Of NAICOM Failure and Policy Holders’ Recourse to Vudu

As policy holders consider the National Insurance Commission a weak for its failure to enforce payment of claims, Ebere Nwoji writes that annuitants now resort to consulting their local deity for vengeance against those who reneged on terms of agreement 

Recent media reports indicating that annuity holders with the embattled African Alliance Insurance Company and others now resort to consulting their local deities  to speak for them after seven months of unpaid annuity  arrears, have been interpreted by the members of the insuring public as lack of public confidence on the National Insurance Commission (NAICOM) and sign of weakness on the part of the commission which is the regulator of insurance industry.

THISDAY learnt that a group of Nigerians tagged, “Concerned Citizens,” have implored sorrowing annuitants of African Alliance Insurance Plc to take their unpaid seven months pension benefits to Oba Lesekese meaning God Almighty as against sango and obakoso, their local deities.

They made the appeal while reacting to the report by an online medium, Inspenonline quoting the annuitants as saying that Sango and Obakoso, their local deity would fight on their behalf. But that in a counter reaction some members of the insuring public and their fellow retirees have advised them to rather call on Oba Lesekese – God Almighty as the only one that could help them out of their present plights.

Oba Lesekese is the title of a gospel song recently released by a local gospel musician popularly known as Chuxudo and it means God who is prompt in solving problems.

Annuitants in a bit to express their frustration, have resolved to report the company to deities such as sango and obakoso.

Some of their expressions which they displayed to the public read, “After seven months of non-payment of my annuity, then let nobody blame me if l report AAI & collaborators to “Sango, Obakoso for immediate sanction.

“I don’t want or request for two months payments, but full payments of the arrears of seven months from August 2024 to March 2025,” one of the victims stated.

Another aggrieved annuitant said, “May all the deities in Yorubaland, get ready to act for my rights to get paid when due and AA insurance and its collaborators have denied me that agreement since last year August, 2024 till today.

“Sango, Obatala, Obanta, Agemo and others get ready for action,” said the aggrieved annuitants. These complainants are retirees who purchased life annuity contracts from one of the life insurance companies African Alliance Insurance being regulated by NAICOM.

Annuity and PRA2014

An annuity is a written contract typically between a retiring worker and a life insurance company in which the insurance company makes a series of regularly spaced payments to the retiree in return for a premium or premiums he has paid.

It is a financial product that offers a guaranteed income stream and is usually bought by retirees. The accumulation phase is the first stage of an annuity during which investors fund the product with a lump-sum payment or periodic payments.

Section 7(1)(c) of the Pension Reform Act 2014 states that, “Retirees can use the balance in their Retirement Savings Account (RSA) to purchase an annuity for life from a Life Insurance Company licensed by Insurance NAICOM. This annuity would provide monthly or quarterly payments to the retired worker. This specific section of the Act allows retirees to choose a life annuity as a retirement benefit option. The retirees use the funds accumulated in their RSA to purchase the annuity. The annuity must be purchased from a company licensed by NAICOM. Upon this agreement the annuity will provide a regular stream of income to the retiree through regular payments by the life insurance company.”

Besides the annuity, retirees can also choose to receive their periodic payment through programmed withdrawals from their RSA held by their chosen pension fund administrator PFA. But the lamenting retirees are those who in line with the Pension Reform Act 2014 choose to use their hard-earned lump sum retirement benefits to purchase annuity plan with the African Alliance.

Beginning of AAI problem

The life underwriting firm started showing signs of insolvency around October 2023 when it failed to pay one OKeke Nkemjika, a Lagos resident who subscribed to a policy contribution with the company in 2015. The  policy was meant to mature in 2023 but when Okeke requested his surrender value, the insurance firm failed to fulfil its end of the contract.

By July 2024, many retirees who purchased annuity from African Alliance started complaining about unpaid arrears of annuity while the company kept making promises. Many of them complained to NAICOM but the commission kept dialoguing with the company until there was arrears of unpaid annuity before it withdrew its operating license.

This was highly criticised by the insuring public who said the commission would have swung into action before the accumulation of the arrears of annuity. 

Duties of NAICOM

By its official regulatory functions, NAICOM was established to regulation and supervise insurance firms. NAICOM established standards for the conduct of insurance business, approves premium rates, and regulates transactions between insurers and reinsurers. 

The commission was also meant to protect Policyholders, beneficiaries, and third parties to insurance contracts. NAICOM ensures compliance with legal and regulatory requirements, including capital adequacy, sound management practices, and the protection of policyholders. 

Its actions contribute to the financial stability of the insurance industry, ensuring that insurance companies operate responsibly and prudently. 

In essence, NAICOM acts as a central authority for the Nigerian insurance sector, ensuring its stability, protecting consumers, and fostering a vibrant and innovative industry. 

Public criticism against NAICOM 

But contrary to this, the commission has often been accused of being passive to one of its function which is the protection of policy holders. Analysts said the commission has over the years been paying lip service to this as when an insurance firm is showing signs of insolvency, the commission would wait until the company is dead before it would swing into action.

The commission received a lot of criticism in this regard from victims of the current African Alliance insolvency status as some regretted that if the commission had acted timely, their condition wouldn’t have deteriorated to the extent that it has gone now.

Industry critics said this lack of prompt action by the commission did not start from the tenure of the present commissioner but dates back to the days of Sunday Thomas, Fola Daniel. They cited examples of companies like Standard Alliance Insurance Plc, Niger Insurance, Investment and Allied insurance to mention but few.

The analysts pointed out that these firms started showing signs of weakness early enough but that either NAICOM was trying to shield them or was sluggish enough not to have noticed that they were going down until they were unable to pay even staff salary. This raises the question on whether there is no way of detecting when the solvency margin of the companies it was regulating begins to wane or whether the commission is more interested in shielding ailing firms than protecting the interest of the policy holders and image of the industry.

Challenge on Omosehin 

Against this backdrop, analysts and industry critics have challenged the present Insurance Commissioner, Mr Ayo  Omosehin to in addition to junketing in and out of the country, looking for collaborations with public and private sector bodies to pay priority attention to protection of the insuring public. For instance, for the African Alliance annuitants owed seven months arrears to resort to calling their local deities and Almighty God to avenge for them instead of looking up to NAICOM to defend their case shows total lack of confidence in the commission and in the insurance sector in general.

This sends a signal to the retiring Nigerian workers who have the option of receiving their retirement benefits through programme withdrawal through PFAs and annuity savings through life insurance firms to run for safety by choosing programme withdrawal to ensure their funds are in safe hands rather than risking it in the  hands of life insurance firms whose stability is not assured and whose regulator can do little or nothing to protect the interest of the annuitants in case of insolvency of the insuring firm.

THISDAY recalled that in one of the seminars on retirement benefits payment held at NECA house Ikeja Lagos, PFAs were making mockery of insurance officers preaching to retirees to buy annuity telling them that they would end up gathering money from people and leave them at the middle of the road in their retirement life. The retirees therefore challenged NAICOM to sit up in dealing decisively with ailing insurance firms and to device means of determining solvency situation of every insurance firm.

QUOTE

“But contrary to this, the commission has often been accused of being passive to one of its function which is the protection of policy holders. Analysts said the commission has over the years been paying lip service to this as when an insurance firm is showing signs of insolvency, the commission would wait until the company is dead before it would swing into action.”