Redeeming Insurance Industry’s  Image

Recent move by the National Insurance Commission to address cases of outstanding claims in the books of insurance companies  through invitation to the public for immediate payment has elicited reactions from insurance sector stakeholders, writes Ebere Nwoji

The National Insurance Commission (NAICOM ), rising from its quarterly meeting with all insurance chief executive officers in the country tagged, “Insurers Committee Meeting,” recently gave an ultimatum to insurance underwriters to within two weeks notify members of the insuring public who have any outstanding claim  to approach their  insurers   with relevant documents  for settlement of such claims.

NAICOM, mandated the insurers to do  this through their umbrella body the Nigeria Insurers Association( NIA), adding that after the NIA had placed the public notice on outstanding claims in the newspapers. NAICOM said it would watch the development in terms of public response towards accessing the outstanding claims  and insurers’ behaviour towards the claims payment  for three months adding that if the response was not satisfactory in terms of number of claims paid after the notice, it would on its own place a follow up notice inviting the claimants to approach their insurance firms for the purpose of receiving the claims.

Stakeholders’ Reactions

The development according to the industry stakeholders is  first in history in the industry and is a cheering news for both Nigerians and the insurance industry itself if well  handled.

Industry observers said it was a cheering news because never in the history of insurance practice in Nigeria has it been heard that insurance firms invited policy holders to come for their claims.

According to them, what is common in Nigeria is situations where insureds file claims and some insurance companies sometimes reject the claims giving one reason or the other why the claims should not be paid .

They noted that in some  cases, the insurers point out one clause in the policy document which would  enable them wriggle out of the claims obligation while the insured is left stranded and helpless.

Cases of Repudiated Claims

Industry observers sited a particular case  of an insurance company with head office around Iponri area in Lagos which  insured a building for an IT engineer working in a media house in Lagos.The engineer said during the contract arrangement, the insurance firm even asked him to pay for extension which he did. The  house was insured against damage  by flood but when the risk cristalised, the IT engineer filed his claim but the insurance firm said the house was insured against flood damage but that what damaged the house was erosion. When the matter was brought to both NIA and NAICOM, they both questioned the difference between flood and erosion but uptil date the insurance firm refused to pay the claim and when the engineer approached a team of claim officers of the firm for three times, after much argument with them he decided to forego the claims. Similar cases of this nature abound in the industry in the past.

Effects of claims repudiation

The result of this has been indelible dent on the image of the industry and Nigerians’ apathy and alienation towards insurance patronage.

This problem has been there over the years with both the regulatory authority and insurers, especially new generation insurers in recent times  working hard to salvage the industry’s image through easy payment of genuine claims to win back the loyalty of Nigerians towards insurance.

Before Now, NAICOM had devised several ways of ensuring that insurance firms pay claims seamlessly.

Way back in the days of late Chief Oladipo Bailey  as the insurance commissioner, the commission did a lot to improve claims payment in the industry.

One of the strategies he used was significant increase in the minimum capital of the industry  from N20 million to N70 million for general insurers and N50 million for life insurers. This he said was to ensure that insurers have enough money in their coffers to pay claims. He also mandated for a re -registration exercise in the industry, a strategy he used to weed out non claims paying and weak insurance firms. 

After this, he adopted the strategy of presiding over claims payment in the industry to the extent that he had used  his prerogative power to mandate the insurers to pay major claims that ordinarily they would not have agreed to pay.

A case in point was  claims from the Ikeja cantonment explosion in 2002 which the late NAICOM Chief executive officer mandated insurers to pay under what he tagged “gentle man’s agreement”

After him came Fola Daniel who from his assumption of office in 2007 continued to crusade about the place of claims payment in insurance contract.

Daniel had told the insurers that the best advertisement they would do that  could pull crowd to insurance firms is seamless claims payment. 

The late Emmanuel Chukwulozie was also not left out among NAICOM chief executives that fought for claims payment. Even the immediate past insurance commissioner, Alhaji Mohammed Kari, did not mince his words in telling the insurers the mandatory nature of claims payment in insurance contract.

Currently, the incumbent commissioner,  Mr Sunday Thomas seems to be a stronger force compared to his predecessors in pushing for seamless claims payment in the industry.

Thomas had before now threatened to employ the ‘name and shame’ strategy in getting insurance firms pay claims.

This, according to him, will involve publishing names of insurance firms that shirk claims for no genuine reason.

NAICOM’s current efforts

With the evolvement of what the commission tagged ten year strategic road map for the industry of which among the seven point strategic thrusts highlighted by the commission, transformation of the regulatory environment to sustain the industry’s growth topped the list.

Industry analysts interpreted the current move by the commission to finally address cases of unsettled claims in the books of insurance firms as major part of this transformation targeted at making Nigerians renew their interest and appetite for insurance.

Stakeholders commend NAICOM

This move by the commission has received high commendations by the industry stake holders.

For instance, the former Chairman NIA and currently Principal Consultant Claims Advocacy Group, Mr Gus Wiggle deceribed the move  as a welcome development and hopefully  a move that would lead to more  confidence in insurance and deepen the penetration. 

According to him, it will give confidence to the insuring public that insurers are really prepared to pay claims and they can be held to their word. 

But in his response to  insurers’ position that some of the claims were not paid because the claimant failed to follow the right procedure for making their claims, he said this could be  true but questioned what stopped  the insurance companies  from reaching out to the client and sending reminders. 

“It’s all about communication and customers satisfaction. You send renewal notice when the policy is getting due and repeatedly sometimes, why not do same for uncompleted claims” he questioned.

According to him, there  may however be reasons insureds don’t want to file for claim some of which could include fear of rejection of their claim, lack of knowledge of steps to filing their claims and  the fact that some don’t know which documentation may be required by the insurance company.

He further said some see it as time wasting and will therefore not want to waste time filing the claim particularly if the value of the claim is small or the process is cumbersome. 

Wiggle said another major  reason insureds don’t file or follow up their claim is this passive notion that insurance companies don’t pay claims and therefore don’t want to waste their time.

He said this  lack of motivation could lead to procrastination and ultimately, abandonment of the claim.

He  therefore, advocated  the use of brokers/agents whenever people want to buy insurance. 

“I am not sure you can buy any stock in the capital market without a stockbroker who still charges you for the services rendered but not so in insurance. The insured does not pay broker but the insurer does, so it’s not a cost to you, “he said..  

He said  the benefits of having a broker far outweigh the consequences of not using one. 

He however said the trend now is that many of the insurance companies are now selling their personal lines online so the use of a broker is limited but said one could  still appoint a broker after the online purchase.  

He also pointed out that there are now claims intermediaries that assist to process claims even if you don’t have a broker to help process these claims.

Also Executive Secretary Nigerian Council of Registered Insurance Brokers  (NCRIB), Mr Tope Daramola said the move was a very commendable stride by NAICOM as it would reinforce the very basis of insurance which is claims. 

According to him, publication of the claims notice would also enhance the image of insurance companies in Nigeria and reinforce the confidence of members of insuring public.

“Someone said that there is no basis for insurance if the issue of claims payment is not settled but we  should all take cognisance of the fact that 80 percent of unpaid claims is due to ignorance of the insured to their rights and obligations when it comes to insurance contract.But this will be a thing of the past if the insurance brokers are engaged because by virtue of the technicalities of insurance, members of the public may not be adequately knowledgeable about the policy terms and conditions as well as procedures for pursuing claims when a loss occurs,” he explained.

He also observed that, “When you engage brokers, the broker would help you to leverage on his own knowledge in the area of the insurance industry itself, knowledge about the operators themselves, about conditions and warranties as well as those procedures you have to follow in the event of  you having to make a claim. “

With this, the NCRIB boss said he believes that the development on the current NAICOM’s move on unpaid claims is speaking to the fact that NAICOM should  advise insurance operators to always engage the services of insurance brokers because they are there like  the police men who would help them  from the point of inception of  insurance policy to the point of making a claim.

“Many people sleep over their right simply because they don’t even know that those rights exist. But when you engage a broker for which you don’t pay any extras cost for their engagement, you get multiple benefit of knowing what policy you are to buy, the scope of the policy, the best rate and when a claim occurs, the broker goes around to get your claim for you and get the burden off your shoulder so that you can fully maximise the value of your insurance, “he said.