Wednesday, April 22, 2020 / 06:40 PM / By
Ekerete Ola Gam-Ikon / Header Image Credit: Risk Heads
Globally, the insurance industry is being called out to respond to the losses faced by policyholders, especially businesses holding Business Interruption coverages, as the COVID-19 pandemic continues to ravage territories and distort economic projections.
While insurance industry leaders have kept at educating and enlightening the rest of us that claims could only arise from evidence that COVID-19 has caused physical or material damage to any policyholder (individual or business), the arguments of many are that the insurers need to examine the cases and consider those that are justifiable and merit claims payments.
In most climes, business interruption coverage is an extension or add-on to a standard property insurance policy, which most businesses have, so you can only imagine the size of the claims if the insurance industry even attempted to discuss on ex-gratia basis.
The usual safe place to stay for insurers is that anything that is not covered by the insurance policy cannot be entertained as claims.
However, some policyholders are too upset about the losses they face, coupled with the anticipated pains of recovery after COVID-19, that they would rather challenge the position of insurers in court with the hope of getting some relief.
In Nigeria where policyholders are either complacent about their rights or have little confidence in the legal process to resolve insurance matters in their favour, the conversations mostly end at the stage of enquiry to confirm whether or not insurance covers business interruptions.
By seeking to close the discussions with the simple response that there cannot be claims from business interruptions coverage in the absence of physical damage, I think insurers are missing, probably, the greatest opportunity to engage and enlighten existing and potential policyholders.
Individuals, business leaders, policy makers and development partners are quietly but intensely following the arguments and seeking meaning of the entire concept of insurance if help cannot come from insurers at a time such as this.
While the lockdown last and citizens are using the time on their hands to get usable information about various risks in their lives, insurers could have considered it the most appropriate time to share more specific information on claims payments to policyholders.
Funnily, those who doubt the prevalence of COVID-19 are like those who insists that insurers do not pay claims!
So, how about offering willing claimants the opportunity to do a short video verifying that they have indeed received claims payments from their insurers? This is what the public needs to BELIEVE insurers but will they do it?
Or is the insurance industry not looking at the possibility of receiving assistance from the Federal Government to be able to meet claims obligations, if need be?
Viewed critically, poor attention to claims payments has become a knotty STALEMATE that the insurance industry, particularly in Nigeria, needs to confront and resolve.
Any hope for regulatory action on claims?
The insurance regulator in Nigeria, National Insurance Commission (NAICOM), like some of its peers elsewhere, bears great burden of trying to instil discipline in its licensed operators when it comes to claims payments. Quite often, they have been forced to intervene in the cases of unsettled claims through its Public Complaints Bureau, which success rate is indeterminable.
However, it is my hope that NAICOM will become less reactive and move to set up Policyholders Protection Fund as we have in other African countries to address the concerns of policyholders in instances where the insurers are unable to make claims payments due to weak financial position. Put simply, with such Fund, the Regulator would pay the policyholders and subsequently reconcile with the insurers before their Financial Statements for the end of that particular year are approved.
This sort of regulatory action is what NAICOM needs to take now as the insurance industry looks to earn the confidence and trust of the insuring public.
If policyholders had been made to pay premium on the basis of the "No Premium No Cover" regime for the insurance industry to survive, it is about time insurers are made to settle genuine claims, especially to Life policyholders, for the relationships and experiences to be worthwhile.
The fallouts from denial or stalemate of claims payments during COVID-19 pandemic will only be a saddening reminder of several such tales in the past, notwithstanding the good work of few insurers, and policyholders are bound to go with that unhealthy impression as the pandemic recedes.
How does the insurance industry represented by insurers, brokers and agents then government represented by the regulator want to be viewed by policyholders (individuals and businesses) struggling to recover from the effects of the pandemic? Or will they not also expect some understanding from their shareholders and principals as well as partners?
A stalemate serves no relationship that desires progress and success.
About The Author
Ekerete Olawoye Gam-Ikon, MNIM, CPP, is a management consultant with a specialization in Strategy and Insurance. He is available through e-mail email@example.com
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