The National Insurance Commission (NAICOM) has introduced new regulatory requirements for life insurance companies engaged in annuity business in Nigeria.
A circular issued by the Commission in Abuja on Friday mandates that insurance companies must employ at least one qualified actuary responsible for conducting and implementing Assets-Liability Matching (ALM) analysis.
Furthermore, these companies must submit their ALM reports to the Commission on a quarterly basis.
NAICOM specified that the reports should adhere to the requirements outlined in the circular, including necessary actions for insurers based on the analysis results and guided by the Standards of Actuarial Practice (NSAP).
Insurance companies unable to meet the additional expenses imposed by the new regulation will be required to transfer their annuity portfolio to another suitable insurance company within 180 days.
Effective start date
The circular will come into effect on February 1st. NAICOM emphasizes that compliance with the new requirements is essential for maintaining a stable and secure annuity business in the country. The Board of Directors of each insurance company is responsible for ensuring strict adherence to these regulations.
“Insurance companies are required to comply with the new requirements, with the Board of Directors responsible for ensuring strict compliance,” the circular said.
The circular aims to instill best practices in managing annuity portfolios by insurance institutions, thereby contributing to a safe, sound, and stable insurance sector.
An annuity is a long-term investment agreement between an individual and an insurance company, which mandates the individual to make payments in series or a single payment at a particular time, in exchange for periodic disbursements or income, immediately or in the future, from the insurer.
What you should know
- On Thursday, the National Insurance Commission (NAICOM) and the Nigeria Police Force (NPF) launched a joint committee dedicated to enforcing compulsory insurance laws. The announcement was made at NAICOM’s headquarters in Abuja.
- This initiative aims to bolster insurance compliance across the country. The Inspector General of Police has also declared that the enforcement of motor vehicle insurance will commence on February 1, 2024.
- The joint committee has several key objectives, which include developing and implementing strategies for enforcing compulsory insurance in Nigeria, ensuring compliance with the Insurance Act and other related laws, fostering synergy and collaboration between NAICOM and the NPF, and providing training and capacity-building programs for the personnel of both organizations on compulsory insurances.
The committee’s scope of work includes evaluating existing challenges in enforcing compulsory insurance and proposing solutions.
They will develop protocols for joint enforcement operations, recommend policy reforms to enhance insurance compliance, undertake public sensitization programs on compulsory insurance, and create training programs for personnel of both organizations.
