Managing Director, Capital Express Assurance Limited, Mrs. Bola Odukale
The recent removal of the presentation of letters of administration as a condition for accessing benefits under the group life policy for workers will have far reaching implications on the insurance industry. NIKE POPOOLA writes on the benefits to workers
The old Pension Reform Act 2004 made it mandatory for employers with at least five employees in the country to put an insurance policy in place for their workers.
Section 9 (3) of the PRA 2004 states, "The employer shall maintain life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee."
The essence is to provide claims compensation for relatives of deceased workers so that they can move on with their lives in the absence of their breadwinners.
Under the old pension Act, insurance benefits of the workers were transferred into their Retirement Savings Accounts with their Pension Fund Administrators, and the provision of either a Will or letters of administration was required to release the money.
Section 5(2) of the 2004 PRA states, "The PFAs shall apply the amount in favour of the beneficiary under a Will or the spouse and children of the deceased or in the absence of a wife and child, to the recorded next-of-kin or any person designated by him during his life time or in the absence of such designation, to any person appointed by the probate registry as the administrator of the estate of the deceased."
Most relatives usually end up abandoning their claims, as workers hardly provide a Will while in active service, coupled with the difficulty of getting letters of administration, .
However, under the new Pension Reform Act 2014 which was signed into law by the Federal Government in July 1, the obstacle of a Will or letters of administration is no longer required, except on the ground that the deceased worker did not leave a dependant behind.
According to the latest figures from the National Pension Commission, about 2,219 employers have taken GLIP life insurance cover for their workers as of the third quarter of 2013.
Past records of the commission showed that in 2011, a total of 632 organisations were able to submit certificates of compliance for the implementation of GLIP.
As of the third quarter of 2012, no fewer than 1,422 employers had submitted compliance certificates.
Figures obtained from the commission indicated that the number of institutions that submitted evidence of compliance with GLIP increased from 30 in the first quarter of 2013 to 54 in the second quarter, representing an increase of 80 per cent and bringing the total to 2,138.
In the private sector level, PenCom has continued to request the firms to provide evidence of compliance with GLIP.
The Director-General, Nigerian Insurers Association, Mr. Sunday Thomas, said, "The delay that arises in transferring the benefits from insurance firms to the PFAs when there are life insurance claims and the demand for letters of administration has been removed. The provision of the insurance law regarding payment of claims is now being implemented, which means the main beneficiary will be paid directly and that reduces the delay that occurs in claims settlement."
Before the advent of the PRA 2014, he explained that claims used to be paid into the RSAs of the workers, with the PFAs enforcing the requirement for letters of administration.
The only ground on which an insurance company will now ask for the letters of administration, according to him, is if the deceased worker did not leave any beneficiary behind.
The Managing Director, Capital Express Assurance Limited, Mrs. Bola Odukale, said GLIP would be beneficial to the federal workers, because in the event of death, the relatives of deceased workers would get some settlements to move on with their lives.
She also noted that the new Pension Reform Act, 2014 had also simplified the Contributory Pension Scheme and made the claims more accessible.
Under the present dispensation, Odukale explained that claims would be paid directly to the beneficiaries rather than the PFAs through whom the claims used to be paid.
The process, she noted, was a tedious one that made it hard for the beneficiaries to access their claims.
"Under the old Pension Reform Act, 2004, we used to pay to the pension operators and a lot of beneficiaries could not access it because they would ask them to produce letters of administration, which some might not get; but now, we pay to the named beneficiaries," Odukale said.
The managing director said that workers should make sure that their insurance was tidied up by specifying who they wanted as beneficiaries that could access the claims in case of untimely death.
"It is also important for employers to enlighten their workers to always nominate their desired beneficiaries and those who can take care of their estate in case of untimely death," she added.
According to her, the provision of insurance cover and removal of the bottleneck of the letters of administration will enable the claims to be released to the beneficiaries so that the children of deceased workers can continue with their lives and education.
The Acting Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, said that PenCom and the National Insurance Commission jointly released the regulation for GLIP in 2006.
She said that there was collaboration between the two commissions and it had the view of exposing operators to a better understanding of the rudiments of GLIP as well as their responsibilities.
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