Group life: FG to cater for risks suffered before payment of premium

Chuks Udo Okonta

The Federal Government would cater for the risks suffered by workers prior to the payment of group life insurance premium, Inspen has learnt.

The Commissioner for Insurance Fola Daniel, who disclosed this yesterday in Lagos, said in the new premium collection and remittance regime, tagged: ‘No Premium No cover’, underwriters have been barred from taking risks not paid for in advance.

He noted that the government did same when the new pension scheme was promulgated, adding that the pension law was enacted in 2004 but took effect in 2007 and that the workers who retired within the period were catered for by the government. He said such decision may be applied by the government to cater for the deficit in the group life.

He maintained that the government is up to its responsibilities and will never do anything that contravenes the law.

Daniel noted that the implementation of the No Premium No Cover law, has significantly improved the cash flow of insurance companies, while optimistic that the positive turn of events would impact on the capacity of operators to settle claims promptly.

The payment of group life premium has become a great concern in recent times as the government is said to owe underwriters about N18 billion for 2011 and 2012.  

Our investigations revealed that insurers have resolved to stick to the No premium No cover rule, which states that insurance takes effect immediately the premium is paid.

Director-General, NIA, Sunday Thomas, said operators cannot continue to sell services on credit and when claims come they pay. He added that nonpayment and delays are not good for business, as operators need to invest the money they realised as premium to able them pay claims.

He said: “For the first time the industry is taking the decision to face the reality.

“We have decided to take the bull by the horns by letting government know that the industry is under threat and that unless the government begins to show support for the sector, other corporate clients will continue to take the industry for granted.”