…a 20% increase FY
Payment of claims is the main reason for taking up insurance and that has been demonstrated efficiently when you look at the full year result submitted by 14 listed insurance companies on Nigerian NGX Limited.
Unaudited results made available to the NGX for investors and shareholders show that 14 out of 21 listed insurance companies paid out N157.19 billion in claims in 2023 financial year, as against N130 billion paid out in 2022, a 20.3 percent increase.
While the insurance companies remain upbeat in revenue despite challenges in the economy, its ability to pay claims is critical for increased confidence and market penetration, according to analysts in the market.
Augustina Onojake Steve of the National Insurance Commission (NAICOM) said the lack of trust and confidence in the Nigerian insurance industry resulting from non-settlement of claims constitute one of the biggest challenges of the industry.
She said, while non-settlement of claims have negatively impacted confidence in the industry, insurance companies should endeavor to settle claims promptly because claims payment in insurance contract serves as spice that attracts potential policyholders to insurance patronage.
“All genuine claims must be paid promptly. The image problem that the insurance industry has today is because of poor claims handling procedures.”
Within the review period, available data shows that the 14 insurers recorded N460.02 billion premiums as against N346.02 billion in 2022.
The companies that contributed to claims are AIICO Insurance Plc N52.31 billion from N46.70 billion in 2022; AXA Mansard Plc N39.70 billion as against N31.42 billion; NEM Insurance Plc N14.5 billion; Mutual Benefits Assurance Plc N17.07 billion, as against N14.71 billion; while Cornerstone Insurance Plc paid out N5.8 billion, from N4.94 billion in 2022.
Others are Coronation Insurance N5.78 billion in 2023, as against N3.33 billion in 2022; LASACO Assurance N4.74 billion from N3.75 billion; Sovereign Trust Insurance Plc N3.33 billion from N3.22 billion; Linkage Assurance Plc N4.50 billion, from N3.09 billion; Consolidate Hallmark Insurance N5.50 billion, from N4.53 billion; Prestige Assurance Plc N1.33 billion, from 388.19 million, among others.
On what customers of insurance can do to have smooth claims process, Augustina said, delay in notifying and submitting claims form about the damage or loss to the insurance company delay in the claim settlement process.
According to her, some policyholders lose the policy document, which are vital for a claim process.
“Policy holders must keep all the original documents in a safe and secure place. If documents are lost or were not found on time, then the claim process will take time.”
Another reason she noted is making a claim after the deadline has passed. “In the terms and conditions of every insurance policy, there is a deadline by which the claim should be filed”.
She also stated that policyholders are expected to pay premium timely so that they can benefit from the insurance policy.
“Timely payment of premium is key to claims settlement. When a policy is lapsed as a result of late payment of premium, such claims may not be settled by insurers.”
“Additionally, if a policy holder cannot continue paying for any reason, there is need to inform the insurer before the policy expires. Most insurers may consider genuine circumstances and offer necessary arrangements, such as converting the policy into a paid-up policy to assist the policyholder.”
“Ideally, a prudent claims settlement promotes customer contentment and allegiance. In other words, claims settlement is the activity of insurance companies that truly portrays what they are there for, because claims settlement is the reason for insurance contract.”
Section 70 (1) (a) of Insurance Act 2003, requires the insurance companies to settle all admitted claims within a maximum time frame of 90 days, and where claims are repudiated, the insured should be communicated by the insurer within 90 days from the date the claims are delivered to the insurer in line with Section 70 (1) (c) of the Act.
If the insurance company needs to investigate the claim, it should do that within 90 days, according to the 2003 insurance Act.