The biggest advertisement needed to promote insurance patronage is prompt claims settlement according to industry experts.
The Nigerian underwriting companies have so far paid N1.5tn claims to their customers in six years according to industry statistics.
Figures obtained from the industry regulator, the National Insurance Commission, reveal that the claims paid by the underwriters have been on the rise with increased awareness and premiums.
According to the industry bulletin report for 2022 financial period released by NAICOM, the industry paid claims totalling N318.2bn to its customers in the period under review.
Claims of N336.8bn was recorded in 2021, from N247bn in 2020 and N225bn in 2019.
The claims paid in 2018 and 2017 were N252bn and N186bn respectively.
Total claims paid in the six-year period amounted to N1.5tn.
The NAICOM bulletin reveals that premiums earned by the industry rose to N726bn in 2022 from N616.6bn in 2021, and N514bn in 2020.
Premiums of N508.23bn, N426.2bn and N372bn were earned in 2019, 2018 and 2017 respectively.
The premium in the periods under review amounted to N3.16tn.
NAICOM states in the 2022 bulleting that, “The insurance claims reported during the fourth quarter stood at N318.2bn representing 31.2 per cent QoQ growth.
“Possible attainment as a result of growing awareness and market expansion as well as consumer’s confidence.”
Insights into the non-life segment shows that motor insurance led with regards to claims settlement vis a vis gross claims reported at about 92.3 per cent, signifying a nine points improvement as against its prior position.
Fire insurance was the least at about 46.3 per cent, the only class below average proportion. All other portfolios of general accident insurance at 80.7 per cent, oil & gas at 51.6 per cent, marine & aviation at 74.4 per cent, miscellaneous insurances at 86.1 per cent recorded a proportion above the average, of paid claims against gross claims reported.
Life insurance business on the other hand reported two points less in comparison to the position held in the prior period of 94.6 per cent of net claims paid compared to total claims reported during the same period of 2021.
NAICOM, recently, said it will revisit the decision to publish the list of claims-paying underwriting firms.
The Commissioner for Insurance, Mr Sunday Thomas, while address journalists, said, “Claims payment has always been one aspect the industry is battling to balance. We all agree that we cannot claim ignorance of the fact that the industry is paying huge claims out there even though activities of few among the operators is jeopardising the efforts of the majority.
“We had before now agreed to start ranking companies on the number of claims received and settled on an annual basis and we intend to publish such ranking for the insurance consumers.
“It is always an issue that puts the entire industry on the edge. The commission is doing all it can to see that the non-settlement of claims is brought to its barest minimum in the sector.”
Thomas notes that insurance practice in Nigeria in the past has had its good, bad and ugly moments.
One of such bad and ugly moments that have had significant impact on the image and perception of the industry is the issue of claims payment, he says.
He adds that, “Indeed the records and statistics of unpaid claims associated with some of our members has not been too good and must be overturned to the benefit of all stakeholders.
“I must quickly acknowledge and salute the efforts of those companies that are alert to their responsibility of prompt claims payment and encourage them to sustain the good practice.”
According to him, insurance practitioners must be seen to be fighting this cause genuinely and collectively for the future of insurance to be as bright as we expect it.
“We must not continue to harbour elements of destruction under our roofs,” Thomas says.
The commissioner notes that the issue of non-payment of genuine claims has always put the commission and the entire industry on the defensive when it comes to discussing insurance in every stratum of the economy.
“I must tell you that the commission is doing all it could within the ambit of extant laws to see that the non-settlement of genuine claims is eliminated in the sector and I can assure you that we will not relent,” the commissioner says.
Consulting Actuary, TAF Consulting Group, Debo Ajayi, says the industry needs to be more loyal to its customer base and show more empathy at the point of grief and stress of loss.
This, he says, will require that the insurance industry becomes more customer-centric, honour its obligations and do so in a timely manner.
Ajayi says the industry must seek to maximise returns (loss ratios) to the customers.
According to him, “While the insurance contract signed with the customer forms the legal document of reference, the industry must be ready to conduct relationship with the customer in a manner that reflects the spirit of the contract and not just the letter of it.
“Delivery of maximum customer value should be the main goal of the insurance industry.”
He urges the industry to be trustworthy and dependable.
According to him, “The insurance contract is a trust contract under which the customer must trust the insurer to deliver on the promises made.
“The insurance industry must conduct business in a manner that the customer can be assured of support at the time of claim and in a timely manner.
“The industry must show relevance in the lives of its customers and be seen to follow the customer throughout life situations. A car accident claim is not just about getting the car fixed.”
He adds that, “It is also about showing interest in getting timely help for the injured persons, how the vehicle gets to repair shop, transportation needs while the car is undergoing repairs, and so forth.
“Good companionship marks good friendship. The insurance industry in Nigeria can do much better to maintain contact with customers and ensure they have positive customer experience.”
Ajayi also observes that the gap between the claims paid by the Nigerian underwriters and premiums collected is wide compared to some other countries.
He says, “We can argue to dispute these figures or even justify the low loss ratio. I am aware that some incorrectly consider that low loss ratio is reward for good underwriting.
“Such underwriting gains, if shared with the customers in reducing premiums would have increased the loss ratio. This would suggest that low loss ratio situation over a long period is not good for the customer and invariably not good for the industry.”
He defines loss ratio as the ratio of incurred claims to premiums earned over a period.
Loss ratio, he explains, is the primary measure of the financial value of an insurance product to the customers.
To calculate loss ratios correctly, he says, paid claims figures must be adjusted for change in outstanding claims, and premium income must be adjusted for change in unearned premiums.
He says the loss ratio is about claims incurred versus premiums earned to support those claims.
According to him, loss ratios captured the returns to the customer for the premiums paid for insurance coverage.
Testifying to claims payment, an AIICO Insurance customer, Mr Monday Abah, says he signed up for one of AIICO Insurance policy on ‘Savings & Life Assurance Plans’ and got paid immediately at maturity.
He says “As a matter of fact, before they called me, my account was credited; I just received the alert and then, a call came through to notify me. I am now planning to embark on a 15-year policy for my retirement.”
The National Coordinator, Insurance Consumers Association of Nigeria, Chief Yemi Soladoye, seeks protection for customers of underwriting firms.
According to him, the service offerings of the insurance companies should improve as the insurers raise their premium.
The Nigerian Insurers Association says it will continue to encourage its members to pay all genuine claims in line with the extant policies as this will boost the confidence of the insuring public.
The Director-General, NIA, Mrs Yetunde Ilori, says the insurance association places high premium on members’ discipline and has zero tolerance for unethical practices, especially as they relate to non-payment of genuine claims and soft market practices.
On dispute resolution, she says, the NIA Customer Complaints Bureau in the past year resolved several cases between insurance companies and policyholders on one hand, and between insurance companies themselves thereby engendering confidence of the insuring public in the insurance.
Source: The Punch