The National Insurance Commission (NAICOM) is set to release supplementary guidelines to further sanitise the annuity business in the country. Mr Moruf Apampa, Vice Chairman of the Subcommittee on Communication and Stakeholder Engagement of the Insurers Committee, made this disclosure on Wednesday during the 18th meeting of the committee.
The move comes after NAICOM previously issued new regulations for the annuity business on February 1, 2025. According to Mr Apampa, the supplementary guidelines are meant to boost confidence in the market and protect policyholders who buy annuities.
He explained that this step was taken following the problems that arose in the industry in the past few months. “We’re all aware of what has happened in the last couple of months, and to forestall future problems and further build confidence in the market, NAICOM is adding these guidelines to adequately protect policyholders’ funds.”
He assured policyholders that the new measures would help avoid a situation where companies become weak or unable to pay their policyholders their pension income. “This is a proactive measure to make sure companies stay strong and policyholders get their payments when due. NAICOM is making sure we will not have failures in this sector again.”
Also speaking at the meeting, Mr Abba Inuwa, a member of the subcommittee and the spokesperson for NAICOM, explained that the industry evolves and regulations must be updated to reflect changing conditions. “As the environment changes, certain things will also need to change. Whenever we find a gap in regulations, we move to close it immediately to avoid future problems.”
He added that the new guidelines will help close gaps and further protect policyholders’ benefits.
An annuity is a financial product in which policyholders pay a lump sum or periodic amounts to insurers in exchange for a steady income stream, typically for the rest of their lives.
In its last guideline, NAICOM required insurers to employ at least a qualified actuary to oversee their Asset-Liability Matching (ALM) to avoid future financial problems. The guidelines allow companies without in-house actuaries to temporarily employ external ones, subject to approval by NAICOM.
Apampa also revealed plans for additional guidelines to align with the federal government’s policy to boost the country’s economic growth. “We will release Market Guidelines for InsurTech companies. We know technology is changing businesses, and we want to streamline the process to avoid confusion.”
He added that the commission is finalizing Cyber Risk Insurance Guidelines to help companies manage growing cyber risks.
On the issue of outstanding policy payments, Commissioner for Insurance, Mr Olusegun Omosehin, raised concerns last year about insurers’ ability to settle all their policy obligations promptly. But at Wednesday’s meeting, Mr Apampa said the Commissioner recognized a “significant improvement” in insurers’ ability to pay their policyholders. Nonetheless, NAICOM is urging insurers to do more.
Furthermore, to streamline payments under Third Party Insurance policy, NAICOM is simplifying the process to make sure policyholders get their benefits quickly and without trouble.
