The National Insurance Commission (NAICOM) has issued a new circular introducing additional regulatory requirements for life insurance companies engaged in annuity business in Nigeria. The circular, dated January 24, 2025, is aimed at promoting best practices in the management of annuity portfolios and ensuring a safe, sound, and stable insurance sector.
The new guidelines, which take effect on February 1, 2025, will require the engagement of over 60 actuaries by 60 licensed insurance companies. These actuaries will play a critical role in conducting Assets-Liability Matching (ALM) analysis and implementation, a key component of the new regulations.
Under the circular, qualified insurance companies must appoint at least one qualified actuary responsible for ALM analysis. These actuaries will be required to submit quarterly ALM reports to NAICOM, ensuring transparency and accountability in the management of annuity portfolios. The Commission has also emphasized that insurers must adhere to the guidance provided in the NAS Standards of Actuarial Practice (NSAP) based on the results of specific analyses.
The circular places significant responsibility on the Boards of Directors of insurance companies to ensure strict compliance with the new requirements. Companies that fail to meet the additional expenses associated with the regulations are mandated to transfer their annuity portfolios to another suitable insurance company within 180 days.
NAICOM’s move is seen as a proactive step to strengthen the annuity business in Nigeria, safeguarding the interests of policyholders and enhancing the overall stability of the insurance sector. Insurance companies have been given a six-month window to comply with the new requirements, with full enforcement expected by August 1, 2025.
Stakeholders in the insurance industry have welcomed the development, noting that the introduction of stricter regulatory measures will foster greater confidence in annuity products and services. However, some smaller insurers may face challenges in meeting the additional financial and operational demands imposed by the circular.
