By Omobola Tolu-Kusimo
As many people lament the non-payment of claims by some insurance firms, there is pressure on the regulatory authority, the National Insurance Commission (NAICOM), to pay the the aggrieved from the firms’ statutory deposits.
Statutory deposits are cash deposited with the Central Bank of Nigeria (CBN) in accordance with Sections 9(1), and 10(3) of the Insurance Act 2003.
The Nation had reported last week that many policyholders of Standard Alliance Insurance Plc had been crying to the commission for an intervention, following the company’s refusal to pay their claims.
The amount is considered to be restricted cash, as the insurers do not have access to it.
Although the commission in 2017 during the administration of Mohammed Kari as Commissioner for Insurance, threatened to pay genuine claims from erring operators’ statutory deposit account with the apex bank, this seems not to have been carried out till date.
The Commission assured that within a timeframe, it would address unpaid claims by operators through withdrawing money from their statutory deposits in the CBN to settle repudiated genuine claims.
Kari had noted that claims payment is critical to deepening insurance penetration among Nigerians, adding that it will engender confidence of the public to the industry.
He said as such, any genuine claims being repudiated by any operator would be paid by the commission from the statutory deposits.
He said this is the easiest way to settle genuine claims being rejected by such firms.
He said for companies that continue to repudiate claims, the commission would continue to withdraw from their statutory accounts until it has exhausted what such companies have and according to the law, if such companies fail to replenish their statutory deposits within 60 days, they would be eased out of business.
Kari said the commission is neither fast nor slow to remove erring operators’ licences but is only conducting cost benefit analysis on such action, adding that through the above means, such operators would lose their licences.
Kari, however, said the commission, was still considering what to do with operators who reject claims that are more than what they have in their statutory accounts.
He said the commission is yet to arrive at a solution.
It is, however, not clear if the commission has carried out its plan, as there is no report from the commission on the matter.
The Nation enquired from the Head of Corporate Communications, Rasaaq Salami, if the commission has paid aggrieved claimants but he did not respond as at press time.
What is, however, clear is that the Insurance Industry Consolidated Bill, which is before the National Assembly, provides that where any claim remains unpaid, the insured may request the NAICOM to effect the payment from the statutory deposit of the insurer and the commission shall have power to effect such payment.
The bill, which scaled second reading on the floor of the Senate last week, is expected to sanitise the industry.
According to the Bill, where a claim is made in writing by the insured or any other party entitled to claim under an insurance policy, the insurer shall, where he accepts liability, settle the claim not later than 30 days after the issuance of a discharge voucher or such period of time as may be prescribed in regulations made by the Commission from time to time.
The Bill reads: “Where any claim remains unpaid as provided in subsection (1) of this section, the insured may request the Commission to effect the payment from the statutory deposit of the insurer and the Commission shall have power to effect such payment.
“Where the insurer does not accept liability, he shall deliver a statement in writing, stating the reason for disclaiming such liability to the person making the claim or his authorised representative not later than 60 days from the date on which the person delivered his claim to the insurer, or such period of time as may be prescribed in regulations made by the Commission from time to time.”
The Bill further provides that an insurer who contravenes the provisions of this section is liable to a penalty of N500,000.
It noted that notwithstanding anything contained in the contract of insurance, in all cases of insurances made compulsory under the Bill, an insurer shall be liable to compensate the insured or third party for damages suffered as a result of the insurer’s unreasonable delay in settling a claim as may be awarded by a court of competent jurisdiction or the dispute resolution panel set up under the Bill.
A chief executive of an insurance firm, who spoke on condition of anonymity, expressed displeasure at what he describes as NAICOM’s handling of recalcitrant operators with kid’s glove.
Another CEO stressed that what is needed is for the commission to wield its big stick against the operators.
Speaking at a conference in Lagos, the Commissioner for Insurance, Sunday Thomas, however, pointed out that the era of huge backlog of claims should no longer be associated with firms.
He added that the commission is profiling firms with huge unsettled claims for sanction, adding that companies that are settle claims promptly should continue to do so to sustain the good business conduct.
