The existence of two customer complaints bureaux is expected to stop the intermittent clashes between the insuring public and their insurers over claim settlement, NIKE POPOOLA writes
A construction firm insured its business in 2000, which was renewed every year. In 2007, it incurred a loss of N40m. This was before the firm could pay the premium for that year.
After the loss, the management of the firm approached the insurance company to pay the premium which had been reportedly due five months earlier. The firm also made a claim for the N40m loss. The insurance firm refused to collect the premium.
However, on a relationship ground, the insurance company agreed to pay the insured only N10m for the loss but the latter rejected it, saying they had always been paying their premium late. They insisted on N40m.
This case dragged until 2013 when the National Insurance Commission decided to enforce the no premium no cover rule which states that no insurance company must grant cover on credit
There are numerous conflicts between insurance firms and the insured; some end up in court; others, out of frustration, abandon the case and the aggrieved party merely switches over to the next company.
Many are unaware about the existence of customer complaint bureaus in the insurance sector established to protect the rights of the insuring public.
The Nigerian Insurers Association recently set up a complaint bureau to complement the one earlier established by the National Insurance Commission.
According to the NIA, its bureau acts as an alternative dispute resolution mechanism between a policyholder and an insurance firm.
The Director-General, NIA, Mr. Sunday Thomas, said the association had received and settled some claims while some complaints were still pending in court.
He said the association’s desire to widen the scope and enhance the efficiency of the bureau required that the operation guideline for the resolution of customer complaints be reviewed, adding that this was effected to include the resolution of disputes involving member companies.
The director-general said a mediation advisory committee had been established with the responsibility of reviewing dispute between member companies.
Where however an insurer was not satisfied with the decision of the committee, he said such insurer would be free to lodge its complaint with the association’s customers’ complaint bureau.
According to him, the review also includes the introduction of a limit on the value of claims that should be referred to the bureau which is set at a maximum of N100m.
NAICOM also said it had settled a number of disputes arising from non settlement of insurance claims between insurance companies and policyholders with claims eventually paid to the insured.
The commission also said its intervention in claims dispute was an indication that the zero-tolerance stance of NAICOM on non-settlement of claim by insurance companies was yielding positive result as companies now respond well by paying claims promptly.
It however noted that there had been a reduction in the number of complaints which the bureau was receiving from the insuring public which showed that the insurance firms were responding well to claims and the policyholders’ confidence in insurance was increasing.
In 2011, the bureau resolved a total of 107 disputes out of 347 brought before it, resulting in N519.08m claim settlement, according to the commission.
In the first quarter of 2012, its customer complaint bureau resolved a total of 17 disputes involving policyholders and insurance companies, which resulted in N617.8m claims settlement.
In its efforts at ensuring adequate protection of policyholders and insurance consumers over settlement of genuine insurance claims, NAICOM said it facilitated claims payment of over N2bn in 2013.
The commission said it received a total of 193 complaints from various sectors of the economy, including the insuring public, insurance companies, insurance intermediaries and legal practitioners.
It stated that a total of 61 complaints were successfully resolved in 2013. This was achieved through correspondences, adjudication, meetings and direct contact with the insurance companies, leading to N2.3bn claims settlement.
Causes of disputes in most cases, according to the commission, include matters relating to the discharge of obligations by insurance companies and intermediaries; non-issuance of documents after receiving premiums; delay in settlement of claims; partial or total repudiation of claims; premium paid or payable; and legal construction of the policy wording.
NAICOM said that the complaints bureau deals largely with issues affecting policyholders, beneficiaries of insurance contract, and third parties to an insurance contract.
To ensure that insurance contracts are properly conducted so that there will not be any ground for claims default, the No Premium No Cover law is enforced as stated in the Insurance Act 2003.
The commission observed that before now, many companies used to do business on credit and policyholders were demanding for claims because they were already used to paying premium at their convenience.
With effect from January 2013, NAICOM said it commenced the enforcement of sanctions against underwriters that granted cover without collecting premium.
The law states that the receipt of an insurance premium shall be a condition precedent to a valid insurance and there shall be no cover in respect of an insurable risk, unless the premium is paid in advance.
NAICOM said with the NPNC policy, it decided to enforce Section 50 of Insurance Act 2003, a law which had been in existence for long but ignored by the underwriters.
The section states, “The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium is paid in advance.”
It is worthy of note that apart from the earnings from investment, insurance companies generate their main revenue through a primary source of premium collection, which is their underwriting business.
According to experts, when insurance firms are unable to get their premium on time, this has adverse effects on their operations .
They said without getting their premium early, it would be almost impossible for the underwriters to invest funds and settle claims promptly.
They also noted that most clients had the habit of ignoring premium payment, ones the year had elapsed and no claims occurred.
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