By LOVETH AZODO, Lagos
The struggle to raise the ratio between the value of premiums written and the Gross Domestic Product in a year in the Nigeria insurance Industry has become an eye opener to the need of boosting the image of the industry through prompt and seemless settling of claims.
Insurance penetration in Nigeria is 0.30 percent which places the nation at the second position in the ratings of countries with the lowest insurance penetration after Chad with 0.20 percent, while South Africa maintains the first position with 12.4 percent penetration.
Most Nigerians are averse to insurance but used to “seeing is believing” and “is not my portion attitude” disposition when it comes to taking insurance policy.
But when claims settlement is done promptly and seamlessly, it boosts the image of the insurance industry by giving a clearer and practical meaning of insurance operations, strengthening the believe of the policyholder on the insurer and subsequently earns public respect.
Financial illiteracy constitute a serious challenge to deepening insurance penetration in the country. So many people who buy insurance products do not even know or understand the extent of coverage the policy guarantee them. Rather, they dwell in rumour peddling that insurance does not work when claims arise.
Indeed, the expectations of policyholders are very high on insurance company whenever any claim arises. But it is important to know that there are limits a product covers.
For instance, when someone buys a fire insurance cover for his or her house, the cover does not extend to burglary or when the house is affected by natural disaster such as flooding. Another example is the Third party motor insurance and the comprehensive insurance, which in event of accident, the third party covers the vehicle hit by the policyholder while the comprehensive vehicle insurance covers the policyholder’s vehicle when stolen or damaged in an accident other than a collision.
The technical nature of the industry gave rise to the establishment of brokerage body, the Nigerian Council of Registered Insurance Brokers (NCRIB), an umbrella of registered insurance brokers in charge of ensuring that policyholders understand insurance products just as it helps to ensure that claims are settled promptly.
Recently, the Federal Government through the National Insurance Commission (NAICOM) introduced necessary regulatory steps to curb unethical practices hence ensuring that the image of the industry is protected by placing sanctions on any insurance firm that is unable to pay claims .
This means that any insurance company that fails to settle any claim of a policy holder is bound to face punitive measures including payment of severe fine to the regulatory body. In respect of this, the Commissioner for Insurance, Mr Sunday Thomas had warned operators to take claims settlement seriously as the regulatory body will not spare any company found wanting.
According to the NAICOM helmsman, “One issue that has been setting the industry on a reverse gear in its developmental efforts is the issue of claims settlement. A few among us have been making this work a tedious one by not paying claims promptly. We should know as a fact that insurance business is about payment of genuine claims and anything short of that will continue to hurt insurance business in the country, thereby giving the industry poor reputation, perception and image. I urge you to look at this issue at your level and deal with it decisively as it has continued to give the industry a bad name.”
It would be recalled that last year, NAICOM slammed a regulatory order on the Industrial and General Insurance (IGI) Plc for the failure of the board and the management of the firm to comply with its directives after the management was unable to submit schedules of claims settlement in the sum of N4,806,682,256,.56 requested by NAICOM.
The order became effective on 18th November and it is expected to elapse on 28th February, 2022 in the first instance.
To ensure that insurance companies are financially solid enough to take risk, the commission attempted to increased the minimum capital requirement for insurance and reinsurance companies.
Giving more insight into the need for the recapitalization, Thomas explained that the process was meant to enable the sector retain insurance businesses instead of allowing it to go outside the country; turn the image of the insurance market, strengthen financial base of the companies, increase the sector’s contributions to gross domestic product of the country, among other benefits.
In the words of Mr. Thomas, “We want to prosecute this recapitalization as one that has never been done before; we want this to ensure that we retain our businesses, turn the image of our market. We have the mandate to ensure that the recapitalization throws up more solid companies. Our hands are open to welcome investors in new companies or existing companies”.
Not only did the NAICOM Boss urge insurers to pay genuine claims, he also advised them to develop new technologies that can aid in fast tracking claims processing and distribution channels in their operations to enable better customer experience.
