The Nation Newspaper

Category: Insurance

  • NCRIB gets new chair

    The Nigerian Council of Registered Insurance Brokers (NCRIB), Lagos Area Committee, has elected Mr Patrick Ikponmwosa as its new chairman. He takes over from Mr Tunde Oguntade whose tenure has expired.

    At the investiture, which took place at the NCRIB National Secretariat in Lagos, the new Lagos Area Committee chairman said his tenure would leverage on the cooperation of past leaders as well as take initiatives that will clear the air on the misconceptions about who insurance brokers are and what they do, adding that he would better the lot of the insurance industry.

    He said: “It is my belief that most of the misconceptions about who insurance brokers are and what they do has been caused by ineffective communication with these relevant stakeholders.‘’

    Speaking on other strategies he intends to employ, Ikponmwosa said the Lagos Area Committee under his leadership would give greater attention to public awareness crusades to major and potential clients.

    He also said: “We shall be more visible in schools, sports arenas, licensing offices and other spots to present insurance to the people. It is my belief that if people could identify genuine insurance practitioners, then the days are over for charlatans and fakes.”

    He pledged to support and complement the national body in the area of training and human resources. “We shall periodically undertake research to distill training needs of members and coordinate our efforts with the national body,” he said.

    The Council said it would continue to support and strengthen the Area Committee system, describing it as the only sure way of getting across to most of the brokers who live in various parts of the country.

    Its President, Laide Osijo, said: “The Area Committee system was informed by the realisation that most of the practitioners are domiciled at the grassroots and any attempt to reach them effectively must be done through these platforms.”

  • Firms fail to meet accounts’ submission deadline

    Two underwriting firms are yet to meet accounts’submission deadline as stipulated by the National Insurance Commission (NAICOM) three months to the end of the year, The Nation has learnt.

    Director, Supervision, NAICOM, Opara Nicholas, disclosed this during at a seminar for external auditors of insurance companies and brokers in Lagos.

    He, however, declined to give the names of the defaulting companies.

    He also said most of last year’s accounts submitted by companies were not properly prepared, adding that many of the accounts were queried due to irregularities.

    Opara stated that the commission is committed to cleaning up the reports of companies to enable them to meet international standard.

    According to him, insurance industry guidelines states that insurance and re-insurance companies shall submit to the commission three copies each of duly audited financial statements and annual returns in prescribed forms. He noted that on the operation of the companies for 2011, returns shall be filed on or before June 30, 2012.

    It said: “The following items shall accompany audited annual returns: Copy of management letter and the response of the management to the issues raised therein, certificate of solvency issued by the external auditors in the case of non-life; certificate of solvency issued by the actuary in the case of life, two copies of actuarial valuation report, schedule of unexpired risk for general business presented in the format of form G.3, schedule of outstanding claims at the year-end according to age analysis and in the format of form G.2C.

    Others are schedule of outstanding premium debt at the year- end according to age analysis and in the format of form G.2P, schedule of investments hypothecated according to the funds and supported with relevant proof of existence and ownership, schedule of fixed assets purchased during the year supported with verifiable evidence, personnel returns for the year presented in the format of form G.4, and evidence of payment of filing fees and penalties for late submission, if applicable.

    According to Opara,the guidelines further stated that in rendering annual returns, composite insurers shall adhere strictly to the provision of Section 19 of the Insurance Act 2003 regarding separation of accounts and reserve funds.

    The guidelines said the late filing of annual returns shall in accordance with section 26(3) of the Insurance Act, 2003 attracts a fine of N5000 per day for each day of default, adding that failure to file annual returns as prescribed by Section 26 of the Insurance Act, 2003 constitutes a ground for cancellation of an operating licence.

    He noted that an insurer shall be deemed to have failed to file its annual returns if the provisions of Section 26 of the Insurance Act 2003 are not met 12 months after the end of the financial year, stressing that cash flow statements shall be prepared and presented on direct method basis.

    It said each firm shall, at the time of submission of annual returns and audited financial statements, pay the following filing fees: Composite Insurers N200,000 Life or General N100,000 and Reinsurers N200,000.

  • ‘Insurance contributes only 0.7% to GDP’

    ‘Insurance contributes only 0.7% to GDP’

    The insurace sector contributes 0.7 per cent to the Gross Domestic Product (GDP), a Consultant to the World Bank, Vyasa Krishna Burugupalli, has said.

    Burugupalli, who spoke at a forum organised by nchor Insurance Company Limited,in Lagos, said the Nigerian insurance market is largely untapped, adding that with over 150 million people, Nigeria has an insurance density of just about five to 10 per cent.

    He said in some other developing countries, insurance density is 40 -50 per cent; in the developed economies, it is as high as 90 – 98 per cent.

    Insurance, he said, can contribute significantly to the economic development of Nigeria as it is being witnessed in the developed world, if practitioners will lay emphasis on customer service delivery.

    Burugupalli, who is Country Director, Micro Ensure, India, and Consultant to Price Waterhouse Coopers in Sri Lanka for a World Bank/IFC project, was presented by Kunle Aduloju, a Senior Lecturer, Department of Actuarial Science and Insurance, University of Lagos.

    He said in the lecture, entitled: “Agriculture and micro insurance: A new vista for deepening insurance penetration in Sub-Saharan Africa,’’ despite the effort of the National Insurance Commission (NAICOM), insurance penetration in Nigeria remains one of the lowest in the world.

    He said exploring micro agric insurance remains about the best option if Nigeria is to record any appreciable level of insurance penetration soon, adding that agriculture, as the mainstay of the economy, contributes about 45 per cent of GDP.

    He stated that the agric sector employs about two-thirds of the country’s total labour force and provides a livelihood for about 90 per cent of the rural population.

    He said 75 per cent of Nigerians live in rural and semi-urban area, a ready-made market for micro insurance to thrive, so with 150 million people, the largest in Africa, and a fast-growing economy, taking insurance to them is the right way to go, he said.

    “Microinsurance simply put is a low premium approach to insurance for those at the bottom of the pyramid, that is the poor. The innovative part of microinsurance is that it reaches an area of the population that is still deemed ‘unbankable’ or physically unreachable to the normal banking or conventional insurance activities.

    “Micro-insurance is the ‘protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.

    The guest lecturer said development institutions, such as the World Bank and the United Nations, see in it a potential to secure poverty reduction. He listed risks covered by micro-insurance to include: crop micro insurance, livestock micro insurance, life micro insurance and health micro insurance. Others are disability micro insurance, property micro insurance and health micro insurance.

    Comparing the traditional with the micro insurance, Burugupalli, said: “In equivalence with regular insurance, the central underlying principle is the pooling of risks, which implies that financial contributions are collected from the members of an insurance scheme, and the loss of one individual is spread among all members in case of risk occurrence.”

    The main difference between micro insurance and regular insurance, he explained, was that the former isw targeted at low-income people, who have limited financial resources and often irregular income flow.

    He said the Food and Agriculture Organisation (FAO) has indicated that five billion people live in developing countries, out of which 57 per cent live in rural areas, adding that 49 per cent of these rural dwellers are employed in agriculture.

    He said the number of micro-insured people was estimated at 78 million, which is not a particularly high number, given that China and India are both among the 77 countries. The lecturer explained that due to the high population numbers in these two countries, the Asian region accounts for 86 per cent of the global outreach of micro-insurance. He said only 2.7 per cent of the poor population in Asia was covered by micro-insurance, while the coverage of the poor in Africa and Latin America was 0.3 per cent and 7.8 per cent.

    This low coverage is reflected in the level of penetration (premiums in per cent of GDP) and density (premiums per capita).

    He said in a world survey of insurance density, out of 78 countries analysed, South Africa ranked 32, Namibia ranked 44, Angola ranked 74, Kenya ranked 82, while Nigeria ranked 86.

  • NCRIB to partner NAICOM on debt validation

    The Nigerian Council of Registered Insurance Brokers (NCRIB) will partner with the National Insurance Commission (NAICOM) on its planned validation of debts allegedly owed by brokers, NCRIB Prresident Mrs laide Osijo has said.

    Mrs Osijo told The Nation that the council suggested the idea to validate the debts to NAICOM, adding that brokers are striving to be ethical and professional and would never engage in anything that would attract sanction.

    She said: “We suggested the idea to validate acclaimed debts to NAICOM. The underwriters have been accusing brokers of with-holding premium which is not true. The underwriter often claim that the premiums has been paid and that brokers are with-holding them. But the truth is that most of the premiums are receivables that are not yet collected, especially government accounts, adding that because the debit notes are written by brokers, it is assumed that the money is with brokers.

    “The allegation is unfounded. We have asked underwriters that have documentary evidence to bring them out, so that we can do reconciliation. That was the advice we also gave NAICOM.The commission wrote us and we replied by telling them to ask underwriters to show evidences of premiums with-held by brokers. I would not say that brokers do not err, but brokers in the past are different from those practising now. ‘’

    She further stated that brokers of these days are afraid of being sanctioned, hence, they abide by rules. ‘’So we are trying to practice professionally and ethically these days, and I can boldly boast of that. Why would anybody accuse somebody for no just cause? It is unfair. If it is possible underwriters can go to the insured to confirm if the premiums have been paid, instead of accusing brokers unjustly. But that may be going to the extreme for there is no contract between the insured and the underwriter. Since we bring the business, we should be allowed the freedom of contract,” she said.

    She said NCRIB would collaborate with NAICOM to validate the claims of underwriters to stem the allegation that brokers hold back underwriters’ premiums, stressing that there should be proper documentation before laying accusation on the brokers.

  • Customers get N1b claims

    CrystaLife Assurance Plc paid over N1 billion as claims to its customers at the end of the third quarter of the year.

    This is contained in a statement made available to The Nation by the Head, Corporate Development and Strategies, Titilope Oguntuga, after a presentation of the company’s financial statements for the third quarter of the year.

    The company’s management also declared that it has taken steps to reposition its operations in line with international best practices. The company’s Chief Finance Officer, Mr Wale Oketola, stated that the company had within the period paid a dividend of N0.02kobo for each N0.50kobo ordinary share held in the company.

    As part of its welfare-based objective, the company, also paid performance bonus to her staff, the statement, added.

    The company in the statement also said:” As an organisation that is committed to excellence and global best practices, we have successfully concluded the transition of our financial reporting from the Generally Accepted Accounting Principles (GAAP) portals to the International Financial Reporting Standards (IFRS), the financial reports for the third quarter will be presented in the IFRS format”.

  • Milliman: Pension plans up $45billion

    Milliman, a premier global consulting and actuarial firm, has released the results of its latest Pension Funding Index, which consists of 100 of the nation’s largest defined benefit pension plans.

    In September, these pensions experienced a $45 billion increase in funded status based on a $30 billion reduction in the pension benefit obligation (PBO) and a $15 billion asset improvement.

    The $45 billion increase in funded status means these pensions have reduced their cumulative funding deficit by $80 billion in the last two months, following a four-month slide of $304 billion.

    “It may be too late in the year to call it a comeback—the funding deficit for these 100 pensions has grown by more than $100 billion in 2012,” said John Ehrhardt, co-author of the Milliman Pension Funding Study. “But two months in a row of funded status improvement is still welcome news. Not surprisingly, the recent deficit reduction was driven in large part by cooperative interest rate movement.”

    In September, the discount rate used to calculate pension liabilities increased from 3.99per cent to 4.08 per cent, reducing the PBO to $1.778 trillion at the end of the month. The overall asset value for these 100 pensions increased from $1.309 trillion to $1.324 trillion.

    Looking forward, if these 100 pensions were to achieve their expected 7.8 per cent median asset return and if the current discount rate of 4.08 per cent were to be maintained throughout 2012 and 2013, these pensions would improve the pension funded ratio from 74.5 per cent to 75.4 per cent by the end of 2012 and to 79.9 per cent by the end of 2013.

  • Firm’s profit grows by 17%

    Prestige Assurance Plc has recorded a 17 per cent rise in its underwriting business for 2011.

    . The Chairman, Dr. Charles S. Sankey, stated this in his statement to the shareholders during the Company’s 42nd Annual General Meeting (AGM), which took place in Lagos last week.

    Sankey said: “Despite the challenging environment, I am happy to report another year of good performance by our company. Underwriting profit grew by 17 per cent from 2010, with the company earning N1.07 billion against the preceding year’s N912.3 million”.

    He also told the shareholders that the net operating income which stood at N1.7 billion for the reviewed year was also six per cent higher than the 2010 position which was N1.6 billion.

    Further analysis of the firm’s accounts shows that the company recorded a total of N4.273 billion as gross premium for in 2011 as against N3.874 billion recorded in 1010, giving an increase of N398.933 million or 10 per cent growth.

    However, the firm recorded decrease in profit before and after tax, divided, shareholders fund, earnings per share as well as net assets per share within the year under review.

    The profit before tax decreased from N830.869 million recorded in 2010 to N419.868 million in 2011, a decrease of N411.001 million or 49.47 per cent. Profit after tax stood at N255.990 million, down from N487.698 million in 2010, giving a decrease of 47.51 per cent or N231.708 million. Amount set aside for payment of dividend decreased from N128.999 million in 2010 to N50.166 million in the reviewed year, a decreased of 61.11 per cent or N78.833 million.

  • NAICOM pegs group life commission at 8%

    NAICOM pegs group life commission at 8%

    The National Insurance Commission (NAICOM) has pegged group life insurance commission at eight per cent, The Nation has learnt.

    A source said the commission had written underwriters and brokers, ordering them not to charge more than eight per cent commission on group life insurance. Violators, he said, would be sanctioned.

    “NAICOM made it clear to the operators that group life commission is not nine per cent as being canvassed by some practitioners, the source said.

    It was gathered that underwriters and brokers have been on a running battle over what should be charged as commission.

    Investigation revealed that both parties early in the year agreed to raise the commission to nine per cent, but the underwriters later reneged on the agreement, as it was considered inimical to their operation.

    The circular by NAICOM, it was gathered was issued to halt the running battle between brokers and underwriters.

    From a reliable source, it was learnt that NAICOM made several attempts to settle the rift between the parties, but failed because the underwriters were not ready to keep to the agreement reached with the brokers early in the year.

    Though brokers were uncomfortable with the new policy issued by NAICOM, they agreed to abide by it to avoid being sanctioned.

    The commission would be applied on this year’s Federal Government group life insurance, which premium is valued at about N7 billion and over 300 brokers appointed by the Federal Head of Service.

  • Benefits of micro-insurance products listed

    Benefits of micro-insurance products listed

    Concerted efforts in the development and introduction of micro-insurance products will go a long way to create insurance awareness among Nigerians, Acting Director – Inspectorate, NAICOM, Mr. Emmanuel Farinu has said.

    He was presenting a paper on how to develop the insurance industry. The forum was organised by the National Insurance Commission (NAICOM).

    Farinu said micro-insurance is accessed by the low income population, provided by a variety of different entities and run in accordance with generally accepted insurance principles.

    The International Association of Insurance Supervisors (IAIS) defines micro-insurance as: “The protection of low income people against specific perils in exchange for regular premium payments appropriate to the likelihood and cost of the risk involved.”

    Farinu said micro-insurance involves low level of premium. “It is insurance with small benefits, simple, easily understood contracts unlike the complex nature of the conventional insurance,” he said.

    He said quite a number of products are offered under the micro – insurance scheme, some of which are: life and savings, health and disability insurance as well as agriculture and livestock insurance. Others include: index based crop insurance, funeral insurance, property insurance, credit insurance/loan protection and packaged policy.

    Explaining the different types of micro- insurance, Farinu stated that for one who took the life and saving insurance, at death, the deceased’s beneficiary will be paid the amount held in the savings plus benefits.

    The health and disability policy is to enable the poor cover the cost of medicine, hospital stay and treatment as well as protecting against the loss of income due to sickness or injury while the agriculture and livestock insurance is to protect against losses associated with cattle rearing, piggery, poultry, fish farming and other types of farming.

    Farinu explained that Index based crop insurance is for protection against adverse weather conditions while the funeral insurance cover the cost of burials. Property insurance, he explained, replaces assets lost due to theft, damages or destruction. Property damage could result from fire, flood or other natural disasters, he stated. For credit insurance /loan protection, he explained that it is meant to

    “To prevent people from becoming poor due to illness, natural disaster, lack of savings, or loss of assets or livestock, developing Countries must invest in micro-insurance. Micro-insurance focuses on helping people from falling into poverty traps on their way to the middle class”.

    The Commissioner for Insurance, Mr Fola Daniel, said insurance penetration in Nigeria was not more than five per cent compared with 15 per cent and above in some African countries, including South Africa.

    A study conducted by the combined team from GIZ, a Germany agency for sustainable development, and Riskguard-Africa Limited revealed that less than 25 percent of insurance companies operating in the country are known by Nigerians.

    This clearly shows the level of apathy among Nigerians to the insurance sector.

     

     

     

     

  • PenCom seeks tax exemption for pension returns

    PenCom seeks tax exemption for pension returns

    The National Pension Commission (PenCom) is seeking tax exemption and strict enforcement of the Pension Reforms Act 2004 to ensure returns on investment of pension funds.

    This, its Director – General, Mohammad Ahmad, said would enhance retirement benefits.

    In a statement, he said though Sections 7 and 10 of the Pension Reform Act (PRA) 2004 provided for tax exemption at the point of accumulation and payment of retirement benefits, it is silent on taxation of income from investment of pension funds.

    “To ensure real returns on investment of pension funds and ultimately enhance the retiree’s retirement benefits, the income earned on investment of pension funds should also be exempted from taxation,” he said.

    “On exemption of Pension Fund from Tax, Ahmed said even though Sections seven and 10 provides for tax exemption at the point of accumulation and payment of retirement benefits, it is silent on taxation of income from investment of pension funds.

    “In order to ensure real returns on investment of pension funds and ultimately enhance the retiree’s retirement benefits, the income earned on investment of pension funds should also be exempted from taxation,” he said.

    The PenCom boss called for the amendment of Section sevens of the Act to include tax exemption on income from investment of pension funds.”

    Chief Executive Officer, IBTC Pension Managers, Dr Demola Sogunle, also said tax exemption should be used by the government to encourage employers to embrace the pension scheme.

    Sogunle said one of the ways the government could assist to ensure the success of the scheme is to engender strict enforcement of the Pension Reform Act 2004.

    He noted that government needs to enforce strict sanctions against defaulting employers, adding that the introduction of the new scheme has induced nation-wide mass saving culture, which allows Pension Fund Administrators (PFAs) accumulate assets that can be invested in financial markets.

     

    Sogunle noted that one of the major challenges against the success of the scheme in the private sector is the fact that many employees are yet to register with a PFA, while some employers fail to remit or are defaulting in remitting contributions into their employees Retirement Savings Accounts (RSAs).

    “The issue of defaulting poses a major challenge to the success of the contributions pension scheme, since it influences the adequacy of the benefit payments to participants. A lot of enlightenment is required to ensure that employers and employees understand the benefits of keying into the contributory pension scheme, especially as it is mandatory by law,” he said.