Actuarial Pricing of Group Life Insurance Schemes for Corporate Employees in Abuja

This study examines actuarial pricing practices for group life insurance schemes provided to corporate employees in Abuja, the Federal Capital Territory. Group life insurance is the most widely held life insurance product in Nigeria's formal sector, largely driven by mandatory employee compensation regulations under the Employee Compensation Act and contributory pension scheme requirements. However, inconsistent pricing approaches across insurers and limited experience data have contributed to both premium inadequacy and adverse selection problems in the group life market. This study uses a combination of primary survey data from 55 actuaries, underwriters, and employee benefits managers in Abuja-based organizations and secondary claims data from six insurers for the period 2019 to 2023. Pricing methodologies examined include manual rate-setting, experience rating, and blended approaches. The relationship between employer industry classification, workforce age profile, and claims frequency is analyzed using regression. Findings reveal that experience-rated group schemes consistently produce lower loss ratios than manually rated schemes, confirming the actuarial value of individual group experience data. The technology and financial services sectors exhibit the lowest claims rates, while transportation and construction sectors record the highest. The study concludes that standardized actuarial experience rating frameworks for group life insurance would improve pricing accuracy and market sustainability in Abuja. It recommends that NAICOM issue guidelines for minimum data standards in group life experience rating.

Keywords: group life insurance, actuarial pricing, experience rating, employee benefits, Abuja.