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Chiamaka Ajeamo
The National Insurance Commission (NAICOM) in partnership with the National Pension Commission (PenCom) has said it would soon unveil a guideline which will empower insurance agents to sell annuity products to Nigerians.
This was disclosed by the Head, Commissioner for Insurance Directorate, NAICOM, Rasaaq Salami, who explained that the guideline became essential as a result of the current trends around annuity business in the country.
Salami stated 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. This figure represented a growth of 17.46 per cent compared to that of 2018 which was N 275 billion.
”Within the same period under review, the cumulative total Retiree Life Annuity (RLA) payouts stood above N122 billion as at end of the second quarter of 2019.
According to Salami, the RLA market has been in existence since the advent of the Contributory Pension Scheme (CPS).
He pointed out that the RLA portfolio has recorded 73,554 contracts purchased for a total premium of N342 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.
Going further, he 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 commpany licensed by the NAICOM and authorised to sell RLA under the regulation of retiree life annuity.
