The Nation Newspaper

Category: Insurance

  • Practitioners lament exclusion from National Conference

    Practitioners lament exclusion from National Conference

    The exclusion of insurance practitioners from the National Conference is an error, a former member of the House of Representatives and Managing Director, Leverage Insurance Brokers Limited, Lanre Laoshe has said.

    He told The Nation that the inclusion of members of the Nigerian Union of Road Transport Workers (NURTW) and the exclusion of his colleagues was an aberration.

    According to him, insurance is Item 33 in the Second Schedule Part 1 in the exclusive legislative list of the 1999 constitution and has been in previous constitutions.

    He added that Item 49 of that list says National Assembly will designate professionals and if it has passed two legislations, which is the 1993 and 2003 Insurance Act and is adopted by the Chartered Institute of Insurance of Nigeria (CIIN) and the Nigerian Council of Registered Insurance Brokers (NCRIB), it means the Legislature designates these bodies as professionals.

    He said: “The Nigeria Labour Congress has 12 members and the Institute of Chartered Accountants of Nigeria (ICAN) and Association of National Accountants of Nigeria (ANAN) have two members. Yet, insurance professionals are excluded. This is an indication that the government does not understand the role insurance play in the modern economy. It is even more disheartening that the NURTW members are more recoginsed than professionals like us.

    “I don’t understand what has happened and I think it’s a tragic error and I believe the government must begin to recognise us as a major economic group. Insurance practitioners are conservative and quiet because of the nature of the business which includes risks. We don’t like to talk too much because the security and assets of people are with us. But our silence should not be misconstrued,” he said.

    Similarly, the Chairman, Nigeria Insurers Association (NIA,) Mr. Remi Olowude, who also decried the exclusion of his colleagues from the conference, regretted that the industry is relegated in national discourse.

    He said there are daunting challenges that have continued to stifle growth in the sector, noting that the obstacles have been responsible for its abysmal contribution to the nation’s Gross Domestic Product.

    He said: “The challenges, perhaps, explain why the industry is not deemed worthy of representation at the upcoming National Conference. The situation is regrettable, to say the least, and must not be allowed to happen.

    “We believe that with the support of the new Board Members of the National Insurance Commission (NAICOM), chaired by Hon Prince Chibudom Nwuche and its management and the concerted efforts of all operators, the industry would experience a reversal of this glaring omission.

    “To make this happen, it is imperative that we dust up the laws governing insurance business, many of which have become obsolete and completely out of tune with the prevailing circumstances.’’

    He added: “It is against this background that we want to appeal to NAICOM to always take cognisance of this fact in the course of its regulatory duties, so that the industry is not made to bear the brunt of inappropriate legislations.”

     

  • Osborne delivers blow to annuities with ‘radical’ pension changes

    Osborne delivers blow to annuities with ‘radical’ pension changes

    Annuity purchases will no longer be the default option for pensioners retiring with defined contribution pension pots, Chancellor George Osborne has announced.

    His Budget included a host of what Osborne called ‘radical’ tax reforms to help pensioners and savers who have to been hit by low interest rates.

    He said the government was ‘backing a Britain that saves,’ adding that he would scrap a number of tax restrictions on defined contribution pots, putting pensioners in charge of their own finances and bringing the tax treatment of DC pensions ‘in line with the modern world’.

    Under the changes, some of which will take effect from March 27, pensioners will have much more flexibility over income drawdown.

    The income requirement for flexible drawdown is to be reduced from £20,000 to £12,000, while the capped drawdown limit will rise from 120 per cent to 150 per cent.

    In addition, the size of the lump sum small pots is to be increased five-fold from £2,000 to £10,000 and the government will almost double the total pension savings that can be taken as a lump sum to £30,000.

    Osborne said: ‘These measures alone would amount to a radical change. But they are only a step in the fundamental reform of the taxation of defined contribution pensions I want to see.

    ‘I am announcing today that we will legislate to remove all remaining tax restrictions on how pensioners have access to their pension pots. Pensioners will have the freedom to drawdown as much or as little of their pension pot as they want, anytime they want.

    ‘When it comes to tax charges, it will still be possible to take a quarter of your pension pot tax free on retirement, as today.

    ‘But instead of the punitive 55 per cent tax that exists now if you try to take the rest, anything else you take out of your pension will simply be taxed at normal marginal tax rates – as with any other income.’With no caps and no drawdown limits, no one would have to buy an annuity, Osborne said.

    But for those who still wanted to buy annuities he said he would introduce a new guarantee, so that everyone who retires on DC ‘will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have’.

    ‘Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal,’ he stated.

    The chancellor said he would provide £20million over the next two years to work with consumer groups and industry to develop this new right to advice.

    Responding to the announcement, the Institute and Faculty of Actuaries welcomed the chancellor’s changes as ‘useful immediate steps’ to create a new flexible retirement landscape for DC savers.

    But President David Hare said it was important that the same opportunities for members of defined benefit schemes as well.

    He said: ‘Undertaking this will not be easy. There are a number of issues that need to be addressed by any proposal to extend the flexibility to those in DB, including making sure that DB members realise what they could be giving up (e.g. longevity protection) in exchange for increased flexibility.’’

     

    • Culled from TheActuary

  • Health insurance firms partner IRS

    With just two weeks to go before the March 31 deadline for applying for health insurance on a government-run exchange, more than five million people have signed up for the new plans.

    It is expected that approximately 30 million previously uninsured Americans are expected to have health insurance, either through a government exchange, employer or Medicaid.

    So, following that logic, the health insurers behind these plans should be raking in profits from millions of new customers, which, even at reduced rates, should allow them to reap huge rewards.

    Along with the influx of new customers, the Affordable Care Act (ACA) is bringing health insurance companies new IRS obligations that could have a major impact on their profitability. While not all of these obligations are outright taxes, the ACA has effectively turned the IRS into a monitoring and enforcement mechanism for many of the health law’s administrative provisions. The cost of meeting these requirements will act as a tax of sorts.

     

    Insurance excise tax

    Chief among these is an $8 billion fee, which, effective this past January, is levied on all health insurers based on their total market share of net premiums written for different health risk pools. As the recent Thomson Reuters Checkpoint special report Tax Changes in Health Care Reform Legislation explains, this fee will be allocated based on the risk pools each insurer covers. Those who take on more customers with higher levels of health risk will pay less, while those who take on primarily low-risk new customers will pay more.

    This fee is essentially structured as an excise tax on insurance companies. The flat fee for the industry starts at $8 billion this year and will increase to $14.3 billion by 2018. To put that in perspective, the widely derided medical device tax, which imposes a 2.3per cent excise tax on several medical technologies, is only expected to generate about $2.9 billion in tax revenue per year.

    This is a big number that will have a material impact on insurance company cash flows starting this year. In fact, the Congressional Budget Office has said that it expects the tax to result in an overall increase in premiums as the insurance companies pass along the increased costs to their members. Consultancy Oliver Wyman has taken the estimate one step further, suggesting that the tax will result in an increase in insurance premiums of $500 per covered worker by 2020.

    Another significant tax hurdle for insurance companies isn’t really a tax at all, but rather a new tax form called the 1095-B, which is required for all covered lives, starting in tax year 2015. Essentially, because the Affordable Care Act requires all U.S. citizens to have some form of insurance, the burden of proof of coverage now falls on the insurance providers who must file this new form with the IRS each year to document that each of their members has insurance.

    That sounds reasonable enough, until you factor the herculean challenge of having to mail a copy of the IRS tax forms to policyholders, totaling 317 million Americans. As of December 2013, the two largest health insurers in the U.S., United Healthcare and WellPoint WLP +0.06per cent, had a combined 106 million members.

     

  • Insurers tackle aviation agencies on encroachment

    Insurers tackle aviation agencies on encroachment

    • Urge NAICOM on challenges

    Insurers have criticised moves by the Nigerian Civil Aviation Authority (NCAA) and other government agencies under the Ministry of Aviation to provide insurance to passengers and public liability for nuclear risks.

    Describing it as an encroachment, they said this was how the health insurancce, pension and the workmen’s compensation scheme were ceded to other bodies, thereby denying the industry the right to prospect.

    The insurers under the umbrella body of the Nigeria Insurers Association (NIA), spoke through their Chairman, Mr. Remi Olowude at an interactive session between the Board Members of the National Insurance Commission (NAICOM) and some chief executive officers of insurance firms. The event was organised by the commission.

    Olowude listed the National Health Insurance Scheme, (NHIS), the National Pension Commission (PenCom) and the National Social Insurance Trust Fund (NSITF) as new bodies holding sway in businesses that should be administered by insurance firms.

    He also criticised the government’s nonchalant attitude to paying premium, restriction on investments and recognition of offshore investments, insurance of oil and gas imports, and enforcement of compulsory insurance.

    He said other issues that bother them include the gradual dominance of foreign investors in the industry, unwillingness by the government to bail out firms that lost huge assets as a result of the financial meltdown and crash of the stock market, multiple taxation of insurance firms by various tiers of governments.

    Olowude, who is also the Executive Vice Chairman, Industrial and General Insurance Plc (IGI), said  NCAA was planning to establish a fund for passengers’ liability.

    He said all over the world, aviation passengers’ liability is subject to international conventions and the risks are covered by conventional insurance policies, noting that Nigeria cannot be an exception.

    He added that the Nuclear Agency also wants to establish a fund for nuclear damage insurance, instead of seeking cover for risks, which are covered in the international market.

    Oluwode stressed the need for the government to pay premium promptly.

    He said: “The government and its agencies have been paying lip service to the importance and benefits of insurance without serious patronage and support. There is hardly sufficient budget provision for payment of premium by government and its agencies.

    “Therefore, when insurance services are patronised, payment of the premium becomes an issue, a clear negation of the provisions of the law on ‘No premium, No cover’. Some parastatals or enterprises are funded without allocation for insurance. Many insurance policies contracted by the MDAs in the past were not renewed, thus leaving the assets exposed to risk, damage and losses without protection.

    He said there was an urgent need to review the restriction on investment to ensure safe, but adequate returns to stakeholders for the viability of the industry. Investments on equities suffered losses in 2008 and 2009, yet insurers are expected to maintain the same proportionate level of investment in prescribed sectors.’’

    He called for an amendment to the provisions of Insurance Act 2003 and Regulation of insurance company investments in line with the realities of business, adding that NAICOM needs to review its position on off-shore investment for solvency calculation and actuarial valuation, which he said, is under discussion with the Commissioner and his team.

    On the insurance of oil and gas imports, Olowude said there was the need to activate the various laws relating to marine insurance of refined petroleum products imported.

    “The Insurance Act 2003, for instance, provides that all imports must be insured with an insurance company registered in Nigeria. This law is only observed in the breach. Consequently, we are seeking enforcement of the Cabotage Act 2003, review of the Insurance Act 2003 and the Nigerian Oil Industry Content Development Act 2010.

    “We have also observed the gradual dominance of foreign investors in the market. Although Direct Foreign Investment (DFI) is in the interest of the economy, we want to believe that the foreign investors are not placed at an advantage over their Nigerian counterparts. We welcome foreign investors provided that there is a level playing field for all.

    “Also, many institutions and enterprises benefited from bail out plans by their governments after the economic crises and financial meltdown of 2008. In Nigeria, the banking industry, aviation and manufacturing industries benefited from the bailout by the Federal Government. Many insurance firms are still groaning from the losses suffered as a result of the crash in the stock market.

    “Recovery has been difficult and returning to profit remains a herculean task. We appeal to the Federal Government through your good offices to look towards the direction of insurers in this regard, Oluwode added.

    NAICOM Chairman, Hon Chibudom Nwuche, said the event was aimed at providing a platform for exchange on the performance of the industry, and to brainstorm on areas requiring urgent attention for improvement and mutual support.

    He said the thrust of the Commission’s activities is to support the Transformation Agenda of the Federal Government, providing an appropriate regulatory framework for insurance institutions.

    He said the sector is a very important, and trhat it must be properly regulated to enable it to play a pivotal role in the economy.

    He said: “We are not unmindful of the fact that there are, indeed, some challenges encountered by you in the course of doing your business. But you will agree with me that while some of these challenges are certainly beyond your immediate control, a lot of the challenges are self-inflicted. So, the onus is really on you to address these challenges.

    “On our part, we will go and critically look at some of the challenges you have highlighted to provide solution to all the problems.But we will continue to resolutely support the resolve of NAICOM’s management to ensure effective supervision of the industry in order to protect policyholders and Government Strategic Assets.’’

    He continued: “While NAICOM continues to operate within confines of all extant laws, all practitioners in the sector must operate with the rules and internal norms as a means towards deepening public trust and enhancing contribution to the nation’s Gross Domestic Product (GDP).

    “In carrying out this statutory responsibility, I must emphasise that there should be no one, or group to be excluded from compliance with the rules and regulations.Indeed, there shall be no sacred cows, as nobody will be allowed to be above the laws.’’

  • Boko Haram menace plunges insurance in northeast

    The violence launched by Islamist sect, Boko Haram, in the Northeast Zone has made insurance more challenging, the Chairman, Northern Area Committee, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Gbenga Ogunsanya, has said.

    Ogunsanya, who is also the Managing Director of Charlie Life Insurance brokers Limited, Kaduna, spoke with The Nation in Lagos.

    He, however, said brokers in the north were hopeful with the Takaful and microinsurance that has takenoff in the country.

    According to him, the northerners accept takaful insurance because it is Islamic.

    He said while Kaduna is peaceful, the problem they encounter is mainly in Adamawa and Borno.

    He said: “Investors are also very skeptical when it comes to investment in the north. Business has been quite challenging in the north. Notwithstanding we are doing fairly and are optimistic that things will get better soon.

    “Part of our projects as a committee, is to increase insurance awareness which has been very low in the north. By so doing, we will focus more on enlightening people at the grassroots about the importance and benefits of insurance. We are hoping to do a lot of seminars, public lectures.’’

    He noted that his colleagues would also sensitise the people on how to deal with claims.

    “We have a secretariat in Kaduna area where people can reach us and lodge complaints or issues of malpractices against any of our member or member of a company while we forward the matter to relevant authorities.

    “People need to have value for their money if at all we want them to believe in insurance and this has to be by insurance companies paying claims as at when due,” he said.

  • NCRIB urges traders, govt to embrace insurance

    • Condoles Iponri market fire victims

    The recurrence of market fires should make the government and individuals to embrace insurance, the President of the Nigerian Council of Registered Insurance Brokers (NCRIB), Mr Ayodapo Shoderu has said.

    He spoke at the weekend in Lagos while condoling with victims of the recent fire at the Iponri Shopping Complex in Lagos.

    He regretted the loss, noting that it had robbed the victims of their means of livelihood.

    He advised the government to put in place adequate covers for markets, adding that such steps would relieve the government of avoidable compensation to victims.

    He said the utilisation of services of brokers would allow clients maximise their insurance through professional advice to clients from premium payment to loss compensation.

  • STI settles N1.7b claims

    Sovereign Trust Insurance (STI) Plc settled claims of N1.7 billion to the insured between January and December, last year.

    A breakdown of the claims composition paid revealed that Energy Insurance claim recorded the highest figure of N645 million, followed by Motor Insurance, accounting for N417 million while N235 million was paid as claim under General Accident.

    The firm paid N186 million for Fire and Allied Perils, N186 millionfor Marine Insurance and N45 million for Engineering.

    Managing Director, STI, Mr. Wale Onaolapo said there is no compromise to claims settlement in the firm.

    He said this has encouraged their customers to come back.

    He said: “The company has put in place a friendly claim process which ensures that customers do not go through undue bureaucratic process in getting their claims settled in good time.The processes involved from the moment a claim is reported to the period the customer receives the cheque have been made as seamless as possible.

    “Over the years, our prompt claims settlement has helped to strengthen the relationship with our customers; we do not allow them to go through distasteful experience in the process of getting their claims settled. Our processes are hinged on professionalism, speed, ethics and promptness.”

  • RIMSON to hold conference on healthcare

    RIMSON to hold conference on healthcare

    The Risk and Insurance Managers Society of Nigeria (RIMSON) will hold a conference on how to maintain and sustain a good healthcare delivery system with proper management of risks by stakeholders between March 26 and 28 at Uyo, the Akwa Ibom State capital.

    It has as theme: “Risk management in the healthcare sector in promoting organisational and national growth.”

    Experts expected at the event include Dr. Bassey Enya Bassey, the State Coordinator, WHO Office, Akwa  Ibom State; Edet Eniang, director of Pharmacy, Ministry of Health, Akwa Ibom State; Dr. Bimbo Banjoko, managing director, Expatcare Health International Ltd and Mr. Babatope  Adeniyi, chief executive Officer, Mansard Health Ltd.

    The  target participants for the Conference are Doctors, Pharmacists, Nurses, NGO officials, Community Development Officers, Health Management (HMOs) Officers, Risk Managers, Insurance Managers, Insurance Brokers, Loss Adjusters, Underwriting Managers, Human Resource/Administration Managers, among others.

     

     

     

     

  • Kari joins NAICOM

    Kari joins NAICOM

    The Federal Government has appointed the former Managing Director of UnityKapital Assurance Plc, Alhaji Mohammed Uba Kari as the new Deputy Commissioner (Technical) of the National Insurance Commission (NAICOM).

    He is an Insurance graduate of the Ahmadu Bello University, Zaria, an Associate member, Chartered Insurance Institute of London and graduate of Caledonian University, Glasgow, United Kingdom (1984).

    He holds a Master’s in Business Administration (Information Technology) from University of Central England Birmingham, UK (2002) and IT Management Certified Professional from learning Tree Management Institute, London UK 2004).

    He started his career with the Royal Exchange Assurance Plc in 1979. Between 1984 and 1989, he worked in Yankari Insurance Company Ltd as Assistant General Manager (Technical).

  • 10 firms’ve significant foreign investments, says NAICOM chair

    10 firms’ve significant foreign investments, says NAICOM chair

    Ten insurance firms have significant foreign ownership as against three that had foreign interest about five years ago, the Chairman, National Insurance Commission (NAICOM), Chibudom Nwuche, has said.

    Nwuche, who made this known in Lagos at an interactive session with reporters, said more foreign investors were making enquiries on requirements for participation, adding that this was part of the outcome of the on-going transformation agenda of the Federal Government.

    He said the sector has a huge potential waiting to be tapped.

    He explained that the developmental agenda which encapsulates a wide range, but attainable developmental roadmap relating to the financial services sector, is intended to enhance the financial literacy in Nigeria and reposition the sector to play a pivotal role in the economy.

    He said NAICOM has historically implemented some regulatory and developmental initiatives that have significantly improved the conditions of the sector and enhanced its attractiveness to investors, stating that a good evidence of this is the increased number of foreign investors that have taken equity interests in firms.

    He noted that the strategic goals of the governing board under his leadership is deepening insurance penetration by sensitising the public.

    “In addition to the on-going efforts to facilitate compliance with the laws on compulsory insurance, we are committed to ensuring the successful implementation of the Financial Inclusion initiatives, such as Microinsurance and Takaful insurance, saying that once completed, it would bring about increase in job creation, accessibility of Nigerians to the benefits of insurance and contribution of insurance to the national economy.

    Nwuche said the Board will support NAICOM in ensuring the maintenance of adequate level of capitalisation, implementation of the Risk- Based management Framework for the sector; continued compliance with International Financial Reporting Standard (IFRS) to sustain the integrity of insurers financial reports; compliance with all relevant laws and regulations, as well as the implementation of the ‘No Premium No cover Policy.’

    He said the Board would enhance NAICOM’s regulatory capacity and oversight through manpower development and effective performance management system, as well as ensure appropriate deployment of information and communication technology infrastructure for the effective discharge of the Commission’s oversight functions.

    He added that they would also work towards the passing of the Insurance Bill, conduct regular interaction and stakeholder panels to exchange views and optimise revenue collection and effective management resource.