Operators mull review of Insurance, Pension investment legislations

In order to allow real sector operators have access to long-term funds, operators in the real sector, the insurance as well as pension sectors have called for urgent review of legislations guiding investments in various sectors of the economy.

The operators made this position known at the 2020 national conference of the National Association of Insurance and Pension Correspondents (NAIPCO) held in Lagos, stressing that currently, some legislations on investment in Nigeria do not favour investments in most sectors of the economy.

Speaking on the theme, “Promoting Bankable Investments Portfolio for Insurance and Pension Sectors,” Dr. Muda Yusuf, Director General, Lagos Chamber of Commerce and Industry (LCCI), said bankable investment portfolio has become a general economic challenge facing Nigerian banking system.

Yusuf explained that insurance and pension funds are larger sources of long-term fund but are not available for real sector investment, while funds from financial system which is short-term in nature are the only available fund for them.

He stressed that the tight regulation in investment of pension fund, however saved the sector during crash in capital market investment.

He cited key issues to put into consideration in investing pension funds in the real sector to include safety of the investment, returns on investment, liquidity of the investment especially for insurance funds because of payment of claims which may arise anytime.

According to him, the N11.35 trillion pension funds as at August this year signifies a lot in Nigeria investment market only if there is right kind of investment environment and regulation.

He harped on the need for government to put in place a unified exchange rate to encourage diaspora remittances.

The Chairman, Nigeria Social Insurance Trust Fund, (NSITF), Mr. Austin Enajemo-Isere, advocated for alternative strategies to retool the economy for survival and growth and for the review of the Pension Reform Act (PRA) to enable those in real sector have access to insurance and Pension fund to finance their operations.

Enajemo-Isere, who was also the chairman at the conference, recounted the effect of the ravaging COVID-19 pandemic and wanton destruction of life and properties across the country in the wake of the #EndSARS protest that was hijacked by hoodlums, among others on the economy and announced that the impact of these crisis have resulted into the Nation GDP declining from a growth of 2.2 percent in 2019 to about -4 percent by year end.

Consequently, he said the government, private sector institutions and individuals have continued to search for economic survival strategies to change the narratives and create new normal.

He called for a deliberate policy by the authorities, as well as to what is currently obtainable, directly or through moral suasion to invest Insurance and Pension Fund in sectors such as Manufacturing, Agriculture and Aviation among others with an inbuilt safety net.

“In furtherance to the foregoing, the current restrictive nature of insurance and pension funds investment outlets calls for review of the legislations guiding investment of insurance and pension fund. The yelling and plea from the Organised Private sector of Nigeria (OPSN) to create more access to investible funds deserves attention.

“It is worthy to note and be reminded that insurance and pension funds are subject to regulatory guidelines as provided in section 25 of the Insurance Act 2003 as amended and Sect 86 of the PRA 2014, for the purpose of safety and Returns.

“However, a consideration for review of these legislations to enable some special and real sectors of the economy have access to insurance and pension fund to finance their operations, will be most beneficial to the growth and development of the Nation’s Macroeconomic activities.

“A deliberate policy by the authorities, in addition to what is currently obtainable, directly or through moral suasion to invest insurance and pension fund in sectors such as manufacturing, agriculture and aviation, etc with an inbuilt safety net, will be a welcome development,” the NSITF boss, emphasized.

Enajemo-Isere, who affirmed the important role of insurance as a catalyst for nation-building and risk transfer mechanism, lauded underwriters for rising to their responsibility.

“Some operators, in recent times have given assurances to the insuring public that reported claims emanating from the EndSARS protest, among others, will be promptly honored, particularly policies with extension that cover strike, riot and civil commotions (SRCC). This is cheering news for the industry and the nation in general,” he enthused.