Achieving Mass Insurance Patronage

Insurers at their CEOs’ retreat highlighted initiatives on  winning public trust and credibility for mass patronage of insurance services amidst economic challenges, Ebere Nwoji presents their views

Faced by lingering challenge of public mistrust culminating in dwindling  patronage, insurance sector operators said they have embarked on a number of initiatives that would restore public confidence and trust in the insurance sector in order to engender mass patronage of insurance services.

But members of the insuring public have insisted that any of such initiatives devoid of prompt claims settlement is a ruse.

The insurers said these initiatives were holistically being implemented by all the arms of the industry with the target of genuinely addressing the critical issue of claims settlement especially prompt claims settlement and other critical issues that discourage Nigerians from buying insurance  to enhance operators’ credibility.

Indeed, importance of claims settlement to the Nigerian insurance industry cannot be overemphasised.

Nigerians Experience

For every Nigerian that has no single insurance plan, when asked the reason for that he  will tell a story of either his personal experience or the experience of a relative or friend with one insurance company or the other.

The story is often told that a policy was taken, premium paid but when claim occurred, the insurance company came up with interpretation of some  clauses in the policy document which initially were not spelt out. The purpose, they stressed, was to see a way of wriggling out of the claims payment obligation.

Initially, insurers claimed that these stories were not true but mere weapon for  tarnishing the industry’s image as they often argued that none of the people who told these stories has even owned up to have been directly involved but that the story will always center around their friends and relations who bought one policy or the other.

The insurers said they were waiting for one person that would own up and said he was directly involved in the case of denied or delayed claims.

Case point

But in recent times, some individuals have came up with glaring cases of their claims that were either denied or delayed by both ailing and healthy insurance companies.

For instance, few years ago, 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. One of the policy holders confided in THISDAY that the annoying part of her own case was that the claims she was making was on an investment and savings  related policy she purchased with the company  with her premiums religiously paid for many years.

Shortly  before that, 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 restrategising 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 the other fuming with traits of what to do if their claims were not paid.

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

Claims settlement

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.

This, coupled with  recent government policies like the fuel subsidy removal, in no small measure depicted  a  picture of dwindling patronage of insurance products, including compulsory insurances.

For instance, statistics from the Nigeria Insurers Association (NIA)  show  that as a result of the 200 percent increase in the premium payable on Motor Third Party Insurance policy  effect from January 1,2023,  and the high cost of fuel due to subsidy removal, at the close of business in 2023, operators did not witness upsurge in number of vehicles for which the policy was purchased. 

Motor Third Party Insurance 

According to NIA Chairman,  Mr Olusegun Omosehin, in the Nigeria Insurance Industry Data base portal where the association keeps record of number of motor vehicles that have genuine insurance cover, total number of 3.69 million vehicles were uploaded in the NIA portal in 2022 but in 2023, only 3.11 million were uploaded. 

Section 68 of the 2003 Insurance Act says, “No person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third parties is insured with an insurer registered under this Act.”

It was against this backdrop that the insurers at their CEO meeting early in the year determined to restrategise by  thinking out a number of initiatives that could boost public trust and encourage Nigerians to buy insurance.

The insurers regretted that despite the position of Nigeria as the biggest market in Africa in other commodities and services, in insurance the country is far from attaining the status of biggest market due to mass apathy to insurance. 

NIA Position

Omosehin at a press briefing in Lagos  lamented Nigerians’ lack of interest in insurance even the compulsory insurance. According to him, with the 200 per cent increase in Motor Third Party insurance, what Nigerians are paying on the compulsory policy is $10  whereas in a country like Liberia, the policy costs $100; in Niger, it costs $125 and the citizens comply. He said against this backdrop, the insurers have lined up a number of initiatives to broaden Nigerians’ views on insurance value.

According to him, the 10 year industry’s strategic plan was part of the initiatives. Describing the plan as transformation roadmap for both the regulator and industry operators, the NIA boss said this cuts across all layers of the industry involving NAICOM the regulator, the insurers themselves, brokers and loss adjusters .

He said in line with this plan, NIA has complied with NAICOM’s directive of publishing notices in the dailies inviting all policy holders who have any outstanding claims to come up with necessary documents for the purpose of collecting the same.

He said the association was monitoring to see any member who would  not collaborate.

He also said the association was collaborating with Federal Government agencies in the enforcement of compulsory insurances, especially the agency in charge of insurance of public building and building under construction. 

He said the insurers were also collaborating with Federal Ministry of Housing and Federal Fire Service  adding that the effect the insurers were getting was impressive and would hopefully bridge the existing gap and increase insurance penetration.

He said this was why the insurers at their CEO retreat early in the year focused on winning the war on insurance penetration.

He said patronage of insurance by the people depended so much on how the people perceived insurance, was it as necessity or as what they could do without.

He noted that insurers have not explained insurance enough to the people that was why insurance was not prioritised by Nigerians. He said at this period of challenging economy, insurers placed so much value on  the table for the people at payment of little premium as he urged Nigerians to have a change of attitude towards insurance in order  to benefit from these values.

Experts’ views

In his submission on claims payment at one of the claims advocacy conference organised by the Carefirst Consult in Lagos, the Managing Director, Grand Metropolitan Associates, Mr Reginald Egbuniwe,  speaking on the topic, “What Insurers do When Claims are Reported,’ listed the complexities of handling some claims which he said were  very important for consumers to understand.

He said there were  differences between simple and complex claims, adding, “If you have a simple claim, the insurance company has to be notified. Once a claim is reported, the insurance company has to receive it, and make sure that whoever is reporting the claim has a policy with them. The claim has to be authenticated and when that is ascertained, a number will be allocated and a claim form is sent. This doesn’t take long.  Depending on what is in the policy, it is expected that a claim should be reported in seven days, 14 days, or whatever.

Speaking, Fintech expert, Richard Ogunmodede said he was  of the view that  claims in insurance contract was best teacher  therefore should be paid seamlessly. He highlighted the industry’s problems and the negative effect on its growth.

He said  the problem was the leading indicator and that the  impact was  a liking indication. “If you want to manage something it is better to focus on the leading indicator because you cannot control or influence the liking indicator.

He added, “Insurance has been mispriced in Nigeria.  There is a mismatch in the system. In the industry, you have bad insurers and bad consumers and so you have big systemic problems. Insurers talk all the talk but they never do the work. They just compete based on agreed premium and at a zero rate and the consumer assumes there are implicit guarantee that even when the insurer goes down, they will still get their indemnity so they don’t care about the rate too.”

He said the growth rate of the Nigerian insurance industry and its contribution to the nation’s GDP was very small and called on the operators to do something, especially on the issue of rate.

While narrating his experience with the Nigerian insurance industry, he said the process of getting claims paid was  too cumbersome and called for a better way of doing it. Founder/Principal Consultant, Carefirst Consult Limited, Mr. Gus Wiggle,on importance of claims payment in the struggle to popularise insurance in Nigeria said:  “Claim will remain the anchor of insurance business and will remain on the front burner while communication will become the point of impact of expressing consumers’ impressions…”

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