Addressing Non-patronage, Claims Settlement in Insurance Sector

The Nigeria Insurance Industry Reform Act 2025, going by its stipulations on prompt claims settlement and policy holders’ protection has proffered solution to the lingering problems of delayed claims and lack of mass patronage of insurance, writes Ebere Nwoji

One of the major reforms introduced by the Nigerian Insurance Industry Reform Act (NIIRA2025), which both the insurance industry operators and members of insuring public will remember President Bola Ahmed Tinubu for even after his regime is  the reform on Fast Claims Settlement  and Streamlining of Claims Processing which will engender mass patronage of insurance.

Section 210 of NIIRA 2025 requires all insurers to adhere to strict deadlines for claims processing and payment. The section introduced specific provisions to ensure faster and more efficient payment of claims by insurers.

It requires all insurers to settle claims in writing by the insured or entitled parties within the timelines specified in the National Insurance Commission’s (NAICOM) Service Charter, but no later than 60 days of notification.

NIIRA said failure to comply with these requirements attracts a penalty, in addition to compound interest on the claim amount, to discourage unnecessary delays.

It enforces a “zero-tolerance” policy on delayed claims to restore public confidence in the insurance sector. 

Section 211 is titled, “Claims settlement” in the Act’s table of contents. 

The Act generally aims to streamline the claims process by introducing several measures, including in addition to enforcing a “zero-tolerance policy on delayed claims” to restore public confidence in the insurance sector also expanding acceptable modes of communication to include electronic means, such as email, for delivering policy documents and potentially other claim-related communications, which aids efficiency.

Removing the requirement for a police report for motor accident claims, unless there is a death or serious bodily injury, provided there is sufficient proof of loss or damage. The act also has a definite stand on protection of policy holders’ interest.

Implication of the law

Sector observers said looking at the NIIRA stand on claims processes and payment in the industry, it has become obvious that if the insurers themselves abide by this law, it will address the long-standing lack of public confidence and trust plaguing their business and reposition them favourably before the public for mass patronage.

On the part of the insuring public, sector analysts said the law has reduced burden of long procedure for claims processing and demand for unnecessary documents by the insurers which often lead to claims delay and denial.

According to them, what this means is that if the insurers should strictly abide by the law and the regulator awake to its duty of monitoring offenders and implementing  the stated punitive measures, Nigerians will see insurance as a sector worth patronising and Nigerian insurance sector will be like their counterparts in the western world in  terms of good image and mass  patronage.

Operators’ Concern

Before now, one of the worrisome problems of insurance sector operators, the sector regulatory body the National Insurance Commission (NAICOM)  inclusive, has been how to win mass patronage to enable the sector increase profitability and contribute meaningfully to the GDP of the economy.

To achieve this, the operators had in the past years applied strategies especially in the area of awareness creation on the benefits of insurance to an average Nigerian as well as pushed so many innovative products to attract Nigerians to patronise insurance.

They have also retooled their distribution channels migrating from use of physical agents popularly known as insurance foot soldiers to use of digital channels especially with the advent of insuretech firms to ensure that insurance products get to the door step of an average Nigerian.

But going by THISDAY’s findings, one major area where the insurers have always missed the link in connecting good number of Nigerians to their market is the claims settlement point as despite the huge number of claims annually paid by the sector, an average Nigerian still believes insurers do not pay claims.

Indeed, nothing in the business of insurance gives concern to Nigerian insurers than how best to break off this yoke of unbelief and lack of trust of the insuring public from their necks.

At most insurance gatherings, you hear insurers complain about public perception and public ignorance of the difference between genuine and non-genuine claims.

Erroneous accusations

This is because most of the accusing fingers on claims denial or non-payment of claims directed to the insurers emanate from the fact that an average Nigerian does not understand the limit of claims for the policy he purchased.

To them, insurance cover is the same; so, once they buy insurance policy, any risk that occurs, they are  entitled to claims payment and where the company in question refuses to pay on the ground that the risk that occurred was not covered by the policy purchased, the story goes that insurance in Nigeria does not work because operators don’t pay claims.

Obviously, this has been the problem in most of the claims that were said to have been denied by insurance operators.

Instances of genuine claims 

But there are some instances where some insurance underwriting firms shirk genuine claims mainly due to problem of weak financial base of the underwriting firm involved. Indeed, the industry witnessed this few years back when

 policy holders barricaded the entrance of Niger insurance and Standard Alliance insurance firms carrying placards insisting that their claims must be paid by the companies.

Shortly, before the case of the two companies, both investors, staff and policy holders of Investment and Allied insurance (IAA) took the same action.

At a point, the investors converged for an extraordinary Annual General meeting of the company to see a way of re-strategising to forge ahead but before the meeting commenced, the then executive vice chairman of the company got a court injunction to stop the meeting and that was how everybody who gathered at Ibadan venue of  the meeting dispersed with the policy holders who have one claim or another fuming with traits of what to do if their claims were not paid.

These were cases of ailing companies against the backdrop of which the regulator cancelled their operational licenses and appointed receivers / liquidators for both companies.

Also, among healthy companies, there are lingering cases of hanging claims enmeshed in controversies all of which work together to tarnish the industry’s image and frustrate efforts towards achieving the much-orchestrated deepening of insurance penetration in the country.

But with NIIRA 2025’s stand on prompt claims payment, the problem is as good as being solved.

Omosehin’s position

The Commissioner for Insurance, Mr Olusegun Ayo Omosehin, at the recent media retreat for insurance journalists at Abeokuta, Ogun State was exceptionally happy and confident that with NIIRA, the problem of controversy over claims payment and industry image problem was over.

He assured that NAICOM thorough supervision would ensure compliance of the sector with the new law.

He stated, “We are dedicated to striking a balance between robust supervision and sustainable growth. We have significantly elevated the standards for transparency and accountability in the insurance industry by tightening expectations on: Disclosure requirements: Ensuring policy holders receive clear and concise information about their insurance products. Sales practices: Promoting fair and transparent sales practices that prioritise policyholders’ interests. Pricing fairness: Ensuring insurance products are priced fairly and without bias. Claims handling: Streamlining claims processing and ensuring prompt settlement of genuine claims.

 He said to further enhance policyholder protection, the commission has shortened response windows for complaints: Ensuring timely resolution of policyholder grievances, clarified escalation paths, providing clear and efficient channels for policyholders to escalate concerns.

On claims settlement, the commissioner said, “Our stance on claims settlement is unequivocal: we maintain zero tolerance for non-settlement of genuine claims. As a result, insurance companies are expected to adhere to a “sell-what-you-can-service” principle, ensuring they only offer products they can adequately support and deliver on.”

Hope for the industry

There is hope that knowledge of NIIRA stance on claims settlement will spur Nigerians to action to patronise genuine insurance underwriters and pay correct premium to obtain right claims especially with compulsory insurances like Motor Third Party insurance.

Till date though the law places premium on this policy at N15000 from N5000 and claims compensation increased from N1 million to N3 million, some motorists still collect fake insurance certificate to pay N2000.

For such motorists, there is no compensation for it’s third party road user victims whom he insured against because N2000 cannot buy genuine third-party motor insurance anywhere in Nigeria. The same is applicable to every other compulsory insurance policy.

Industry analysts advised that since the new law is explicit on seamless claims settle on policies under cover, members of public should ensure they purchase their insurance policies especially Motor Third Party Insurance from genuine insurers so as to get their claims when accident occurs.