Stakeholders support zero tolerance for claims non-payment

THE directives given by the National Insurance Commission (NAICOM) to underwriting firms in the nation’s insurance industry to clear backlogs of outstanding claims in their books has received the support of stakeholders in the industry.

According to stakeholders, what the commission is saying is that all genuine claims that has been duly verified and due process followed, such claims should be paid promptly.

NAICOM during the week gave underwriting firms up to September, 31 to clear backlogs of outstanding claims in their books, warning that with effect from October 1, insurance firms that fails to comply with this directive will face appropriate sanctions as prescribed by Insurance Act 2003.

The Director-General, Nigerian Insurers Association (NIA), Sunday Thomas, said that what the commission is simply saying in essence is that all genuine claims that has been duly verified and due process followed, such claims should be paid promptly.

According to him, claims payment is the best advertisement for the industry, therefore, payment of claims is the major reason why insurance companies exist. It implies that the insurance companies must meet its obligations to the policyholders by paying claims promptly, as claims payment determines the valuable structure of the industry in the economy.

The NIA boss said that insurance is made more valuable by meeting the needs of policyholders to enhance the trust and utmost good faith in the industry.

A chieftain of the industry in his remarks explained that over the years, incidents of unsatisfactory response to settlement of claims by underwriters seem to have contributed to the poor public perception of insurance as a financing option.

According to him, we want to shake off the yoke of the inglorious past and chart a new beginning for the industry anchored on the principles of trust and utmost good faith, the basic pillars of insurance practice.

He said “What the commission is saying in effect is that it is going to use its power as regulator to enforce the insurance regulation as it had done in the provision of ‘no premium no cover’ for the overall interest of the industry. We need to co-operate with them by complying with the provisions of the insurance regulation”, he said.

The commission during the week directed 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”.