Most policyholders, especially, those with Motor insurance policy, are unaware of the benefits of the cover they bought, thereby, short-changing themselves and enriching underwriting firms in the process.
As long as your insurance is genuine, policyholders have no need reason to waste their money to fix the damage done on assets or lives that have already been insured.
The scene on Nigerian roads, especially, in Lagos where commercial bus drivers, after collision, will start begging, or the drivers of the vehicles involved in an accident, starts exchanging blow, is mind boggling when indeed, both parties have valid insurance cover!
Although, some of them have fake insurance, most of them who have valid third party insurance cover never knew it value and worth. So, when they have a crash with another vehicle with similar cover, instead of exchange the insurance certificate, they will fight, abuse themselves and later drag themselves to panel beaters to fix their cars from their purse.
It is not restricted to motor Insurance alone, even though, its more rampant among road users, it happens to virtually all classes of insurance policies. Some policyholders just buy policies, may be, to fulfill regulatory requirements and never believe they need to claim on the insured risks. Moreover, some have the notion that underwriters don’t pay, hence, will not want to waste their time to pursue the claims.
Insurance companies, realising that people don’t make claims, especially, on Motor Insurance, have now turned this to a cash cow, collecting premium with the hope of not paying claims. With the mindset that policyholders will not claim, and amidst stiff competition among insurers for Motor insurance business, they rate-cut below the minimum regulatory rate of N5,000. Some go as low as N1,000 to N3,500, on a policy whose Sum Assured is up to N1 Million.
In this instance, if any of the policyholders now comes for claim, it would be difficult for the insurance company involved to pay that claims, hence, continue to give series of excuse to evade such claims or else, the firm will run at a loss.
Experts are now calling on the insuring public to always demand for claims whenever there is a mishap covered under the policy so that insurers can charge the right policy rate and policyholders can get value for money through prompt payment of their claims by underwriters.
Claims Profile
Insurance policyholders across the country were able to recoup about N1 tillion claims from the insurance industry in the last nine years, after they suffered insured risks, even as the industry generated a whopping N3 trillion premium income within the same years.
A year-on-year analysis of the claims payment trend from 2013 to 2021 shows that there is a consistent progress in claims paid by the industry, even as more policyholders are now aware on how to claim when an insured risk occurs, unlike what it was years back.
Investigation shows that the benefiting claimants comprise of public and private companies, government at federal, states and local levels as well as individuals who have paid premium to insure their respective risks before they happened.
And with incessant increase in volume of car crash, building collapse, fire incident in factories and market places, among other risks, across the country, there has been continuous surge in the volume of claims in the last nine years.
Moreover, increase in replacement value of insured assets, that is making underwriting firms to pay more to replace assets when risk occurs, could be partly responsible for the increase in claims value.
Why Policyholders Must Claim
The executive director, Leadway Assurance Company Limited, Ms. Adetola Adegbayi, while urging insured Nigerians to always demand for claims from their insurers whenever an insured risk occurs, noted that, most Nigerians who purchased insurance policies are ignorant of when and how to make claims, adding that, instead of going to their insurers to make claims, they decide to bear the financial burden themselves.
Realising that some people don’t demand for claims, she said, some overambitious operators cashed on this loopholes, to rate-cut policies to unreasonable price, with the assumption that the insured will not demand for compensation.
Because of the low rate they demand on their policies, she said, they, in most cases, outbid their competitors for businesses because their rates are lower and consumers always want to go for policies with lower rates.
In the event of claims, she said, these overzealous underwriters do default, since the premium charged is not the actual value of the policies sold.
To this end, Adegbayi stressed that rate-cutting can be fought by Nigerians, if they begin to request for claims on their insurance policies, stating that when this happens, underwriters would sit up and charge the normal rates that can sustain them when claims arise.
Explaining that an insurance company would be heavily sanctioned if it defaulted in claims obligations, she charged Nigerians to report defaulting underwriting firms to law enforcement agents, promising necessary steps would be taken to pay claims to the aggrieved insured.
According to her, policy prizing is becoming lower and the lower your policy, the riskier your business becomes, adding that, ‘but for the mass market products, as the volume increases, the price reduces.’
On his part, the managing director/CEO, Sanlam General Insurance Company, Mr. Bode Opadokun, believes there is the need for insurers to explain in details the terms and conditions of each product to aspiring policyholders before selling to them.
This, he said, is essential to avoid conflict at the point of lodging a claim, saying, the insured must be aware of what risks his policy cover and what it does not.
He charged policyholders to always approach their insurers on time and submit the necessary documents to process their claims when an insured risk occurs, noting that, most times, the delay in the payment of claims was because customers fail to submit the needed documents on time. “When you don’t submit the documents on time, it will prolong the duration for settling a claim and people will accuse us of delaying claims whereas it comes from them,” he stated.
The group managing director/CEO, Consolidated Hallmark Insurance Plc, Mr. Eddie Efekoha, while advocating for the enforcement of the five compulsory insurances to increase insurance adoption, penetration and acceptance in the country, he pleaded on underwriting firms to avoid rate-cutting, especially, on the five compulsory insurances, as this is affecting the profitability of insurance sector.
He, therefore, advised his colleagues to publicise the claims they pay as this will increase insurance awareness and acceptance.
The managing director/CEO, Blue Pearl Konsult Limited, Chief Chris Obi, on his part, said, insurance business can only thrive in situations of trust that insurers will not renege on their promises to the insured, adding that, over time, the insuring public have experienced abuses and infractions on their insurance claims and confidence level has waned.
Moreover, he said, insurance laws has been stagnant for too long that both insurers and the insured do not feel fully protected. Even the available laws are poorly enforced, so that there are no consequences for breaking insurance laws, especially by insurers, he stressed.
To him, lack of faith and confidence have seriously eroded the trust that must exist between insurers and customers and only a change in the insurance paradigm and offer of a rebranding of insurance can flip the situation.
The commissioner for insurance/CEO of the National Insurance Commission(NAICOM), Mr. Sunday Thomas, disclosed that, there are several complaint bureau that insurance policyholders can express their grievances about non-payment of genuine insurance claims and that their problems would be attended to. He urged the people to explore NAICOM and the Nigerian Insurers Association(NIA) Compliant Bureaus, promising that their cases would be pursued to logical conclusion. Through NAICOM complaint bureau, a lot of claims have been settled without necessarily seeking redress in court, he said.
Section 70 of the Insurance Act 2003 requires that claims must be settled within 90 days of the insurance company accepting liability and issuing its discharge voucher. If the company fails to pay within this period, the customer has the right to approach the insurance supervisory body, NAICOM and ask the commission to pay the claim. NAICOM is legally empowered to make the payment from the insurance company’s regulatory deposit at its disposal.
Where the insurance company is not prepared to pay a claim, the law mandates the company to inform the customer within 90 days of reporting the claim stating the reasons why the claim would not be paid. If the customer is not satisfied, he still has the right to approach the regulator.
However, some insurance companies now settle claims within a week, some of them even do so within 48 hours. How prompt a policyholder gets his claim depends on a number of factors ranging from the magnitude of the claims to prompt submission of the required documents to enable the insurance company process the claim on time.
