THE National Insurance Commission (NAICOM) has given underwriting firms in the nation’s insurance industry up till September, 31, to clear backlogs of outstanding claims in their books.

As a result, with effect from October, 1, insurance firms that fails to comply with this directives will face appropriate sanctions as prescribed by the Insurance Act 2003.

A directive issued by the commission titled ‘‘Claims settlement and the image of the insurance industry” signed by Deputy Commissioner (Technical), Mohammed Kari, to that effect warned all insurance firms to comply immediately or face the wrath of the law.

The circular stated: ‘‘You would recall that the commission collated claims details from all insurance companies and complains on delayed and unsettled claims from members of the insuring public. In its efforts to verify the persistent complaints of the consumers of insurance about an unsavory attitude of the providers that has brought the image of the industry to disrepute.

‘‘Our study of the records and complains received has confirmed the truth of this situation which happily is perpetrated only by a few, whose sad posture stains the efforts of the many.

‘‘In the continued effort of the commission to sanitize the industry of this unpalatable tags and restore the confidence of the insuring public all insurers are hereby directed to note that:

“Henceforth, all claims must be handled strictly in accordance with the provision of the Insurance Act 2003.

“As a palliative gesture, the commission shall allow a grace period until the 31st September, 2015 for companies to clear all backlogs of outstanding claims as provided by the Insurance Act.

“From 1st October, 2015, the commission shall evoke the full application of punitive sections of the Insurance Act, including but not limited to, sections 8(1)(m), 70(1)(b) and 70(2) without further recourse.

Section 8(1)(m) states :‘‘The insurer who persistently fails to pay claims promptly.

Section 70(1)(b) also states: “subject to Section 69 of this Act in every case where a claim is made in writing by the insured, or any other party entitled thereto under an insurance policy, the insurer shall:

“ Where he accepts liabilities to settle the claim not later than 90 days after the issuance of discharge voucher where any claim remains unpaid as provided in (a) above, the insured may request the commission to effect the payment from the statutory deposit of the insurer and the commission shall have power to effect such payment”.

However, a chieftain of the industry told The Guardian on telephone that the new directive from the commission was expected if one takes into account the recent release of the status of submission of 2015 financial statements of insurance companies as at 25th June, 2015 which indicated that out of 58 underwriting firms operating in the industry, 34 companies got their 2015 statements of accounts approved by the commission, seven insurance firm’s accounts were queried, while 17 insurance firms are yet to submit financial statements as at June 2015.