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Chuks Udo Okonta
Insurance firms operating without an in-house actuary would soon be denied the opportunity to underwrite annuity business, Inspenonline can report.
This is one of the rules the National Insurance Commission (NAICOM) is considering to help boost the underwriting of benefits annuity which is presently facing challenges of return on investment due to the drop in interest rates and restriction on some investable financial securities.
According to the Acting Commissioner for Insurance, Sunday Thomas, who spoke recently at the Chartered Insurance Institute of Nigeria (CIIN) 2020 Business Outlook in Lagos, NAICOM has taken the step to raise about 100 actuaries in the next five years. He noted that the industry would soon get to the point where firms operating without in-house actuaries will be debarred from underwriting annuity business.
He noted that due to the technical nature of annuity business, it requires experts with analytical minds, which actuaries fit in.
“Part of our plans is that within the next five years, we want to produce at least 100 Certified Actuarial Analyst and we will take responsibility for the commitment.
“We must analyse our job, role and the need to change our focus on how to develop the market and ensure compliance to regulatory policies .
“Part of the development is the human capital development, as the growing potential of the industry is built on the capacity to have the required capital that will drive it forward.
“The issue of measuring and taking necessary step for effective pricing has made the Actuarial profession to be more pertinent more than ever before .
“There is need to develop young professionals and give them a future in the insurance industry and we are determined to develop their potentials and make them relevance to the sector, ” he posited.
According to him, only a couple of the Insurance companies have an in-house Actuaries and this is why the commission has intervened to stem the tide .
Thomas said actuaries are needed to manage the annuity business which was becoming quite significance and almost accounting to 35 to 40 per cent in the insurance industry portfolio.
According to the Nigerian Insurers Association (NIA) life insurers generated N77.93 billion, which is 44 per cent of the total N178.83 billion life business premium from annuity in 2018.
The NIA stated that N61.24 billion was derived from benefits annuity, while N16.14 billion from annuity guarantee.
The association also said 31 per cent of the N94.91 billion total life claims went to annuity amounting to N29.44 billion.
On profit made on annuity, NIA said five firms posted loss, while six posted profit.