INSURANCE AND PENSION

INSURANCE AND PENSION

NAICOM unveils risk-based supervision guidelines in Q2

By Chris Agabi

From the second quarter of 2016, the National Insurance Commission (NAICOM) would release the timetable, guidelines and minimum capital requirements (MCR) for insurance firms in Nigeria as it transits from compliance based supervision to risk-based supervision of the industry.

The Commissioner for Insurance and CEO, NAICOM, Alhaji Mohammed Kari disclosed at a workshop for insurance reporters and business editors held in Abeokuta recently.

The insurance regulator said the release of the timetable, guidelines and the MCR would climax a painstaking efforts by the commission towards seamlessly transition to RBS that has been in the works, a couple of years now.

Risk Based Supervisor (RBS) is a structured supervisory approach aimed at identifying the most critical risks that face each company and through a focused review by the supervisor; access the company’s management of those risks and the company’s financial vulnerability to potential adverse experience.

RBS will see insurance companies underwriting risks relative to their financial capacity. Companies with weak balance sheets wouldn’t be able to underwrite certain risks. A lot companies would be downgraded from the classes of businesses they currently take.

Alhaji Kari also noted that the full implementation of the Code of Corporate Governance will precede the full implementation of the RBS as it’s a key requirement to the transition. When this occur, a lot of the sit tight CEOs in the insurance industry who have stayed over 10 years would have to exit for new CEOs.

Leadway refutes allege default in FCTA staff claims payment

By Chris Agabi

Underwriting firm, Leadway Assurance Company Limited, has refuted media reports alleging a consortium of insurance companies (including Leadway) defaulted in meeting its claims obligations due to the deceased staff members of the Federal Capital Territory Administration (FCTA) under Group Life Insurance scheme.

Giving an account of what transpired, the company in a statement said,

The FCTA Group Life Insurance scheme was being handled by a consortium of underwriters starting from 2007 to date and certain claims were reported between 2007 and 2012.

“The process is that every notified claim must be properly documented before a discharge voucher can be issued. Payment is then made in accordance with the policy contract subject to any prevailing law governing payment of benefit at the time of settlement, which, in this case, was the Pension Reform Act (PRA) 2004. Some of the claims received were not properly documented and so could not be concluded till 2015 when full documentation was received” it stated.

It further explained that “by the time payments were due to beneficiaries, the Pension Reform Act (PRA) 2014 was in effect. Before the PRA 2004 was amended by the PRA 2014, life assurance benefits had to be paid to the deceased employee’s Retirement Savings Account (RSA) with their named Pension Fund Administrator (PFA). Access to the deceased account could then only be secured under a Testamentary WILL of the deceased or by Letters of Administration issued to deceased legal representatives under Probate following intestacy.” It said.

It added that “the review of the PRA 2004 came as a result of public outcry on the difficulty/inability of the families of deceased persons to promptly access life assurance benefits from the RSA of the deceased persons. The PRA 2014 now allows benefits to be paid directly to the named beneficiaries of the deceased persons and the responsibility for compliance is on the insurer. In keeping with the PRA 2014, we issued our cheques in favour of the named beneficiaries of the deceased members of the FCTA.”

It noted however that “the FCTA is however insistent that for all claims reported prior to the PRA 2014, payment must be administered through the named PFAs of the deceased members in accordance with the PRA 2004 rather than as amended in 2014. It should be noted that some payments had already been issued in the name of beneficiaries and collected.”

How N5.21tn pension assets were invested – PenCom

By Chris Agabi with agency report

The National Pension Commission (PenCom) has published details of how the N5.21 trillion pension assets as at November 2015 were invested.

PenCom published the details on its website. A breakdown showed that the Federal Government’s securities got N3.49 trillion or 66.41 per cent and the highest investment portfolio of the funds.

Also N505.71 billion or 9.97 per cent, was invested in domestic ordinary share, while N69.10 billion (1.35 per cent) in foreign ordinary shares.

Federal Government of Nigeria securities got N3.49 trillion (66.41 per cent) a breakdown: Bonds N2.95 trillion (56 per cent) and treasury bills N480.26 billion (10 per cent).

State government securities got N157.13 billion (3.14 per cent); corporate debt securities, N179.45 billion (3.04 per cent); supra- national bonds, N12.69 billion (0.22 per cent); local money market securities, 516.18 billion (10.39 per cent); foreign money market securities, N645 million (0.01 per cent); open/closed end fund, N19.36 billion 0.42 per cent.

Real estate properties got N231.25 billion (4.52 per cent); private equities funds, N13.43 billion (0.34 per cent); infrastructure funds, N1.40 billion (0.02 per cent); cash & other assets, N58.71 billion (0.70 per cent) and other liabilities, N38.02 billion (0.52 per cent).

Director-General PenCom, Chinelo Anohu-Amazu, had earlier said the present assets which is placed at over N5.31 trillion are not laying idle in any bank account as alleged. She noted that all pension funds are invested according to the industry’s investment guidelines, stressing that the industry’s investment guidelines specified how the funds are to be invested.