NAICOM goes tough on claims defaults

Chuks Udo Okonta

The National Insurance Commission (NAICOM) would soon come out with rules that would make it impossible for insurance companies default on claims settlement, Inspen has learnt.

In source in the commission said in the next six months a stricter rule on claims default will be issued and offenders will be severely punished for any infraction.

It was gathered that the commission took the step because of the compliance that have greeted the no premium no cover policy which has enriched insurers lately.

The Commissioner for Insurance, Fola Daniel, has at a forum called on insurance operators to allow the benefits obtained from the new policy collection and remittance regime impact on their claims settlement, staff remuneration and better returns on investment for shareholders.

Daniel said: “The on-going implementation of the no premium, no cover rule has significantly improved the cash flow of insurance institutions. It is therefore expected that this would impact on our claim settlement ability, thus removing a major sore point in the relationship of insurance consumers and service providers. We expect this positive turn of events to enhance employee remuneration and better returns on investment for shareholders.”

He called on insurers to develop the retail insurance market which has remained grossly untapped in Nigeria; considering the nation’s vast population, adding that the sector is currently embarking on several reforms geared towards developing the industry and improving the general perception of insurance.

He said the Commission incepted various reforms in the industry aimed at facilitating deeper market penetration and contribution to the nation’s Gross Domestic Product (GDP), stressing that the commission is glad to note that these efforts are beginning to yield positive results, but more needs to be done.

“It is the Commission’s believe that insurance professionals need to develop the retail insurance market which has remained grossly untapped in Nigeria; considering our vast population.

“The insurance sector is currently embarking on several reforms which include transition to IFRS, Risk Based Supervision, Market Conduct, Claims Settlement Reform; Financial Inclusion, all geared towards developing the Nigerian Insurance industry and improving the general perception of insurance. The industry is indeed in motion,” he said.

NAICOM, said operators in the country paid N81.3 million as fines and penalties during the year ended December 31, 2012, as against N70.3 million paid in 2011.

In its yearly report, the commission said total insurance levies paid by operators, including insurers, brokers and loss adjusters in the year under review amounts to N1.57 billion as against N1.4 billion recorded in the preceding year, explaining also that it generated an income of N1.97 billion as against N1.6 billion the previous year and recorded a surplus of N624 million.