NAICOM targets consumer rights in new protection policy

Daniel

A new consumer protection policy that would enhance consumer rights in insurance contract and consequently boost their confidence in taking up covers is in the works at the National Insurance Commission (NAICOM), BusinessDay investigations reveal.

The new policy is expected to provide the potential insured the opportunity to understand details of the insurance contract, rights and privileges, entry and exit rules, such that no part of the contract would be alien to the insured in the event of loss occurring.

Analysts said last night that the policy, which would be called ‘Market Conduct Guideline’, would engender consumer confidence in the sector as well as deepen penetration in Africa’s most populous black nation, where insurance penetration has been abysmally too low at less than 1 percent.



Fola Daniel, commissioner for insurance, said the first responsibility of NAICOM was to protect the consumer in the insurance contract.

"We have renewed our vigour to enforce market discipline with stricter regulations and sanctions because we must protect the insured," he said.

He added that the regulatory body had been taken for granted in the past because it adopted moral suasion to correct anomalies even though the law was there, stating that the new decision to enforce the law with respect to market discipline would be taken very seriously.

"As I said, I do not owe anybody any apologies because it is our responsibility as regulator to protect the insured and that is what we are doing and hope to improve on," Daniel said.

A senior officer in NAICOM who spoke to BusinessDay on conditions of anonymity said the guideline, which would be released soon, has a provision called ‘cooling period’, being a timeframe of two weeks during which a consumer has the right to withdraw from an insurance contract even when premium has been paid, without losing a dime.

This cooling period would help the customer to make up his mind whether to continue with the contract or not without losing the money he or she had paid to the insurance company, the source said. Besides, it would enable a presentation of policy document in clear and simple terms such that the policy customer does not need to stress him or herself understanding the terms of the contract.

The source further disclosed that another important aspect of the guideline was that it would let consumers know when a policy can attract surrender value so that right from the beginning of the contract the consumer is well in the know what he or she is going into.

In its earlier efforts at ensuring adequate protection of policyholders and insurance consumers over settlement of genuine insurance claims, NAICOM in 2013 successfully facilitated claims payment of over N2.24 billion.

During the period, the commission received a total of 193 complaints from various facets of the economy, including the insuring public, insurance companies, insurance intermediaries and legal practitioners, and a total of 61 complaints were successfully resolved in 2013. This was achieved through correspondences, adjudication meetings and direct contact with the insurance companies.

As at the first quarter of this year, NAICOM, through its complaint bureau unit, successfully adjudicated and settled a total of 15 complaints.

Technical Adviser INSCAN, Yemi Soladoye

The Insurance Consumers Association of Nigeria (INSCAN) recently put up a demand for change in the manner in which insurance policy is delivered to consumers.

"Your policy documents, being the evidence of the contract with us, is full of discouraging and frustrating technical jargons that hardly would anybody read more than one page of the ‘handout’ which at times goes up to 30 pages before dropping same," said the advocacy and consumer protection body, which tagged its demand ‘Give Us Transparent Reader-Friendly Contract Wordings’.

"We therefore make it categorically clear that we are tired of these intimidating words and expect all insurance companies in Nigeria to adapt their policy documents to the modern trends where the policy document starts with ‘meaning of words’, followed by ‘what is covered’, what is not covered and then the conditions guiding the contract with a claim form tucked into the folder at the back of the policy jacket. We expected this from you like yesterday," INSCAN said.

Over the years the general public had had the belief that insurance companies only existed to rip people off, and the major concern was policy wordings which were usually tiny with technical jargons. This created negative image for the sector and put a question mark on credibility of players, irrespective of efforts to launder image.


Source BusinessDay