Insurance

Guideline empowering insurance agents to sell annuity coming soon – NAICOM

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Chuks Udo Okonta

The National Insurance Commission (NAICOM) and National Pension Commission (PenCom) will soon unveil a guideline which will empower insurance agents to sell benefit annuity products, Inspenonline can report.

This was disclosed by a member of staff of NAICOM, who said the insurance and pension regulators are working on the guideline, adding that the guideline became necessary due to the current trends around annuity business.

He noted that when the guideline becomes operational, only insurance agents will be allowed to sell benefit annuity on behalf of underwriters, stressing that any insurance broker that is interested in the sale of annuity should be ready to earn agency commission.

According to him, the step is taken to protect annuity funds against huge commissions earned by intermediaries, especially insurance brokers.

According to NAICOM the insurance sector life annuity fund portfolio stood at about N323 billion at the end of the second quarter of 2019.

The information which was revealed by the Head, Commissioner for Insurance Directorate, NAICOM, Rasaaq Salami, noted that the figure represented a growth of 17.46 per cent compared to that of 2018 which was N 275 billion.

”Within the same period under focus, the cumulative total Retiree Life Annuity (RLA)
payouts stood above ₦122 billion as at end of the second quarter of 2019,” he said.

According to him, the RLA market has been in existence since the advent of the Contributory Pension Scheme (CPS).

Salami said the RLA portfolio has recorded 73,554 contracts purchased for a total premium of ₦342 billion as at end of the second quarter of 2019.

“This depicts 13.02 per cent and 6.21 per cent growth in count and volume, respectively, ” he said.
The NAICOM spokesman said that the growth during the last three years for RLA business averaged 34.28 per cent and 35.12 per cent in count and volume respectively.

He noted that the RLA fund portfolio growth averaged 27.46 per cent, notwithstanding the RLA cumulative total payments of N122 billion.

“The graph of the annuity payouts, premium receipts and portfolio fund balance depicts a clear representation as the difference between the cumulative premium amounts received and fund balance is small compared to the cumulative annuity payouts earlier stated.

“The above indicates growth in the RLA business and a positive future outlook for the business in Nigeria, ” he said.

The RLA is an insurance product and one of the available retirement benefit options for retirees. The product can be purchased from a Life Insurance Company licensed by the NAICOM and authorised to sell RLA under the regulation of retiree life annuity.

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