…As only nine qualified actuaries found in industry
Shortage of actuaries is threatening to derail the new regulatory requirements for annuity business recently issued by the National Insurance Commission (NAICOM).
NAICOM, in a circular effective February 1, 2025, directed life insurance players to have at least one qualified actuary responsible for Assets-Liability Matching (ALM) analysis and implementation.
The commission said any of the companies that will not be able to meet the new requirement within a period of 180 days should transfer its annuity portfolios to stronger companies.
NAICOM said, “Companies that are unable to cover the additional expenses imposed by the circular are required to transfer their annuity portfolio to another suitable insurance company within 180 days.”
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An actuary is a professional with advanced mathematical skills to deal with the measurement and management of risk and uncertainty. These risks can affect both sides of the balance sheet and require asset management, liability management, and valuation skills.
Data from the Nigerian Actuarial Society (NAS) show that there are only nine fully qualified actuaries in the country, out of its over 71 membership serving the entire financial services sector.
The insurance industry alone will need a minimum of 26 actuaries to work in its 13 life specialist companies, with 13 composite insurance companies and another 28 working in general insurance businesses.
Pius Apere, actuarial scientist/chairman and CEO, Achor Actuarial Services Limited, said there is a clear shortage of professional actuaries in Nigeria.
According to him, the available actuaries in the country are already engaged with companies. Some of them, he said, are working with consultants. “So, how many of them will accept to leave their current employment to join insurance companies.”
According to him, “Qualified actuaries earn quite much, even more than what some CEOs earn. So, it will mean so much if the regulator insists on qualified actuaries as stated in the circular.”
Newly qualified actuarial analyst or consultant in the UK earn in the region of £40,000 to £55,000 annually, while qualified actuaries earn as much as £78,377 per year, with an average salary of £69,690 per year.
When insurers planned the implementation of the International Financial Reporting Standard (IFRS17) in 2024, they faced similar challenges and had to shop for actuaries and actuarial consultants from South Africa, Kenya, among other countries, to meet the requirements.
With the new demand on annuity business, fears are that the shortages will become clearer, which may put a lot of pressure on the industry.
“The demand for actuaries in the Nigerian financial services industry became more pronounced following the introduction of IFRS. Incidentally, in the insurance industry, every company needs to have an actuary, as IFRS requires that every entity’s balance sheet reflect true and fair representation of the obligations,” Apere had said in his earlier research report on the Nigerian insurance market.
“The dearth of actuaries in Nigeria would not only affect the insurance companies’ operations but also the oversight functions of the regulatory body.”
The Financial Reporting Council (FRC) projects that the Nigerian economy requires over 3000 actuaries.
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Rabiu Olowo, council’s executive secretary, had recently expressed concern over the acute shortage of qualified actuaries in the country. He said while fielding questions from journalists during the 2024 annual conference of the Nigerian Actuarial Society (NAS).
“What we need to do is to be intentional about increasing the number of skilled and qualified actuaries in Nigeria. The number today is very disheartening,” he said.
Moruf Apamapa, managing director/CEO, NSIA Insurance Company Limited, said during the insurance industry transition to IFRS 17 in 2024 that, “We do not have enough resources in the country to be able to manage the process, and even the regulators themselves are contending with few available resources within the system.”
He added, “So, IFRS 17 is more than a simple accounting. You have limited resources in terms of actuaries in the market, so we had to rely on actuaries from South Africa and Kenya to meet up.”
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