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The National Insurance Commission (NAICOM) has urged underwriting firms to increase their claims reserve accounts so that they would have enough funds to settle huge claim liabilities.
A claims reserve is money set aside for a claim that has been reported but not settled. An insurance company assigns a claims reserve to each file, reflecting its best estimate of the eventual settlement amount.
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Speaking to some of the underwriters at the weekend on why some claims are not responded to, they said generally, many issues that could make claims payment outstanding include reporting delay, which is a time gap between claims occurrence and claims reporting to the insurance company); and settlement delay because it usually takes time to evaluate the whole size of the claim.
Speaking at a workshop organised by NAICOM in Uyo, Akwa Ibom State, the Assistant Director, Complaint Bureau Life, Agustina Onojake, said Section (20) (a), (b), and (c) of the Insurance Act 2003 requires insurance companies to make provisions that will cater for unexpired claims and outstanding claims.
To re-awaken the industry through claims settlement, Onojake advised underwriting firms to increase claims reserves to address claims settlement when a loss occurs.
She also called on operators to comply with Section 25 (1) and (2) of the Insurance Act 2003 regarding the Protection of Policyholders’ Funds, advising insurers on how to invest policyholders’ funds.
“Insurance companies should strictly comply with the provision of the Act at all times to enable them to mitigate the risk of not being able to perform claims obligations when a loss occurs as a result of an inadequate investment of policyholder’s funds,” she said.
She said the commission had made several rules and regulations concerning the protection of policyholders to ensure that genuine claims are settled timely.
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