Sunday, January 26,
2020 / 09:57PM / By Ekerete Ola
Gam-Ikon / Header Image Credit: thegeneralist
When the chequered history of insurance in
Nigeria is updated and the real reason for its survival is noted, I do consider
that the enforcement of "No Premium, No Cover" captured in Section
50 of the Insurance Act 2003 will be more relevant than that of
recapitalization.
To get the insurance industry in Nigeria on the
"thriving mode", we have to decisively address the issues of
unsettled claims, delayed claims and fraudulent claims!
It is in this context that I consider the need
to affirm who is on that "Road Called Recapitalization", why it is
necessary to rejig and reposition the Public Complaints Unit of the National
Insurance Commission (NAICOM) and immediately pursue the enforcement of
the provision of the Act with regards to claims.
Amongst the Nigerians who are aware of Insurance
(not necessarily active policyholders), the larger percentage desire that the
generational stories about the failure of insurers to settle claims should be
ADDRESSED before or as the trip on the "Road Called Recapitalization"
commenced.
Who is on That Road?
Recently, NAICOM reaffirmed the cancellation of
the operating licences of Investment and Allied Assurance Plc and Spring Life
Assurance Company Limited, leaving the "Road Called Recapitalization"
with Fifty-three (53) licensees. The breakdown shows Thirteen (13) Composite
Insurers, Twenty-seven (27) General Insurers and Thirteen (13) Life Insurers.
According to available information, Fifteen (15) of these companies have
foreign content and have expressed strong intentions to retain their licences
while the discussions on mergers and acquisitions are relatively remote as
reported by NAICOM weeks ago.
While many more insurers are involved in the
horrifying stories of unsettled claims (attributable to poor financial position
and failure to make reserves), delayed claims (attributed to incomplete documentation)
are even more rampant amongst insurers and fraudulent claims increasingly
dominate discussions of insurance industry executives.
The chances that most funds generated from the
recapitalization process, especially by financially weak companies, might be
used to settle claims have been the huge concern of investors and shareholders,
who remain "respected visitors" to the "Road Called
Recapitalization"!
Like insurance brokers whom insurers woo and dot
over when discussing new accounts or renewals of existing ones, shareholders
and investors are presented with opportunities that promise benefits after
investment have been made. This is not so for the insurers with foreign content
that have a track record of good dividend payments over the years in Nigeria or
where they came from.
It is very important for existing and potential
customers to be well informed about the characteristics of the insurance
licensees on the "Road Called Recapitalization" as it equally has
Insurers under NAICOM Management, Insurers under Regulatory Order and Insurers
that have not received regulatory approval of their Financial Statements for
Two or more years!
The "Road Called Recapitalization" needs
licensees that can attend to emergent digital customers and give them excellent
insurance experiences that would positively change the narratives of the
insurance industry in Nigeria. This is also the commitment that NAICOM has
expressed and we are eager to see the completion of its work in this regard.
Settling claims on that Road
Globally, claims handling in insurance have
largely accounted for the maturity (hard or soft) of markets. When a market
experiences claims of high magnitude and severity, insurers review rates
upwards, often based on the insistence of reinsurers, and subsequently, it
becomes easier for claims to be settled, and promptly.
Unfortunately, in Nigeria, rates have continued
to go downwards, no thanks to unhealthy and crass competition amongst insurers.
Since the last recapitalization exercise of 2007, only in January 2018 did we
have an upward review of rates, and that was for Group Life from Three percent
per mille to Six percent per mille announced by NAICOM.
On the "Road Called Recapitalization",
poor and baseless rates have been responsible for failure to settle claims,
without delay. This is besides the fact that the discounts that makes the rates
seem explainable actually takes away the premium income due to the insurers and
erode value that ought to go to shareholders.
The damning effects of these actions are mostly
felt at the point of claims settlement.
While the regulator has watched the rates slide
to incredibly unprofessional level though conscious of the negative impact on
claims, it has also not convinced customers why it has not penalized defaulting
insurers in line with Section 70 of the Insurance Act 2003. Genuine cases of
claims where Discharge Vouchers had been executed and yet unsettled Nine Months
after (not 90 Days as the Law states) abound in the Public Complaints Unit of
NAICOM.
This new "Road Called
Recapitalization" being completed with dateline of 31st December 2020
should not have such insurers. To achieve this, the regulator should review its
criteria and threshold for the claims that are referred to it for resolution.
If premiums are paid immediately by customers,
claims should be paid immediately after the processes are concluded.
Digitization offers the best opportunities for such new experiences in this
regard.
The confidence and trust of existing
policyholders and hope of potential ones are seriously needed to make the
"Road Called Recapitalization" smooth and enjoyable by other
stakeholders including governments at all levels seeking to address the issues
of revenue generation and creation of jobs.
End of the Road?
In the minds of the many stakeholders in the
Nigerian insurance industry, there is a common end that the "Road Called
Recapitalization" is expected to have - the point where policyholders,
shareholders and "trustholders" (insurers, brokers and agents) will
be excited!
The mixed feelings we have today could not be
without accusations and counter-accusations of respective stakeholders yet we
know that we can have better experiences if the process of claims settlement is
half as open as that of premium payment.
It is time to address the issues that are most
urgent and important to policyholders especially claimants, as aggressively as
the issue of raising funds on the "Road Called Recapitalization".
A new insurance industry beckons!
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