Insurers may see premium default over COVD -19

Some insurance policies that will be due for renewal in the months of March and April 2020, and ordinarily requiring the insured to pay premiums for the new period may suffer renewal lapses.

But with the continuous lockdown across the country over Coronavirus (COVID-19), some insured’s are not able to pay their premiums at this time, meaning that some policies will elapse, except insurers were able to offer some palliatives.

This policy renewal challenge will be more common with consumers of motor insurance, particularly comprehensive covers which because of poor economic situation in the last few years, are now allowed to pay premium bit by bit (monthly or quarterly) as the case may be.

In India for instance, InsurTech Acko General is providing a one-month insurance extension to car and bike owners who are unable to use their vehicles during the COVID-19 lockdown period.

Customers, who renew or are first time buyers of Acko’s auto insurance policy, will need to pay only for 12 months and will get a one-month extension at no extra cost. This initiative will provide relief to customers for the month of the lockdown where their car or bike has not been used.

For existing Acko customers, the time frame for the one-month lockdown extension is for the full financial year from 2 April 2020 to 31 March 2021.

In addition, Acko is offering a one-month extension of third party and own damage policies at no extra cost.

India’s ministry of finance has announced a grace period for premium payments for third-party policies until 21 April.

Nigeria operates a ‘No Premium No Cover’ regulation, which implies that if the insured were not able pay premium, the policy is assumed to have expired.

The policy though has been in the Insurance Act 2003, was given full enforcement on 1^st January 2013, with NAICOM warning then that any insurance company found in its book unpaid premium for policy granted to clients would be sanctioned or license revoked on extreme cases.

“No Premium No Cover” is an import of section 50 (1) of the 2003 Insurance Act which stipulates that “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 the insurance risk unless the premium is paid in advance.”

 

Modestus Anaesoronye