• Saturday, July 13, 2024
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BusinessDay

Foreign equities grow in insurance industry over policy on annuity

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The reinforcement of annuity products in the insurance industry following the implementation of the Pension Reform Act 2004, which included annuity as investment window for retirees pension emoluments, has buoyed the increasing presence of foreign equities in the nation’s insurance industry.

The number of firms which have established presence in the industry to take advantage of the growing annuity market, the National Insurance Commission said has grown from three before 2004 to 10 currently.

Annuity is defined as a series of fixed payments paid at regular intervals over the specified period of the annuity, purchased by a retiree from his pension emoluments. As provided in the Pension Reform Act 2004, a retirement Savings Account (RSA) holder may upon retirement or attaining the age of 50 years (whichever is later), purchase an annuity from a life insurance company licensed by NAICOM with monthly or quarterly payments.

This development, analysts noted, has expanded the scope of annuity business for insurance companies offering life business, and so is attracting many foreign companies into the life insurance business of a number of local companies, particularly from South Africa.

Fola Daniel, who hinted on the development at the Investiture Dinner of the Chartered Insurance Institute of Nigeria (CIIN), said this has become possible following strong collaboration between the commission and the National Pension Commission.

Daniel said the nation’s insurance industry has continued to witness tremendous growth particularly since the last three years when it began its market developmental initiatives anchored on Market Development and Restructuring Initiatives (MDRI).

According to him, within this period the number of insured has grown from 500,000 to 1.5million policy holder indicating growing market penetration, which analysts also said was as result of growth in retail sales particularly in the life business.

Gross Premium Income (GPI) has also increased from N157 million in 2010 to N250 million in 2012, resulting in increased Gross Domestic Product (GDP) moving from below 0.5 percent to nearly one percent.

Daniel said increase in local capacity has moved from less than 10 percent to 48 percent, while commencement of implementation of Section 50 of the insurance Act 2003 has improved financial assets of operators.

“These are initiatives introduced by NAICOM of which received full support of the members of the industry and the profession, Daniel said.