The National Insurance Commission(NAICOM) has said that the challenge of non-settlement of claims have negatively impacted confidence in the Nigerian Insurance industry.
The Commission attributed one of the major challenges of the insurance industry to lack of trust and confidence in the industry, resulting from non-settlement of claims.
Speaking to Newsmen at the retreat for insurance journalists recently organised by NAICOM and held in Uyo, Akwa-Ibom State, the Commissioner For Insurance(CFI), Mr. Olorundare Sunday Thomas directed insurance companies in the country to settle outstanding claims of covered customers promptly or risk being sanctioned.
Thomas revealed that the Commission has issued letters to companies that are owing policy holders outstanding claims, warning that insurance companies who default in payment of claims will be made to face the consequences.
The Commissioner For Insurance expressed concern at insurance companies that wait untill they are pressured before settling claims of insured customers, adding that claims settlement should be willingly done and not out of persuasion.
” We have just issued letters to the companies. You will begin to see in the papers,. Companies will begin to advertise, asking those who have claims to come up with their documents to enable them conclude the documentation and effect payment.
“We have written and asked them, we have given them timeframe within which to get this done. If they don’t do it there must be consequences.
“A lot of them have issues of no documentations, non-completion of documentation that will enable the company secure the payment.
“And for the companies that are not settling claims that have been fully documented, insurance companies need not be pressured to settle their claims but willingly do it,”the CFI said.
Meanwhile in her presentation, NAICOM’s Assistant Director, Complaint Bureau Life, Mrs Augustina Onojake observed that claims payment in insurance contract serves as spice that attracts potential policyholders to insurance patronage.
Onojake who noted that prudent claims settlement promotes customer contentment and allegiance, urged insurance companies to endeavor to settle claims promptly.
According to her, “Section 70 (1) (a) of Insurance Act 2003, requires the insurance companies to settle all admitted claims within a maximum time frame of 90 days, and where claims are repudiated, the insured should be communicated by the insurer within 90 days from the date the claims are delivered to the insurer in line with Section 70 (1) ( c) of the Act. If the insurance company needs to investigate the claim, it should do that within 90 day.”
Part of efforts made earlier by the Commission to tackle the challenge of non settlement of claims include: Numerous rules and regulations by the commission to protect policy holders and ensure prompt settlement of genuine claims and the establishment of Complaints Bureau and Inspections to enhance insurance companies’ solvency for timely settlement of claims.
Onojake noted that despite the provisions of the Extant Laws, claims settlement has remained a mirage by some insurance companies. Some of the reasons she gave for this includes Weak Capital Base, Insolvency, Poor Underwriting, among others.
In order to re-awaken the Nigerian Insurance Industry through claims settlement, the Deputy Director recommended but not limited to the following:
i. Increase of the Insurer’s Capital Base: The liquidity position of some of the underwriters is very bad. The capital increase will assist the company to meet their obligations thereby re-awakening the Nigerian insurance industry
ii. Creating awareness on claims notification and documentation : Most of the policyholders lack awareness on claims notification and documentation. There is need for creating awareness on this to enable the claimants to provide adequate documents needed for their claims for prompt settlement.
iii. Beef up claims reserve: Claims reserve is money set aside for a claim that has been reported but not settled (RBNS) or incurred but not reported (IBNR). An insurance company assigns claims reserve to each file, reflecting its best estimate of the eventual settlement amount. In order to re-awaken the industry through claims settlement, insurance companies should beef up claims reserve to cater for claims settlement when loss occurs.
iv. Compliance with Section 25 (1) and (2) (a-g) of the Insurance Act 2003 regarding Protection of Policy holders Funds: it protects policyholders fund by directing the insurers on how to invest policyholders’ funds. Insurance companies should strictly comply with this provision of the Act at all times to enable them mitigate the risk of not been able to perform claims obligations
The regulator is encouraged not to relent in its functions but continue to make rules and regulations to enhance fair customer treatment as well as supervise the compliance of the regulations to ensure robust claims management system.
