Underwriters may have settled claims worth N207.4 billion to policyholders, who suffered losses in 2018, as operators recorded increase in value of insured assets against premium paid.
This may well be the highest claims ever paid by the industry in a financial year, more than 50 per cent of the N413 billion premium income generated in the same period.
Besides, the claims outlay is over 80 per cent above the N142.8 billion total claims paid by insurance industry in 2017.
The development is seen as good news for the insured against the backdrop that the insurance industry has always been accused of not honouring claims obligations.
Additionally, increased awareness on the need for policyholders to make claims is partly responsible for the increase.
But operators argued that the rise in claims adversely affected the balance sheets of insurance companies in Nigeria, as a few operators had to relinquish about 60 per cent of their profit to pay these claims.
Speaking on the development in an interview with The Guardian, the Chairman, Nigerian Insurers Association (NIA), Tope Smart, raised concerns over the continuous increase in claims value, against low policy rate, saying most rates in the market were not a true reflection of the risks the policies covered.
Smart, who also spoke at the 2nd interactive session with consumers of insurance products and services, organised by the National Insurance Commission (NAICOM), in Lagos, noted that claim was a fundamental part of insurance.
He said a policy purchased by “a consumer is a promise of compensation when things go wrong, provided the circumstances fall within the policy’s terms and conditions.”
The Director of Operations, NIA, Lanre Ojuola, noted that “insurance policy is expected to provide help in times of trouble, put smiles on the face of the insured, share their burden and grief with the insured, give the insured hope, and instil confidence in the insured.”
Ojuola, linked factors that may lead to late or non-payment of claims to policyholders to late notification, false statement that makes claim suspicious, failure to take preventive measures, lack of proper documentation, and exclusion clauses.
The Acting Commissioner for Insurance, Sunday Thomas, said customers’ satisfaction is central to the sustainability and success of every business, insurance inclusive.
“We are aware of some of the obvious challenges bedevilling the insurance sector either on the side of operators, consumers, investors or regulators. These challenges could be very overwhelming, however, we must not relent in looking for better ways to effectively and efficiently ensure the delivery of quality services to policyholders,” he said.
Thomas, who was represented by the Head, Lagos Office of NAICOM, Adamu Balanti, affirmed that constant efforts and new reforms were being packaged by the Commission to ensure prompt payment of genuine claims by insurers.
He said NAICOM’s Complaints Bureau Unit, had been working tirelessly to resolve policyholders’ issues relating to non-settlement of claims, contract agreement violation, among others.
“It is pertinent to inform you that the unit has been further enhanced with the deployment of more staff at very senior level to effectively discharge assigned responsibilities.
“Its doors are open to receive and resolve, as much as it can, issues on non-settlement of genuine claims from the public,” he emphasised.
He stressed the need for a paradigm shift in the insurance industry to a better one where policyholders will not be grumbling on issues of prompt claims’ settlement, pricing of insurance products, value for money, innovative products and more.
“Recent developments and reforms in our sector, particularly the recapitalisation exercise, is a move to ensure that the industry becomes more robust in its technical competence and financial base,” he added.