• Thursday, December 07, 2023
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“No Premium No cover” is not a threat to retail policies – Fola Daniel


Fear in some quarters that the current level of success achieved in development of the retail market, where many uninsured individuals and small scale businesses are keying into, through personal line products will be eroded by “No Premium No Cover” policy has been ruled out.

“No Premium No Cover” is a provision in 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.”

Fola Daniel, commissioner for Insurance told BusinessDay in a telephone interview that life insurance businesses are never sold on credit, as cover lapses when premium is not paid.

Daniel said there is no problem with life policies and it has never been a problem for the industry, stating that “‘No premium No Cover’ is not a threat to life or individual policies because the process of cover is clear.

“It is policies like group life insurance that cannot be underwritten without premium paid in advance, and that is what the law is trying to address.”

Some operators had expressed concerns that majority of the insurance clients already accommodated in piece meal payment structures through Direct Debit deductions, particularly with life insurance products may be discouraged if they cannot pay full cash to purchase cover.

Though they have agreed that “No Premium No Cover” being driven by the National Insurance Commission is a good development for the industry, they however suggest that there should be a benchmark preference for certain level of clients.

“My fear is that the small clients, who are newly taking interest in insurance buying, but pay from Direct Debit deductions from their salary may be discouraged, if companies offering these products insist on cash and carry as expected in the law,” one of the operators stated.

To them NAICOM should look at the different category of customers, and benchmark what should not be accepted as credit cover by giving preference to small retail customers, and this they believe would give firms opportunity to accommodate more small scale clients.

“NAICOM should attune their mind to this reality, so that would not run fowl of the law or get punished for misinterpretation of the law.”

All of these however have been cleared by the Insurance Commissioner when he said there is no problem with individual and personal life insurance policies.