Tackling Non-Patronage and Claims in Insurance

Daftar Isi

Key Reforms in the Nigeria Insurance Industry Reform Act 2025

The Nigeria Insurance Industry Reform Act 2025 has introduced significant changes aimed at addressing long-standing issues within the insurance sector. Among these reforms, the focus on prompt claims settlement and policyholders' protection is particularly notable. This reform is expected to resolve problems related to delayed claims and the lack of public confidence in insurance services.

One of the most impactful aspects of the act is the requirement for all insurers to adhere to strict deadlines for claims processing and payment. Section 210 of the act mandates that claims must be settled in writing by the insured or entitled parties within the timelines specified in the National Insurance Commission's (NAICOM) Service Charter. Importantly, this deadline cannot exceed 60 days from the notification of a claim.

Failure to comply with these requirements results in penalties and compound interest on the claim amount, serving as a deterrent against unnecessary delays. The act enforces a "zero-tolerance" policy on delayed claims, aiming to restore public confidence in the insurance sector.

Streamlining Claims Processing

Section 211 of the act, titled "Claims Settlement," outlines measures to streamline the claims process. These include expanding acceptable modes of communication to include electronic means such as email for delivering policy documents and other claim-related communications. This move is intended to improve efficiency and reduce the burden on policyholders.

Another key provision is the removal of the requirement for a police report for motor accident claims unless there is a death or serious bodily injury. This change simplifies the claims process and reduces the administrative burden on both insurers and policyholders.

Implications of the Law

Sector observers believe that if insurers strictly abide by the new law, it could address the long-standing lack of public confidence and trust in the insurance sector. The law also reduces the burden of long procedures for claims processing and the demand for unnecessary documents, which often lead to delays and denials.

Analysts suggest that if insurers and the regulator diligently enforce the provisions of the act, Nigerians will view insurance as a sector worth patronizing. This could position the Nigerian insurance sector similarly to its counterparts in the western world in terms of image and mass patronage.

Operators' Concerns and Challenges

Historically, one of the main challenges for insurance operators has been winning mass patronage to increase profitability and contribute to the economy. To achieve this, operators have employed strategies such as awareness creation and innovative products to attract Nigerians to insurance.

They have also retooled their distribution channels, moving from physical agents to digital platforms through insuretech firms. Despite these efforts, the claims settlement process has remained a critical link in connecting Nigerians to the market.

Public Perception and Misunderstandings

Public perception remains a significant concern for insurers. Many Nigerians do not understand the limits of their insurance policies, leading to accusations of claims denial or non-payment. This misunderstanding often stems from the belief that insurance covers all risks, regardless of the policy's specific terms.

Instances of genuine claims being shirked due to weak financial bases of underwriting firms have further tarnished the industry's image. Cases involving companies like Niger Insurance and Standard Alliance Insurance, where policyholders protested for claim settlements, highlight the challenges faced by the sector.

Regulatory Measures and Assurance

The Commissioner for Insurance, Mr. Olusegun Ayo Omosehin, expressed confidence that the NIIRA would resolve controversies over claims payment and improve the industry's image. He emphasized NAICOM's commitment to thorough supervision to ensure compliance with the new law.

Omosehin outlined several initiatives to enhance transparency and accountability, including improved disclosure requirements, fair sales practices, and pricing fairness. He also highlighted the importance of timely resolution of policyholder grievances and clear escalation paths for concerns.

Hope for the Future

With the NIIRA's stance on prompt claims settlement, there is hope that Nigerians will take action to patronize genuine insurance underwriters and pay the correct premiums. The law emphasizes the importance of purchasing insurance from legitimate sources to ensure proper coverage.

Despite the increased premium and compensation amounts, some motorists still opt for fake insurance certificates to save money. This practice leaves victims of third-party accidents without compensation, highlighting the need for greater awareness and adherence to the law.

Industry analysts advise the public to ensure they purchase insurance policies, especially Motor Third Party Insurance, from genuine insurers. This step is crucial for obtaining rightful claims when accidents occur.