2013 recorded premium income of more than $2 trillion.

Although insurance premium growth on the continent was flat from 2012 to 2013, PwC’s Victor Muguto said there’s hope that newfound wealth in fast-growing African economies will increase the demand for insurance on the continent.

Coupled with rapid urbanisation, the number of insurable assets and lives is predicted to grow considerably on the continent, Muguto, who is PwC South Africa’s long-term insurance leader, said.

“Also, improving governance and relative economic stability bode well for insurance growth in the rest of Africa in the future,” he said.

SA insurers face stiff competition in Africa

Subdued economic growth in South Africa means local insurers are looking north of our borders for growth. “Contributions from the rest of Africa need to increase and I think they [local insurers] are all doing a lot to try and make their acquisitions and diversify their businesses,” Muguto said.

However, high levels of penetration in home markets and increased demand for insurance in Africa will increasingly attract developed market peers.

That competition for insurance business is increasing across Africa is reflected in the fact that South Africa’s major insurance groups with operations in the rest of the continent saw a 22% reduction in the value of new business (VNB) written in 2014. This drop followed year-on-year growth in the previous two years.

“The only exception was Sanlam, whose VNB increased by 20% to R280 million,” PwC said.

Dewald van den Berg, insurance technical director at PwC South Africa, said this was partly attributable to currency fluctuations and the increased cost of capital as insurers wrote higher risk business.

Sanlam’s rest of Africa contribution to VNB in 2014 was the highest of its peers at 22%. Old Mutual’s rest of Africa contribution to VNB was 14%, followed by MMI Holdings at 6% and Liberty at 3%. 

Van den Berg said Africa would not remain South Africa’s “playground” but was going to be “a world stage in terms of competition”. “We are seeing moves in the regulatory environment to improve capital requirements, which will add to business complexity in the rest of Africa,” he commented. 

South African insurers face competition from the likes of AXA, Prudential and other European insurers, many of which have bigger balance sheets and more sophisticated underwriting models, said Muguto.

“The focus is there from an Africa perspective; all four have put out their wallets. I believe they can compete, but they need to run very quickly because the European AXA’s and Prudential’s are fast movers as well,” Muguto said. 

SA insurers face tough Africa fight

BDlive

SOUTH African insurers looking for growth in the rest of Africa need to move fast as they can expect strong competition from large European insurers chasing the same markets.

Victor Mugoto, PwC long-term insurance leader for Africa, said on Monday that large European insurers like AXA and Prudential have substantial balance sheets, sophisticated models and are experienced in pricing risk.

This gives them an advantage over local insurers who have tended to shy away from insuring infrastructure projects and rather let the business be written outside of Africa.

"There is a lot of development that needs to happen and we need to run very quickly because the European insurers, like AXA and Prudential, have very sophisticated models and are very experienced at underwriting more sophisticated risk, and they are very quick to get to those new risk areas."

Sanlam, Old Mutual, Liberty and MMI are all expanding their operations on the rest of the continent, in search of growth as SA’s economy expands at a sluggish 1.5% to 2%.

Yet the rest of Africa’s contribution to the value of new business for the insurers decreased by 7% in 2014, said Dewald van den Berg, PwC director of the financial services division. This was partly due to currency fluctuations while competition also played a role, he added. Margins also reduced in the rest of Africa.

Only Sanlam was able to maintain its new business margins at the same level as the prior year, Mr van den Berg said.

Sanlam was also "ahead of the pack" with 22% of the value of new business coming from its rest of Africa operations.

The insurer has the largest operations in the rest of Africa, with businesses in 14 countries, excluding SA.

Sanlam has R2.5bn to spend on acquisitions in the rest of Africa or other emerging markets as it aims to earn 30% of net operating profit from outside SA by the end of 2015.

 

Old Mutual’s rest of Africa businesses made up 14% of the value of new business last year, said Mr van den Berg.

The insurer, listed in both Johannesburg and London, operates in seven African countries besides SA and has R1.4bn to spend on expansion across the rest of the continent.

MMI’s rest of Africa operations accounted for 6% of the value of its new business and Liberty’s 3%.

MMI has operations in 12 African countries and R1bn for potential acquisitions in SA and on the rest of the continent.

Liberty is found in 15 African countries.

The short-term insurance industry in the rest of Africa has more potential for growth than long-term insurance, said Mr Mugoto. Life insurance premiums in Africa totalled $50bn in 2013, making up 1.9% global market share. This had not grown from 2012, according to Swiss Re.

Nonlife insurance stood at $22bn in 2013, accounting for 1.1% of the world’s market share. This was also flat compared to the year before.

SA’s insurance penetration is among the highest in the world, with premiums at 15.4% of gross domestic product in 2013.

Nigeria, on the other hand, has the biggest economy, but insurance premiums make up only 0.6% of GDP. This makes it an attractive market for insurers seeking growth.

Mansard Insurance emerges one of the best firms

Press release

Mansard Insurance plc’s outstanding performance has again been recognized as it was selected as one of the top quartile (first place in Insurance Category) of publicly listed Growth Strategy Leaders in Nigeria for the year 2015 awards season. This coveted award honors "best of the best" growth companies listed on the Nigerian Stock Exchange in Nigeria and was presented by MSY Analytics, (a teaming partner and Nigerian representative of global research and growth consulting giant, Frost & Sullivan). 

According to MSY analytics, ‘Using a weighted scoring methodology, the performance and financials of all publicly traded companies on Nigerian Stock Exchange (NSE) as of December 31, 2014 were evaluated  across several metrics such as Total shareholder returns, Revenue Growth and Profitability Growth.  From within this pool, we selected elite group of ten top companies per industry and Mansard ranked #1 in the Insurance Industry.

The organizers further disclosed that Emerging and Frontier markets represent over 50% of world GDP & over 2/3 of global growth and thus a strategic focus area for investors around the world.  While African continent is home to several of these markets, Nigeria (a key frontier market) enjoys a unique position as the largest GDP in Africa. Moreover, Nigerian Stock Market was among the 10 best performing markets around the world during 2013 and is expected to be an attractive market for both domestic as well as global investors for coming decades.

On receiving the award, Mr. Taiwo Adeleye, the head of Mansard’s Marketing and Corporate Communications Group, appreciated MSY Analytics for the honour accorded Mansard and he noted that Mansard has remained the biggest insurance company on the Nigerian Stock Exchange for several years. 

The 2015 Growth Strategy Leaders award was presented during the Wharton Club of Africa (WCA) Executive Investment Summit & CEO Forum 2015 at the Intercontinental Hotel in Lagos. 

Should you sell your duff annuity? Pension freedoms will allow those who have already taken an income from their nest egg to sell it back

Mail Online

taken an income the chance to sell their annuity back to an insurer company — but should they do that?

In the Budget this year, the Chancellor announced plans for a second-hand annuity market that would allow the 5.5 million people already taking an income from their pension the right to exchange this for cash.

It is just a proposal, but the idea is that from April 2016 this will give the same freedom of choice to everyone with a pension, regardless of what type of deal they have.

+1

Headache: What could you reasonably expect to get from selling back your annuity to an insurer?

But while this could prove to be a lifeline for some, even the Government has admitted it is likely to provide value for money for only a few.

By using the Budget assumptions, industry experts believe that the second-hand annuity service could be used by only 100,000 people.

So, what could you reasonably expect to get from selling back 

your annuity to an insurer?

We asked Alan Higham, the retirement director at investment firm Fidelity Worldwide International, to crunch some figures for us.

He told us that ten years ago, a 65-year-old could have turned a £100,000 pension pot into an income paying £7,000 a year. So far, they would have had £70,000 from their fund.

Now they are 75, they are likely to have another 12 years to live if they are in good health — which means another £84,000 of income.

The cost to an insurer to buy this income would be about £91,000. But, of course, this would not be what you would get in your pocket, because the insurer has to price in their costs — such as the risk that you would die early and their income would stop, plus other administrative expenses. In all likelihood, what you would probably get is closer to £57,000.

But those with poor health could get much less. That’s because there is a greater probability of dying sooner and so, therefore, the income to the insurer would stop earlier.

So if someone had life expectancy of just another seven years, they would probably get around £35,000, and if they were critically ill the cash they would receive for selling their annuity would likely be around only £3,000.

‘The payouts on offer to savers are likely to be disappointing, particularly for those who are unhappy with what their annuity pays now,’ says Mr Higham.

‘But if you bought a car and paid too much for it to start with, then selling that car second-hand is not suddenly going to make up your loss.

‘In all likelihood, you’re going to end up even more out of pocket.’

Major insurer Legal & General believes a healthy 75-year-old could receive more than £57,000 — it estimates they could get £78,000. But it points out that to match the income they would have received from an annuity, they would have to earn interest of 8.6 per cent a year.

‘Only exceedingly speculative investments can offer that sort of return,’ says Adrian Boulding, from Legal & General.

‘So, it’s not an option that would be recommended to a pensioner in an attempt to generate a higher income for themselves.’

On top of this, you have taken on the risk that you will live longer than expected — a risk that was previously with your insurer. Insurance companies are still debating the pros and cons of the second-hand annuity market that is likely to come in from April 2016.

And there is a further bonus from hanging on to your annuity if you bought one that pays an income to your spouse after death or had a guarantee to pay out for a particular time if the person who bought it has died.

New rules mean that beneficiaries will get this income tax-free — provided they haven’t already started to receive the money and the policyholder was under 75 at death.

Where the policyholder was over 75, beneficiaries just pay their normal rate of tax.

PIA committed to develop micro-insurance

PIA FORUM with DOREEN KAMBANGANJI
CREATION of an enabling environment through appropriate legislative framework remains one of the key components of the Zambia micro-insurance strategy, Pensions and Insurance Authority (PIA) registrar Martin Libinga notes.
Mr Libinga said PIA has since developed micro-insurance regulations which protect low-income people against specific risks in exchange for regular monetary payments (premiums) proportionate to the likelihood and cost of the risk involved.
During the Microinsurance Business Models for Africa Conference held in Livingstone from March 9-12, 2015, Mr Libinga said, “These [regulations] were subjected to extensive stakeholder review and it is our hope that they can quickly be promulgated.
“I have no doubt that these will provide a framework for the industry to introduce innovative products that will cater for the needs of the targeted customers, that is, the low income market.”
Within the framework of the current legislation, the PIA is still supporting insurance companies that have developed products tailored for the low-income market despite not having specific legislation on micro-insurance.
In highlighted the importance of consumer protection and consumer financial education in financial supervision, Mr Libinga said, “I cannot overemphasise [this significance], and these have been high on the agenda of regulatory forums.
“It is thus, cardinal to ensure that as we develop business models and legislative frameworks, creating value for the micro-insurance targeted markets should not be ignored. Consumer financial education is also a critical ingredient, particularly in micro-insurance, because no matter how well designed the products can be, they have to be understood by the target market, to achieve inclusiveness.”
Officiating at the function, Felix Nkulukusa who was then, Ministry of Finance Permanent Secretary said the theme of the conference -Microinsurance Business Models for Africa’ was important as most of African countries had very low levels of insurance penetration.
“We have heard of a number of cases where our people have gone into desolation after disaster has struck. Children are left without parents and no means to live a decent livelihood or continue their education. Households are left with nothing after a theft or fire. Micro entrepreneurs close shop after their goods have been stolen or burnt. Small scale farmers are left in misery after a drought or flood,” Mr Nkulukusa said.
Certainly, there is no need to emphasis on the importance of insurance, “but, I would like to commend you for your investments in coming to this conference that is discussing not just ‘insurance’ but ‘microinsurance’- insurance services for the low-income market segment,” he said.
Government is fully aware of the challenges that the market segment has in understanding insurance and indeed making the decision to buy a ‘peace of mind’ amidst the many competing needs for their income – Conventional insurance would certainly fail to reach this target market.
Certainly, Government is supportive of initiatives that could help Zambians manage their risks better.
“The Zambian government is keen to work with the private sector to bring development to the country even through the insurance sector.  The government of Zambia is in the process of enacting a new Insurance Act which will spur the insurance industry to higher heights,” said Mr Nkulukusa.
The conference was attended by 84 participants from 13 African countries and also delegates from the USA, Germany and Switzerland.
The discussions of the conference were centered on putting clients’ first, business case and challenges in micro-insurance, health insurance, agriculture insurance and consumer education and marketing.
Your feedback is always welcome. Get in touch with us through email: pia@pia.org.zm or you can visit our website www.pia.org.zm for more information.

CBN gives conditions for operations of bancassurance

Chuks Udo Okonta 

Central Bank of Nigeria (CBN), has issued a new set of guidelines for banks providing bancassurance, mandating them to conduct thorough due diligence/pe­riodic assessment on se­lection of insurance partners, which must hold valid operational license from National Insurance Commission (NAICOM).

The directive in a circular to banks and signed by Director of Banking Supervision, Mrs. Tokunbo Martins, said it was part of its measures to effectively regulate transactions on General and Life Insurance among banks.

She specified that banks shall not engage in any other model of bancassurance other than that allowed under these guidelines and for which approval has been obtained from CBN.

However, the apex bank stated that the guidelines were issued based on recent devel­opments and the need to ensure synergy in the financial system in exercise of its power un­der Section 33(1)(b) of the CBN Act 2007 and the provision of Part 2, Section 3, Item(l) of the CBN Scope, Conditions & Minimum Standards for Commercial Banks Regulathe CBN Scope, Conditions tions No. 01, 2010. ­

It set out the regulatory framework for the offering of bancassurance products through the non-integrated referral model.

The choice of this model, according to CBN, was pre­mised on the fact that it does not preclude banks from focusing on their core bank­ing businesses and does not undermine the essence of CBN’s New Banking Model Bancassurance products.

Under the guidelines, the apex bank directed banks to enter into agreements with insurance companies, but should not engage in any other model of bancassur­ance other than that permit­ted under these guidelines and for which approval has been obtained from it. It stat­ed that banks should not of­fer banking products that in­corporate insurance features.

In addition, they were also prohibited from offering free premium payments as a feature of any of their prod­ucts as well as providing the bancassurance products in a manner that contravenes the new guidelines or any other statutory provision or law that applies to insurance products and services.

On the required agree­ment between the banks and insurance companies, CBN directed that the re­ferral model of bancassur­ance arrangement between a bank and an insurance company shall not be valid without an executed Ban­cassurance Agreement just as it restrained banks from undertaking any insurance marketing, underwriting or claim settlement.

Similarly, the guidelines provided that banks shall ensure that no risks are transferred to it and shall not assume any fiduciary responsibility or liability for any consequences, financial or otherwise, arising from the subscription to insurance policies by customers.

Other conditions set by the apex bank for bancas­surance product transactions are, “Deposit Money Banks (DMBs) shall conduct a thorough due diligence/pe­riodic assessment for the se­lection of partner insurance companies, which would be restricted to two insurance companies; ensure that only bancassurance products ap­proved by relevant regula­tory authority are offered to their customers by the insur­ance companies and shall not enter into bancassurance agreement with insurance companies who do not hold a valid operational license from National Insurance Commission (NAICOM).”

PenCom extends submission of bid for ICT infrastructure by two weeks

Chuks Udo Okonta

The National Pension Commission (PenCom) has given two weeks grace for submission of bid for supply and installation of its Information and Communications Technology (ICT) infrastructure and MPLS based broadband network.

Information obtained from the commission, said the two weeks extension, is due to the Easter public holiday.

The commission urged prospective bidders to continue to submit the bids at its Head Office in Abuja.

Insurers shrink policies for long-term care; rates rise

New York – — Thirty years ago, insurance companies had the answer to the soaring cost of caring for the elderly. Plan ahead and buy a policy that will cover your expenses.

Now, there’s a new problem: Even insurers think it’s unaffordable.

Life insurance firms pitched long-term-care policies as the prudent way for Americans to shoulder the cost of staying in nursing homes. But those same companies have found that long-term-care policies are squeezing their profits. Earnings for life insurers slid 11 percent in the most recent quarter, according to Moody’s Investors Service, and long-term care was the chief culprit.

“Insurers that sell these products lose money on them,” said Vincent Lui, a life insurance analyst at Morningstar. “So they’re raising prices and also trying to get out of the business right and left.”

Four of the five largest providers — including Manulife and MetLife — have either scaled back their business or stopped selling new policies, according to Moody’s. The largest provider, Genworth Financial, continues to offer them, but has struggled under the weight of rising costs.

The trends behind the industry’s troubles sound like good news outside the world of insurance. Older Americans are healthier and living longer. But that makes it difficult for the industry to turn a profit. Stays in nursing homes tend to last longer, so insurers have to pay out more in benefits than they had planned.

For older Americans and their families, however, there are few options besides private insurance. Medicare doesn’t cover nursing home stays except in certain circumstances. The Obama administration had planned to make a long-term insurance program part of the Affordable Care Act but eventually abandoned it.

Sean Dargan, an analyst at Macquarie Group, an Australia-based investment bank, expects to see more people turning to Medicaid, the government’s health insurance for the poor, to cover the costs of care.

“It could really blow a hole through state budgets,” he said. “I think states and the federal government are going to need to think creatively to find a way out of this.”

In an interview with the Associated Press, Tom McInerney, Genworth’s CEO, said his company has been taking steps to make long-term-care insurance a viable business, raising prices on older policies, introducing new products and throwing out their previous assumptions.

When they began selling policies widely in the 1980s, the industry made a slew of assumptions about how long people would live, health care costs and interest rates. Nearly all of them turned out wrong, analysts say.

Take life spans. At nearly 79 years, overall life expectancy in the U.S. has never been higher, according to the Centers for Disease Control and Prevention. That’s the biggest issue, analysts say, because it means more people who took out policies stick around to make claims, moving into nursing homes and asking insurance companies to help cover the steep bills.

The rate for staying at a nursing home has gone up an average of 4 percent every year for the last five years, according to Genworth’s annual survey. In 2014, the median bill for a shared room topped $6,000 a month.

Prices range widely, depending on where you live, your age, level of benefits, and much else. In Tennessee, for instance, a 55-year old woman who is healthy enough to qualify for a policy can expect to pay $2,411 in the first year for $136,000 in benefits. That’s a new policy, likely the lowest premium.

Analysts who follow the industry think that insurers have learned from their missteps and probably figured out the right price to charge for long-term care policies to turn a profit.

The problem is, it might be too high for most people to pay.

Barclays Africa Applies for Nigerian Equities Trading License

(Bloomberg) -- Barclays Africa Group Ltd., which is expanding on the continent after buying most of its parent’s operations in Africa, has applied for an equities trading license in Nigeria in addition to a commercial license. 

“We really want to follow our corporate clients into Nigeria,” Maria Ramos, chief executive officer of the Johannesburg-based lender, said in a presentation on Thursday. “We want to bank our global and local clients in Nigeria. It’s an important, large and vibrant economy.” 

Barclays Africa has a presence in 12 African countries including Kenya, where it has now applied for an insurance license. Parent Barclays Plc still owns operations in Egypt and Zimbabwe. When the South African bank bought the U.K. company’s operations in eight African nations in 2013 for 18.3 billion rand ($1.52 billion) in stock, Egypt and Zimbabwe were left out of the deal because of political turmoil and potential regulatory delays. 

While Barclays Africa now wants to buy those units, “Egypt will be a very tough negotiation with Plc because the pricing has changed,” Ramos said. “We will have to pay a very competitive price.” 

Barclays Africa is rolling out corporate and investment banking services across the continent while using its parent’s franchises to also boost consumer lending outside of South Africa. Within that country, it’s the largest consumer bank after Standard Bank Group Ltd., and has the most ATMs. 

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.netJohn Viljoen, Michael Gunn