The National Insurance Commission (NAICOM) has unveiled plans to drive financial inclusion in the country through aggressive implementation of the micro-insurance policy.

The unveiling of the financial inclusion plan took place at the opening session of the National Insurance Conference held in Abuja

The theme of conference ‘insurance industry and financial inclusion was chosen given the fact that access to financial services is concentrated in urban areas has limited the people from the rural areas from contributing maximallyto growth and development of the nation’s economy.

It is therefore instructive to state that the theme of this year’s Conference was quite apt, in view of the policy direction of government towards including all segments of the society within the financial safety net.

The National Financial Inclusion Strategy was launched on October 23, 2012, and the overall target is to reduce the percentage of adult Nigerians excluded from access to financial services from 46.3 per cent in 2010 to 20 per cent by 2020.

But three years to the 2020 target, Nigeria is currently battling 41.6 per cent exclusion rate as revealed by the Access to Financial Services Survey conducted by Enhancing Financing Innovation and Access.

Speaking at the event, Commissioner for Insurance, Mohammed Kari said the theme of the conference clearly captured the retail end of the market, adding that this was the direction in which the insurance industry was headed.

As part of measures aimed at promoting financial inclusion, Kari stated that the commission would soon launch the Nigerian Insurance Industry Development Plan.

The plan, he noted, had financial inclusion as one of its major components.

PenOp backs PenComs ‘Slash lump sum to 20%’ template

The Pension Fund Operators Association of Nigeria (PenOp) is backing the the new template introduced by the National Pension Commission (PenCom) given to the pension funds operators for calculation of retirement benefits to Contributory Pension Scheme saying it would promote the standard of living of retirees.

“By and large, the new template has been put in place to bring about an improvement in the standard of living of every retiree. However, some perceive this change as unfavourable if there is a drop in their lump sum. We are confident that over time, retirees will come to appreciate this”, said the PenOp President, Mrs Ronke Adedeji.

The use of new template, according Adedeji takes effect May 15, 2018 as an improvement on the existing template.

While explaining the characteristics of the new template, she stated, “Unlike the old template, the new programmed withdrawal template has factored in payment of arrears of pensions to retirees who did not access their benefits immediately after retirement. These retirees are paid pension arrears for the period between their retirement dates and the date they access their funds.

“Minimum lump sum payment has been reviewed from the initial 25 per cent to 20 per cent of the RSA balance, while the existing maximum of 50 per cent lump sum was repealed. The purpose of the reduction to 20 per cent is to enable retirees with smaller funds to access more periodic pensions for long term sustenance rather than collecting a huge lump sum today at the expense of their future; while those with large sums can potentially access more than 50 per cent.”

The PenOp boss added, “The new template contains salary structures of all Federal Government employees to further standardise benefits computation. The minimum of 50 per cent of the final annual total emolument has also been recaptured in the new programmed withdrawal template as 50 per cent of the total annual gross salary of retirees. This is to ensure that retirees have robust periodic pensions to cater for their needs at retirement.

“The new template programmes retirees from a minimum age limit of 50 years and above, while the maximum age limit of 65 years that existed in the initial template has been removed. This allows older retirees to earn more lump sum/pension at retirement.

“By and large, the new template has been put in place to bring about an improvement in the standard of living of every retiree. However, some perceive this change as unfavourable if there is a drop in their lump sum. We are confident that over time, retirees will come to appreciate this.”

RBS: insurance firms to focus on areas of competence, ability

From Ngozi Onyeakusi, Lagos

The Federal Government is coming up with Risk Based Supervision (RBS), a new policy, that restricts insurance companies to their areas of competence and ability.

This was disclosed in Lagos by the Commissioner for Insurance Alhaji Muhammad Kari during an Executive Breakfast meeting organised by the Society for Corporate Governance Nigeria, (SCGN).

Kari noted that the new policy would introduce a “risk-based system” where companies would be restricted to their areas of competence and abilities instead of the “rule-based system” in operation, where companies operate regardless of the level of their capital.

He said the policy was being worked on and that when it was ready, “companies with capital-base of about N2 billion would restrict their operations to activities like insurance of motor cars, buildings for fire and the like, while those with higher capital base can go into oil, ship, aircraft and engineering equipment.

“What we are coming out with is going to force companies to operate within their ability to their capital asset so that the policy holder and companies are protected against their wishes to go into areas where they cannot afford.

“We are used to classify companies with the capital they can bring in but we are getting to the process of introducing risk-based classification which will try to see what your asset or capital can cover.

“I don’t see the stock market growing again, of course it is dry now, I don’t see the banking sector growing bigger but the insurance penetration is under one per cent and under one per cent contribution to the nation’s Gross Domestic Product (GDP),

“There is a lot of potentials in the biggest economy in Africa, with the population we have, you can imagine if we are able to increase our earnings and make companies responsible, you can imagine what it will be, it will help the economy, create employment and bring financial support to businesses and government.”

Right now, majority of the risks in Nigeria are funded by government, whether building collapse, flood, deaths, when people can take insurance in all of these things.”