As Insurance Sector Struggle to Gain Patronage


Ebere Nwoji writes on the negative impact of the non-payment of claims by insurance firms

Recent visit by the umbrella body of insurance underwriters, the Nigeria Insurers Association(NIA) to the Speaker , House of Representative, Hon.Femi Gbajamila seeking for legislation that will enable the sector overcome its present challenge explains the desire of operators to see the sector blossom.

The sector, has continued to occupy the low position of poor cousin of bank and by extension, poor parent of the pension sector.

Whereas in its 16 years of existence, pension assets has hit the N11 trillion mark, whereas in its over 100 years of existence, insurance annual premium is still below N500 billion.

Against this backdrop, insurance operators, the National Insurance Commission and even the brokers are eager to see the growth of the sector.

They have resolved that the much desired growth can only come when the industry gains recognition of both the masses and the government.

To win this recognition, the industry leaders have for years been making efforts through interface with various agencies of government to establish and register the image of the industry and its services to the mind of the people.

Unfortunately, in the mist of these efforts, the insurers themselves scuttle their chances of success through their protracted poor attitude to both claims and dividend payments.

For instance, the NIA, during the visit, specifically sought for improved engagements between the sector operators and the lawmakers.

The association, noted that the industry, needs a number of legislative interventions to improve and create opportunities for insurance growth.

The insurers’ visit to the lower house for the above purpose was one out of several similar visits in recent times just for the same purpose.

A quick recall of such visits brings to remembrance that in January 2018, during the tenure of Mrs. Funmilayo Babington-Ashaye as the CIIN President, she also made similar efforts amongst which included a meeting with the then Head of Service of the Federation, Mrs. Winifred Ekanem-Ita-Oyo .

During the meeting, one of the issues that topped agenda of the meeting was better recognition of insurance industry and its professionals in the civil service of the federation.

Babington-Ashaye, had also warned that one of the reasons the insurers were not taken serious was because of unprofessional and unethical activities of some professionals who often refuse to play by the rules.

Just few months back, the Nigerian Council of Registered Insurance Brokers (NCRIB) said it will take insurance awareness to the office of President Muhammadu Buhari.

The Executive Secretary of the Council, Mr. Fatai Adegbenro, said the proposed visit to the president was part of the Council’s sensitisation programme to deepen insurance penetration in the country and seek for recognition of the industry.

He also said the planned visit to the Presidency was aimed at sensitising the government on the need to engage the services of the registered insurance brokers, to protect the assets and liabilities of the government.

“We are engaging the people to embrace the benefits of insurance. Insurance is key. In other climes, nobody waits for the government. It’s very easy because people rely on ignorance to say government has not done this or that.

Government cannot do everything even in the United States of America (USA).

“If they suffer loss, they don’t go to government, the people call on their insurance companies for compensation. We are doing everything to ensure we minimise reliances on government here,” he said.

As earlier stated the insurers have been making these efforts to gain both government and public recognition. But the result has not been as fruitful as desired.

The climax of their effort to win government recognition was their benevolent donation to government for fight against corona virus during the COVID-19 lockdown.

The industry, during the fight against COVID-19 supported the fight by offering free life insurance cover for frontline health workers and donated some health equipment.

The industry operators paid N11billion for the life insurance cover for 5000 health workers.

Perhaps, this gesture by the insurers, explains why government recently paid fully the group life insurance premium for its workers.

Findings on why both public and government recognition of the industry remains low shows that poor attitude of operators towards claims payment and dividend payment is major factor.

Indeed, in spite of all their efforts to create awareness and boost patronage, both government and the people still do not take insurers serious let alone patronise their products because they are not sure that after paying premium, their claims will be paid when it comes.

Indeed, in most cases, they don’t see insurers as genuine and serious minded people due to attitude of majority of them towards claims payment.

This poor attitude towards claims and dividend payment cuts across all classes of insurance firms as even the market leaders are number one culprit.

The insurers these days play out their poor attitude towards claims payment in such a way that whereas it is obvious that they are in business to pay claims, they appear to be keen to see that in their annual reports, figures on claims’ payment lowers every year than reduction in their management expenses.

Irked by the insurers’ growing non claims and dividend payment attitude, the former commissioner for insurance, Alhaji Mohammed Kari, had noted that it was fast eroding the interest of investors and the insuring public towards the sector.

Kari, had also said non -payment of dividend by insurance firms was a disincentive to investors in insurance sector.

He had noted that only about six out of 27 publicly quoted insurance companies paid dividends in the last three years.

The Executive Director, Leadway Assurance Limited, Adetola Adegbayi, in her submission on non-payment of claims by some insurance firms charged members of the public to ensure they file claim on every insurance policy they bought from genuine insurance firms whenever risk occurs.

Adegbayi, regretted that members of the public ignorantly allow insurance firms to sweep their claims under the bed especially such low cost policy as motor third party insurance, noting that this was because many road users are not aware that this policy has claims attached to it.

She said the cause of this was because many road users obtain their policies from fake operators while others who bought from genuine operators paid premium much lower than the official rate as such when claim comes, they become reluctant to demand for claim and the insurance firm involved realising that it did not charge appropriate premium, prefers to ignore the claims on account of ignorance on the side of the insured that he should demand for claims.

She called on road users to always demand for claims on such policy and to take up cases with any insurance firm that decides to repudiate such claims.
She also urged customers to trust insurers, adding that insurance firms are in the business to pay claims and many are regularly paying claims.

She also urged the law enforcement agents to help people in getting their claims.

She further advised members of the public to make use of complaint bureau set up by the industry regulator as well as to employ the services of legal practitioners to get their entitlements from deviant insurance firms.