Annuity: PenCom urges insurers to step-up marketing

Chuks Udo Okonta

The National Pension Commission (PenCom) has called on life insurers to intensify efforts in marketing annuity business instead of complaining of demarketing by Pension Fund Administrators (PFAs).

A staffer of PenCom who asked not to be named, told Inspen that the complain by some life insurers that they are denied annuity business by PFAs is uncalled-for as the Pension Reform Acts (PRA) 2004, has spelt out the roles to be played life insurers and PFAs in managing retirement funds.

Life insurers were asked to double their efforts in marketing the retirees who have been mandated by the pension Act to choose where to invest their retirement benefits. They were enjoined to stop complaining and reach-out to the retirees who would not on their own come to them to invest their benefits.

Some Life Insurers have alleged that only insurance firms with pension subsidaries are the ones enjoying annuity business.

An insurers said annuity business is out of reach of some of them due to the attitude of some PFAs. He noted that the money life operators ought to obtain from annuity is being withdrawn by the PFAs, adding that instead of PFAs to focus on programme withdrawal, they go about marketing the same person an insurance company is prospecting.

" We expected annuity product to be thriving in this economy. But as far as the business is concerned, it is still out of reach for insurance companies. The major reason is the money that need to be withdrawn from the PFAs are being held on.

"I have done many proposal, I have done many presentation with oil companies and construction companies, but the PFAs are saying, let the money stay with us. "Whatever insurance companies can do for you, we will do it for you and the Act covers it for them.

"Annuity is still very low in our market, except insurance companies that has a PFA are the one enjoying it. It is a product that suppose to be thriving well. That which is suppose to be brought to insurance companies are being held on to by the PFAs. It is not a case of saying they withheld it. It is a case of PFAs marketing the same person an insurance company is marketing, that is the experience.

"And when you think you have close a deal, the man comes to you and said my PFAs said they could still give me the same thing. The same structure that you said you will pay me on monthly basis, they said they will pay it.

"When I said withheld, I did not mean that they will not release the money, but they are ready to give them whatever you have proposed to them. It is like indirectly, the PFAs is accepting the annuity too," he said.

　

NAICOM,brokers,agents colloborate to promote MDRI

Chuks Udo Okonta

Barely unforeseen circumstances the Market Development and Restructuring Initiative (MDRI) would soon receive a boost as brokers are chating a new course on how to leverage on the programme to deepen insurance awareness at grassroots, Inspen can authoritatively reveal.

Investigation revealed that brokers have written the National Insurance Commission (NAICOM) seeking a guideline that would enable them colloborate with agents to sell compulsory insurances provided in the MDRI at the grassroots.

A source from the broking arm, said the move is to activate the provision in the MDRI that gives room for sub-brokers in the implimentation of the programme.

Though the move by the brokers is still rapped, as the strategies have not been fully developed, it was learnt that when operational, brokers would be enabled to employ agents to market their products, especially the compulsory ones on their behalf.

It was also gathered that the move would help deepen the retail market, which is presently left untapped.

MDRI is a medium term industry development plan by NAICOM, with the first phase covering the period of 2009-2012. It was designed to operate as the first phase of the necessary reforms in the insurance sector and focused on the following: enforcement of compulsory insurance products, increase insurance awareness, reduction in the incidence of fake insurance, insurance agency reform. It was the industry’s projection that the following results will be achieved by the end year 2012: gross premium income of N1.10 trillion, creation of additional 250,000 new jobs, make substantial contribution into the Fire Service Maintenance Fund (FSMF) as provided in section 65(5) of the Insurance Act and attain3.0 per cent insurance contribution to the nation’s Gross Domestic Product (GDP) as against 0.72 percent in 2008.

Going by the inability of the industry to achieve the set targets last year, NAICOM is making frantic effort to reveiw the programme to pave way for attainment of the set projections.

The Managing Director Riskguard-Africa Nigeria Limited and Consultant to NAICOM on MDRI, Yemi Soladoye, said NAICOM would soon come out with a fully repackaged programme for the initiative.

"I know that NAICOM is repackaging to come back and hit the thing very well to address the problems sofar encountered. I also know that some insurance companies, that have embraced the initiative," he said.

'How budgetary issues shattered insurers expectations in first quarter'

Chuks Udo Okonta

Insurance operators expectations for a better business in the first quarter, has been shattered by the delay witnessed in the signing into law of this year's budget, Inspen can reveal.

It was learnt that most operators had hinged their expectations on the president's early presentation of the budget to the National Assembly. But the forward and backward movement of the budget between the presidency and the national Assembly, robbed the operators of their expectations as they watched the first quarter went with little or nothing to hold on to.


The President Chartered Insurance Institute of Nigeria (CIIN) Dr. Wole Adetimehin, said the operators had high hope for improved business when the president took the unusual step to present the budget to the national assembly before the end of last year, adding that the expectations were trucated when the budget was kept to the end of the end of the quarter before it was singned into law.
He noted that the delay in the signing of the budget stemmed the activities of government, making it impossible for production and other economic activities to thrive.

He said the delay in signing the budget, will also affect insurance operations in the secord quarter, noting that due to bureaucry in government, most government's ministries, department and agencies would not be able to access and release funds for projects as expected in the second quarter.

"That the budget was tabled before the upper and the lower house in November last year is enough to raise the hope of any sector of the economy, that yes, the basis for planning in the new year is firmly in place. Without economising words, I would say all those hopes and expectations became shattered, because the budget was not signed into law as expected."
Adetimehin called on the government to improve the state of the economy, stressing that businesses including insurance is low due to the high level of poverty in the land.

He noted that lack of basic infrastructure stemmed the productive capacity of the nation, adding that when the economy improves, people would have enough to partake in businesses.
He maintained that in spite the challenges, operators would continue to strive in making their contributions to the development of the economy through the provision of measures to mitigate risks.

Takaful insurance gains 70% penetration in northern Nigeria

Chuks Udo Okonta

Takaful insurance is gradually being embraced by Nigerians as reports have revealed that it has attained about 70 per cent penetration in the northern region.

It was learnt that takaful products are doing well because they are designed to carter for the low income earners and that its simplicity, makes it attractive to the public. Investigations revealed that motor cyclist, teachers, farmer and more are the major buyers of the products.

The cultural belief of the north is another factor said to be driving the sales of the products, as investment of takaful funds is done in compliance with sharia law which prohibits gambling and profiteering and consumption of alcohol. The fund are not invested in economy activities that negates islam and sharia, including brewing alcohol.

The insurance product line which was awakened by the development of economic activities and establishment of Islamic banks in the seventies and known as joint gurantee or share responsibility in Arabic, operates in according to Islamic laws. The products are designed to carter for muslims and non- moslims, and are meant to encourage saving culture and build capital, over a period of time to meet personal or business needs.

The Vice-Chairman Chartered Insurance Institute of Nigeria (CIIN) Oyo State Chapter, Babatunde Omosola, said under takaful plan, people can save regularly for a fixed period that is convenient for them, adding that the accumulated targeted amount can be used to fund obligations such as purchase of land, house, marriage or hajj and that it could also be used to meet other long term financial objectives, such as retirement, children education, travelling expenses as well as expected commitment.

He noted that reports have shown that in many countries, takaful products have been bought by non muslims due to some of its attractive features, which are not offered under conventional products, adding that the implication of this trend is that there is a promising market and potential growth for takaful business.

Omosola, said claims in takaful business are paid to those unfortunate policyholders/shareholders who suffer some insured losses within the period of cover, noting that they are compensated from the pool and reinstated accordingly.

Takaful products thrive in South-East

Chuks Udo Okonta

Contrary to the belief that Takaful insurance are solely for moslims, reports have shown that the South-Eastern part of the country which is predominantly christians now has the highest subscribers rate of the products.

The Vice-Chairman Chartered Insurance Institute of Nigeria (CIIN) Oyo State Chapter, Babatunde Omosola, who disclosed this at the 2013 Media Retreat Organised by the CIIN, for members of National Association of Insurance Correspondents (NAICO) in Ibadan, said South-Easterners have embraced takaful insurance products because of its simplicity.

He noted that though takaful which means joint gurantee or share responsibility in Arabic, operates in according to Islamic laws, the products are designed to carter for muslims and non- moslims, adding that the products are meant to encourage saving culture and build capital, over a period of time to meet personal or business needs.

He said: "Under takaful plan, you can save regularly for a fixed period that is convenient for you. The accumulated targeted amount can be used to fund obligations such as purchase of land, house, marriage or hajj. It could also be used to meet other long term financial objectives, such as retirement, children education, travelling expenses as well as expected commitment."

He noted that reports have shown that in many countries, takaful products have been bought by non muslims due to some of its attractive features, which are not offered under conventional products, adding that the implication of this trend is that there is a promising market and potential growth for takaful business.

He said investment of takaful funds is done in compliance with sharia law which prohibits gambling and profiteering and consumption of alcohol, noting that the fund should not be invested into economy activities that negates islam and sharia, including brewing alcohol.

The President CIIN Dr. Wole Adetimehin, said the institute has over the years remained focused in supporting the industry through building the human capacity. He noted that aligning with the transformation agenda of the present government, the institute is poised to ensure that the insurance potentials in the nation are harnessed.

He called for the infrastructural development, adding that it is when the economy thrives people would buy more insurance products.

'How we are driving MDRI with electronic devices'

Chuks Udo Okonta

In spite the belief in some quarters that the objectives of the Market Development and Restructuring Initiative (MDRI) are not harnessed by insurance operators, some underwriters have started reaping from the programme.

One of the underwriting firms that have position itself and is harnessing the benefits accruable from the MDRI programme is Royal Exchange Insurance Group which said it is using electronic platform to sell insurances identified in the initiative.

Managing Director, Royal Exchange General Insurance, Olutayo Borokini,

said: "What we have done in Royal Exchange, is to use electronic platform to sell some of the compulsory insurances. For example, we are about the first to start using scratch cards to sell third party insurance policies through the various licensing offices and other distributing channels.

"We recruited agents nationwide to sell these products through the use of scratch cards to members of the public. Apart from the third party insurances, we also created the variants of comprehensive policy. We find out that there are some people that don’t have money to purchase the comprehensive policy.

"So we have the variants of comprehensive policy whereby you can decide to purchase third party and damage only which we also sell through scratch card system."

He noted that the company has also introduced the sales of public buildings policies through the use of scratch cards, adding that the firm is mapping out strategies to sell these policies using various channels that may be available to it.

He said the firm is embarking on strategies to reach out to the poor and owners of public buildings on the need to insure them.

Borokini maintained that though, government is making efforts to get the people to insure their properties, there is the need for more enlightment.

He said the firm would put in foot soldiers to actually go into the market place, enlighten the people and convince them on the need to have these insurance policies.

NAICOM automates processes to enhance operations

 Chuks Udo Okonta

The National Insurance Commission (NAICOM) would soon commence work on the second phase of its Information Technology (IT) automation which is targeted at enhancing regulatory processes, Inspen can reveal.

Assistant Director Inspectorate NAICOM Sam Onyeka, who confirmed this, said the commission is automating its processes not just for anti-money laundering reporting, but to enhance operational efficiency.

He said the information technology project is in phases, adding that the commission has gone far with the first phase and that work on the second phase would soon commence.

Onyeka noted that completion of the automation process depends on a number of issues, including the speeds employed by the consultants on the work. He maintained that the consultants are working assiduously, to meet the specified time for the project completion.

As part of the commission's re-engineering process, it has redesigned its website to make its user-friendly.

NAICOM said the new site is designed encourage more social media presence and enhance interaction with the public.