Stories by ROSEMARY ONUOHA
The Insurance Consumers Association of Nigeria, INSCAN, has called on insurance operators to see claims payment as the right of the insurance consumer and not as a favour.
The National Technical Adviser of INSCAN, Mr. Yemi Soladoye, who made the assertion, stated that the insurance premium does not belong to any insurance company, it is money held in trust for the policy holders.
Soladoye said “We the insurance consumers in Nigeria feel that insurance business is that of collecting money from the shareholders and the policy holders mainly for the benefit of the practitioners or how else would we describe a situation whereby in 2011 the net claims paid to us was N30.7 billion but management expenses was N36.7 billion out of N163 billion generated as gross premium from the general business class.
This is 18 per cent and in fact one of the most ridiculous claims ratios in the world. In some individual company cases the gross claims ratio was as ridiculous as 3.0 per cent.
We the consumers are very much aware of the fact that – the insurance premium does not belong to any insurance company, it is money held in trust for the policy holders.”
Soladoye said that a claims ratio of 18 per cent should be a source of concern to any industry that is interested in its future, adding “In most other countries of the world, claim servicing cost alone – provision of replacement car, alternative accommodation, cost of investigation, payment for temporary staff, and computer are well over 25 per cent of the gross premium income.”
Soladoye said “According to Ralph Nader and Wesley Smith in their book “Winning the Insurance Game”- “The greatest calamity that can befall a man is to suddenly discover that his so called insurance protection is a worthless piece of paper”.
Research has shown that in any country where the claims ratio is below 30 per cent, it is either that the premiums charged are too high or claims are not adequately paid. In Nigeria, it appears it is both.
He also charged insurance operators to minimize the claim documentation and investigation process and time. “Stop the practice of requesting for claims documentation piece- meal as a way of buying time.
In other countries of the world, insurers have stipulated period on which claim must be paid and at times they conduct their investigation for up to seven years but the claim must be paid promptly. In Nigeria, our members are made to wait on adjuster’s report which takes ages to come and who we did not appoint in the first place.
The insurers in Nigeria are protected by Sec. 52 of the NAICOM Act 1997 in case they paid out any fraudulent claim, and hence our members should receive their entitlement at the time they are still in grieve,” Soladoye said. He said that insurers should also pay claims to meet the intended purposes, adding “For the past three years, we have been looking for instances where burial expenses benefit would be paid for its intended purpose and we have not gotten one.
Insurance claims especially on life and accident classes are usually classified into payment, reimbursement or capital sum but we do not have such luxury here. Payment for towing expenses, burial expenses, repatriation expenses all fall within the category of “Payment” and we expect them to be paid for the intended purposes.”
The INSCAN Technical Adviser also tasked insurers to issue their discharge voucher with cheque, stating “The discharge voucher usually issued to our members is confirmation of receipt of payment and then we have cases of death for that matter that took up to 18 months after signing the DV.
Henceforth, our members want the payment cheque or evidence of bank transfer at the same time we are made to sign the Discharge Vouchers.
In Nigeria today, we are not getting “indemnity” in line with the definition of the underwriters themselves and to make us to sign papers to discharge you of your liability which ends up not discharged up to three months after is to say the least unacceptable irrespective of whatever the law says.”