By ROSEMARY ONUOHA

There are fears in the insurance sector that the ‘no premium, no cover’ directive could slow down the momentum of business renewals in the first quarter of 2013, Financial Vanguard has learnt.

The slowdown in renewals, according to industry sources that choose to remain anonymous, will result from hesitation on the part of consumers that are used to renewing their policies early in the year only to pay at a later time, as has been the practice long before now.

Industry sources also fear that renewals might be delayed due to the fact that some consumers could be waiting to see if insurers can really adhere to the directive.

It will be recalled that the National Insurance Commission, NAICOM, mandated underwriters to commence enforcement of the ‘no premium no cover’ directive as stipulated in the Insurance Act, 2003, from the 1st of January this year.

Although insurance consumers under the auspices of the Insurance Consumers Association of Nigeria, INSCAN, have pledged their support towards the success of the concept, operators are still apprehensive.

It will be recalled that INSCAN tasked insurance practitioners to establish a premium financing concept if they want the ‘no premium no cover’ directive to work.

According to INSCAN, the premium financing concept as a line of business in the manner it obtains in other jurisdictions will solve the problem of outstanding premium, adding that an insurance company will be justified to repudiate any claim as from the aforementioned date on which no premium has been paid except as provided in Sec 69 of the Insurance Act 2003 regarding third party liability claims and that an insured person need not pay the total annum premium debited at the inception of cover but the insurance company will be justified to pro-rate its cover to the extent to which the deposit premium is able to carry the risk.

The Association also charged insurance companies to recognise the fact that the effective date of the enforcement is 1st January 2013 and that it expects fairness, equity and good business relationship to prevail on all covers up to 31st December 2012 and thereafter.

“Unless the ‘No premium no cover’ provision was endorsed on any policy document being the evidence of the contract relating to a claim before 1st January 2013 or any other endorsement to that effect, our Association will presume non–disclosure of a material fact on the part of any underwriter wishing to repudiate any legitimate claims on basis of this provision and we shall explore all legitimate means to pursue our members claims to logical conclusions.

We hereby enjoin all insurance brokers in Nigeria to comply strictly with the provisions of sec. 41 (1) of the Insurance Act 2003 as regards remittance of premiums so that the interest of the insurance consumers will not be prejudiced before the underwriters,” INSCAN said.

INSCAN also enjoined the insurance companies in Nigeria to comply with sec. 70 (1) of the Insurance Act 2003 on payment of claims saying that it in full support of all the recent reforms and initiatives of  NAICOM in pursuit of its main duty of protecting the interest of the insurance consumers in Nigeria.