The National Insurance Commission (NAICOM) has introduced fresh regulations for annuity businesses, set to take effect on February 1, 2025, in a move aimed at improving market practices and ensuring regulatory compliance.
In a circular issued and signed by the Director of Innovation & Regulation, A.I. Adamu, NAICOM outlined additional requirements for life insurance companies engaged in annuity operations across Nigeria. The directive, addressed to Managing Directors and CEOs of life insurance firms, seeks to enforce best practices in annuity portfolio management.
Under the new rules, insurance companies must appoint at least one qualified actuary responsible for asset-liability matching (ALM) analysis and its implementation within their investment teams. Firms without in-house actuaries are required to engage external actuarial professionals for an interim period of up to two years, subject to regulatory approval for further extensions.
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“The appointment of an in-house or external Qualified Actuary, who shall sign off all ALM reports as required by the Prudential Guidelines, shall be subject to the prior approval of the Commission,” the circular stated.
NAICOM also mandated that insurance companies submit ALM reports quarterly, with specific requirements outlined in the directive. Companies with annuity portfolios exceeding 1,000 annuitants or valued at N5 billion or more must submit monthly reports, due by the 15th of the following month.
Additionally, the commission emphasized that compliance with the new regulations rests with the Board of Directors of each company. Firms unable to meet the financial obligations imposed by the new guidelines must transfer their annuity portfolios to another suitable insurer within 180 days.
The revised regulations reflect NAICOM’s commitment to enhancing the stability and transparency of Nigeria’s annuity market, ensuring better protection for policyholders, and promoting sustainable industry growth.
