Transition to the International Financial Reporting Standard (IFRS), one of the reform programmes which shaped the financial services industry and publicly quoted companies in the last two years, has revealed a shortage of professional actuaries in the insurance sector, BusinessDay investigations reveal.
Insurance companies have been unable to file their annual returns to the National Insurance Commission (NAICOM) after the yearly June 30 deadline, worsening the perception of the sector and this has had a negative impact on their stocks at the exchange, where they rallied among the bears.
Consequently, insurance firms had to pay huge sums to secure the services of IFRS consultants and actuarial professionals to navigate the transition process to the new accounting standard.
Insurers have lagged behind their banking sector counterparts in implementing IFRS, and have suffered penalties from NAICOM, the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) as a result.
Rotimi Okpaise, chief executive officer, HR Nigeria Limited, said IFRS and Global Risk Management practices have significantly increased the role (or need) of actuaries in the management of insurance.
“IFRS requires that balance sheet liabilities of insurers (for General and Life business) to their policyholders be scientifically calculated, “which he said must be handled by actuaries.
At the moment, there are about 12 qualified actuaries operating in Nigeria and according to Okpaise “it’s difficult to be categorical to say how many are needed but I look forward to when Nigeria can boast of 50 qualified actuaries”.
Sakiru Oyefeso, managing director, Staco Insurance plc, confirmed that the delay suffered by insurance companies in submission of their annual returns was as result of the shortage of professional consultants familiar with IFRS processes.
“There are only a few professional actuaries in Nigeria, and so companies had to queue for their services and at high cost. In some cases you pay as much as N30 million for consulting.
“And because IFRS is new, they are also learning on the job. But I think we have been able to understand the challenge and process, and with internal capacity among our staff, we would not have these delays going forward”, Oyefeso observed.
Meanwhile, Mansards Insurance plc is in the process of boosting its in-house actuarial skills with the support of its new core investors AXA Group, which acquired 100 percent of Assur Africa Holdings (AAH), which holds a 77 per cent stake in Mansard, a source close to the company said.
AXA, a French multinational investment banking firm with subsidiaries in insurance is said to have rich manpower in actuarial and risk management, which enables it manage huge investment funds across many markets around the world.
Taiwo Adeleye, assistant general manager, Marketing Group, Mansard Insurance had said in a recent statement that Mansard would be able to capitalise on AXA’s extended distribution knowledge, unique product skills and actuarial know-how, to further accelerate its development and leverage its competitive advantage.
AXA is a French multinational investment banking firm, headquartered in the 8th arrondissement of Paris and engages in global investment banking, securities, investment management, insurance, and other financial services.