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| Soladoye |
THE EXPECTATIONS OF THE INSURANCE
CONSUMERS IN NIGERIA – TODAY, TOMORROW.
BEING THE TEXT OF THE PAPER PRESENTED BY
THE NATIONAL TECHNICAL ADVISER OF
THE INSURANCE CONSUMERS ASSOCIATION OF NIGERIA
AT
THE 1ST BUSINESS JOURNAL INSURANCE SUMMIT AND EXHIBITION 2014.
VENUE: Sheraton Hotel, Ikeja, Lagos.
DATE: 10th MARCH 2014
Salutation.
Origin of INSCAN.
The idea of establishing the INSURANCE CONSUMERS ASSOCIATION OF NIGERIA (INSCAN) was introduce in the CBN – led FSS 2020 project in 2007, re-emphasized in NAICOM MDRI project in 2009 and reinforced by section 2(h) of the Consumer Protection Council of Act of Nigeria 1992.
The Objectives of INSCAN
INSCAN is a public – led initiative registered with the CAC with the following 4 objectives:
To create awareness to the public as to the importance of Insurance and the implication of not having Insurance.
To stand in the middle between the Insurance companies and the Insured whenever there is dispute for amicable resolutions vis-a vis compensation.
To foster unity and progress between the Insurance Industry and the general public.
The Journey so far
INSCAN was registered as an Incorporated Trustee with the CAC in 2010 and became a Registered Affiliate of the Consumer Protection Council of Nigeria (CPC) in Feb. 2014. At the moment it has 3 offices in Lagos, Ibadan and Abuja and has members in 8 states of Nigeria – Lagos, Oyo, Kwara, FCT, Sokoto, Enugu, River pand Abia. We have just acquired a bus which we use for our weekly insurance awareness activities.
We have also established collaboration with NAICOM, FSS 2020, and National Orthopaedic Hospital Yaba. Collaboration with the FRSC, the Fire Service and the Police in each state where we operate is on-going.
We have developed 4 flyers on (1) Insurance Consumers Bill of Rights and Responsibilities, (2) The Rights of the Motorists, Artisan etc. under compulsory insurance, (3) Tips for buying insurance in Nigeria and (4) The Basic Insurance products and terminologies. At the field level, we operate with 7 constituent committees
1. Accident Victims Relief Committee – Headed by Capt. Dele Ore, a Lawyer and retired pilot. The committee helps the victims of Motor Accidents, collapsed buildings and all that are protected by the compulsory Insurance in Nigeria up to the point of prosecuting the negligent parties.
2. Insurance Promotion And Awareness Committee – Headed by Alh. Kunmi Olayiwola- a journalist of repute who rose to the level of Assistant Editor in the Concord newspapers and played significant roles during the June 12, 1993 episode. The committee embarks on public enlighten activities on insurance.
3. Road Dispute Resolution Committee – Headed by Engr. U.S. Abubakar – an Irrigation Engineer with vast experience in the public service. The committee members at the spot of any road accident move in to prevent fighting, arson and further damage by educating the victims that even their 3rd party cover is sufficient for their losses.
4. Volunteer Fire Fighters Committee – Headed by Mr. Emmanuel Kolade – a retired Director of Fire Service in Oyo state. The committee provides basic firefighting training for our members to enable them assist their communities in case of fire incidents to homes, motor vehicles etc.
5. Compulsory Insurance Enlighten Committee – Headed by Builder Kunle Balogun – a prominent member of the Nigerian Institute of Building. This committee identifies and educates all institutions and bodies that are captured by the compulsory insurance products on motor vehicles, buildings in course of erection, public buildings, hospitals and corporate bodies warning them that INSCAN will fight for their staff etc. at the appropriate time, if they refuse to take the appropriate insurance cover.
6. Risk Management and Collaboration Committee – Headed by Engr. Rafiu Balogun, an aircraft maintenance engineer who worked in the risk management department of a U.S.A. based insurance company for 8 years.
7. Committee Of Arbitrators – Headed by Mr. Tamuno George, a lawyer, accountant, banker and arbitrator of repute. The committee appoints one of its members to represent our aggrieved members to satisfy the arbitration clause usually put in insurance contract documents.
At the command and control level of the association is Rr Admiral Isaac Areola (Ltd) – a former Minister for Commerce and Tourism in Nigeria as the National President and Chief Yemi Soladoye, a seasoned insurance and pension consultant as the National Technical Adviser
Our Mode of Operation
We have spent our money and time in the past three (3) years to put in place the above enumerated structure without collecting a kobo of support from any organization in or outside insurance or anywhere in the world because we want our mission and purpose to be very clear to all and sundry. We have come in as the responsible and reliable bridge and the missing – link between the Nigerian Insurance Industry and Nigerians in general. Now that we have put in place all the structure to make our association effective and efficient in the discharge of our duties and knowing fully well that our intervention will sooner than later enable the Nigeria Insurance Industry to compete very well with the likes of banking and the telecoms industries, in income generation and other Key Performance Indicators(KPIS), we will come to you for support because your support to us will in fact be the greatest investment (not a cost) you can ever make for the growth of your business in Nigeria.
As to our approach of taking you there, nothing militant, purely intellectual but we will protect our members’ rights to the fullest.
With the above stated background in mind, we hereby make these (13) demands which we tag the "Lagos Declaration", as our expectations from the Nigerian insurance operators and the regulators for the year 2014:-
Give Us Transparent Reader- Friendly Contract wordings.– Your policy documents, being the evidence of the contact with us is full of discouraging and frustrating technical jargons that hardly would anybody read more than one page of the "hand out" which at times goes up to 30 pages before dropping same. Why do you bombard us with words like - whereas, where in, where of, now therefore, knowingly, willfully, recklessly, negligently, directly and indirectly, proximately and remotely - all making the contract look mysterious and scary to our members. 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.
We Demand Truly Comprehensive Motor Insurance Cover -The 10% premium agreed by the market for comprehensive motor insurance is for about 15 benefits that are enjoyed by the Insurance consumers in other parts of the world. Prominent among these are own damage, 3rd party liability, replacement car, loss of personal effect, personal accident cover etc. In Nigeria we are given 2 ½ benefits – own damage, 3rd party liability and usually N10, 000 towing expenses and N20, 000 medical expenses. Our position as consumers of insurance in Nigeria to your members who are under-cutting the rates is that even when your charge 2.5% for the benefits granted us, you are still ripping us off.
Another problem that we have with your comprehensive motor policy is that it is always depressing for our members to realize only at the time of claim that their comprehensive motor policy does not cover losses arising from riot, strike, civil commotion and flood unless they had specifically requested and paid for them before the loss.
We hereby request the governing council of the NIA to give us the full benefits of a trully comprehensive motor insurance policy on "a la carte" basis as from Jan 2014 and in the minimum, benefits like car replacement, vehicle tracker should be automatic as from 2014. Medical benefits should be increased to minimum of N100, 000 while the underwriters should bear the cost of towing an accidented vehicle to the repairer’s garage in full.
We Also Demand Trully Comprehensive Householders Insurance
Where an occupied building is destroyed by fire or any of the extraneous perils, the insurer usually provides for loss of rent/ rent of alternative accommodation/ loss of use as the case may be pending the completion of renovation or for specified period of time. Accident and Life cover for domestic servants is also normally endorsed on a comprehensive householder’s insurance cover. We demand that this be provided for us as from 2014.
Stop Selling Ordinary Paper To Us As Insurance.
Goods In Transit Insurance - It is almost impossible nowadays for our members to make successful claim from their goods in transit policies. Not only that, all that is said is covered in the operative clause is removed in the body of the contract and now you insert a warranty to the effect that the carrier must have its own goods in transit cover. Still your charge full of premium (in advance for the cover). This situation is so rampant that we even get complaints against the underwriters from brokers.
Bonds – Bonds issued to our members suffer the same fate as the goods in transit cover. The wordings are empty and on top of this our members are requested to provide collateral, guarantor, counter – indemnity and personal guarantee all making sure that at the end of the day, the insurer is not carrying any risk. If you are not ready to be our risk-carrier on burglary, goods in transit and bonds, please stop giving us false sense of security.
See Claims Payment As Our Right And Not A Favour
According to Ralph Nader and Wesley Smith in their book "Winning the Insurance Game"- "The greatest calamity that can be fall a man is to suddenly discover that his so called insurance protection is a worthless piece of paper". Research has shown that in any country where the claims ratio is below 30%, it is either that the premiums charged are too high or claims are not adequately paid. In Nigeria, it appears it is both. Today we the insurance consumers in Nigeria feel that insurance business is that of collecting money from the shareholders and the policy holders mainly for the benefit of the practitioners or how else would we describe a situation whereby in 2011 the net claims paid to us was N30.7b but management expenses was N36.7b out of N163b generated as gross premium from the general business class. This is 18% and in fact one of the most ridiculous claims ratios in the world. In some individual company cases the gross claims ratio was as ridiculous as 3.0%.
We the consumers are very much aware of the fact that – the insurance premium does not belong to any insurance company, it is money held in trust for the policy holders.
A claims ratio of 18% should be a source of concern to any industry that is interested in its future. In most other countries of the world, claim servicing cost alone – provision of replacement car, alternative accommodation, cost of investigation, payment for temporary staff, and computer are well over 25% of the gross premium income.
Stop the practice of requesting for claims documentation piece- meal as a way of buying time. In other countries of the world, insurers have stipulated period on which claim must be paid and at times they conduct their investigation for up to 7 years but the claim must be paid promptly. In Nigeria, our members are made to wait on adjuster’s report which takes ages to come and who we did not appoint in the first place. The Insurers in Nigeria are protected by Sec. 52 of the NAICOM Act 1997 in case they paid out any fraudulent claim, and hence our members should receive their entitlement at the time they are still in grieve.
You should also pay our claims to meet the intended purposes. For the past 3 years, we have been looking for instances where burial expenses benefit would be paid for its intended purpose and we have not gotten one. Insurance claims especially on life and accident classes are usually classified into payment, reimbursement or capital sum but we do not have such luxury here. Payment for towing expenses, burial expenses, repatriation expenses all fall within the category of "Payment" and we expect them to be paid for the intended purposes.
Issue Your Discharge Voucher With Cheque.
The discharge voucher usually issued to our members is confirmation of receipt of payment and then we have cases of death for that matter that took up to 18 months after signing the DV. Henceforth, our members want the payment cheque or evidence of bank transfer at the same time we are made to sign the Discharge Vouchers. In Nigeria today, we are not getting "indemnity" in line with the definition of the underwriters themselves and to make us to sign papers to discharge you of your liability which ends up not discharged up to 3 months after is to say the least unacceptable irrespective of whatever the law says.
For so many years, we have been seeing publications as to the names and amounts paid to our members as claims. This is in utter disregard for the duty on both parties to maintain "privity of contract". After all, we do not go to the pages of newspapers to advertise the amount we pay to you as premium and even banks do not advertise the names of the people they had granted loans talk less of the deposits they had paid back. We will demand instead and in the best interest of your business that you now publish the following on monthly basis:
Names of policy holders whose agents are no more with you but the clients have benefits with you.
Outstanding death claims for which you cannot trace the beneficiaries.
All outstanding claims of more than 3 months in your records and the reason for the delay.
Your business is in a way unique, funny and somehow awkward in the sense that it is the careless and unfortunate people who get rewarded by you from the money of the careful and fortunate people. In some other countries, the insurance industries provide entry gift items, mortgage loans, free biannual comprehensive medical test and a host of other benefits to ensure that even those who do not make claims also get something back for their patronage. We demand that you start this in 2014.
Do Something For The Larger Society.
In some other countries, the fire brigade of the insurance industry normally gets to the scenes of incidents even before that of the state. We see ambulances and towing vehicles that belong to the insurance industry in other countries. Apart from being of service to the larger society, these facilities also help in loss reduction to the insurance industry itself. We expect the governing councils of the NIA and NCRIB to show Nigerians how they want to contribute to safety of lives and properties in general as the Insurance Industry in Nigeria.
B. Our Expectations From The Regulator – NAICOM
1.Stronger Focus On Consumer Protection- ‘The purpose of insurance supervision is to promote the maintenance of an efficient, fair and stable insurance market for the benefit and protection of the policy holders’ - IAIS.
Sixty Four (64) out of the 103 sections of the insurance Act 2003 are for the protection of the policy holders. Ralph Nader and Wesley Smith wrote further - "Insurance is a ‘fear’ contract. Where the fear of the risk materializing is lower than the fear of getting compensation, insurance has failed in that society". Our members have confidence in insurance mechanism but they don’t trust the Nigeria insurance practitioners. Getting Insurance compensation here still looks like a game of luck
The National Insurance Commission (NAICOM) has done a lot to ensure the safety and solidity of the Nigeria insurance market at the international level– IAIS Core Principles, IFRS rules, risk – based supervision, solvency – focused regulation. With all these, the Nigerian insurance consumers are still largely dissatisfied. It is very important for NAICOM to look inward and see how it can better the lots of the Nigerian insurance consumers through the provisions in our local insurance laws i.e. the Insurance Act 2003 and the NAICOM Act 1997. The following are our expectations from the regulators within the year 2014.
Let it be made clear that our members fully support the implementation of Sec 50(i) of the Insurance Act 2003 i.e. the "No premium No Cover Provision" and we even issued a press release in that regard which was carried by the newspapers. To the best of our knowledge however, NAICOM will be failing in its sole duty – protection and fairness to the policy holders – if it continues to enforce Sec 50(i) of the Act in isolation of sections 15(i), section 55(4) and section 70 (a) and (c) of the Insurance Act 2003. Section 15(i) gives the insurer up to 60 days to issue the policy document, being the evidence of the contract for which we must have paid one year premium in advance before he touches our application and section 55(4) says "Nothing in this section shall prevent an insurer from repudiating a contract of insurance on the grounds of a breach of a material term before the occurrence of the risk or the loss insured against. Section 55(5) goes further to say "fundamental term means a warranty, condition, or other terms of an insurance contract which a prudent insurer will regard as material and relevant in accepting to underwrite a risk and in fixing the amount of premium. Now, the premium has been fixed and collected in full, in advance and mid-way, the "prudent" insurer can repudiate the contract. Nothing was mentioned about full or partial refund of our premium both in the law and in practice. We the insurance consumers in Nigeria are definitely not comfortable here and we expect the regulator to protect us from this possible fraud. The financial crime of carrier’s GIT Warranty in a GIT policy is already a case in point
Section 70 (a) (c) also state:-the insurer shall:
Where he does not accept liability, deliver a statement in writing, stating the reasons for disclaiming such liability to the person making the claim not later than 90 days from the date on which the person delivered his claim to the insurer.
In express terms, section 70(a) and (c) permit the "prudent" insurer to meander and toy with, for upward of 6 months, the entitlement of our member who had probably lost his only means of livelihood, or the only car that takes him, wife and children to work and school or the widow who lost the only bread-winner and the future of everybody now looks bleak when the "prudent" underwriter did not suffer for one day to collect our premium. And it did not stop there, It is only if the "prudent underwriter" refuses to pay after six (6) months that we can apply to NAICOM to take from the insurer’s statutory deposit with the CBN – another 3 months process. By implication in Nigeria, it is not an offence for an organization that collected premium from us 1 year in advance, to pay our claim one year in arrears. We hope that the Nigerian insurance consumers will not be pushed to embark on the other side of "No Premium No Cover" which is "No Claim No Peace".
NAICOM should as a matter of urgency go back to the drawing board and issue market conduct directives to its operators to bring the period for payment of our claims to not more than 30days which is still within the contemplation of the law. NAICOM should also give proper interpretation to sec 70(c) of the act and note that there should really not be any outstanding claim for more than 90 days in the books of any underwriter. This is the only way that NAICOM can claim success, within the context of its duty, in the implementation of section 50(1) of the Insurance Act 2003.
Section 83(i) of the Insurance Act 2003 stipulates continuation of the life assurance business of insurer in liquidation to be transferred as a going concern. Most of the time that companies die as a result re-capitalization, or taken over or suspended by NAICOM, the hard- earned life savings of our members also die or get suspended in the process. A worrisome case now on hand but can still be salvaged is that of Spring Life Assurance. Thousands of our members have benefit advice of over 2 years not paid by the company. Numerous policy holders of the defunct Amicable Assurance still parade our offices asking for the whereabout of that company and its agents.
On 5th Sept 2005 - the day of the ministerial pronouncement of N5.0bn MCR for composite underwriters in Nigeria - we had 103 primary underwriters in the country.
On 14th Nov 2007, NAICOM published the names of 49 underwriters who scaled the huddle. 54 insurance companies had died or lost their corporate identities. What happened to their policy holders? Out of the 23 that emerged as general business only companies, 17 were composite companies before the capital increase. To where are the life portfolios transferred? Our members could not trace them. NAICOM should mandate all the companies that acquired/ merged with others (especially life) by 2007 to make uniform publications (at least 4 times) to inform the public of the where about of their former underwriters. It is only by so doing that NAICOM would be protecting the policy holders in Nigeria in the manner that is most beneficial to them.
Conclusion
We, the Nigerian Insurance Consumers have henceforth resolved not to continue to leave the Nigerian insurer to God. We will go to any legitimate, intellectual, civilized and technical level to protect the interest of our members and defend their rights.
The Nigeria insurance industry - the operators the regulators and the shareholders should all be reminded of the fact that they are remunerated and compensated from our premium. We deserve better treatment for our patronage. We hereby appeal to the Insurance Practitioners not to be arrogant about this. The era of "and so what" or "you can go to hell" is over with the Nigerian Insurance Consumers. This is why we first sought affiliations with the Consumer Protection Council of Nigeria before making our public outing. The Nigerian insurance consumers have been deprived, traumatized and treated with arrogance in the past 93 years to the extent that the Insurance Practitioners even set up some organs within their market associations for us to bring our complaints to them as the judge on matters where they are also the accused. We are ready to forgive the past but we cannot forget. If therefore Nigeria is the 6th most populous country in the world but our insurance performance is number 60, if we are the 2nd largest economy in Africa but our insurance performance is no. 5, if there is no single insurance company in Nigeria that makes the list of the biggest 15 in Africa, if the Nigeria Insurance Industry does not become relevant in the financing of our national budgets or in the capital market response, the practitioners should not go too far for the answer – it is the result of the way you treat your customers. With an Insurance Industry that commands the trust, respect, and confidence of the Insurance Consumers, our governments will not to finance our roads, airports and other infrastructure through "Concessioning" as Insurance is usually a veritable source for generating funds for projects of national development. We the Insurance Consumers Association of Nigeria (INSCAN) are ready to support and collaborate with the Nigeria Insurance Industry in its strategic role of protecting, driving and leading the Nigerian economy as it is done in other parts of the world.
Thank You,
Yemi Soladoye.
National Technical Adviser (NTA)
Insurance Consumers Association of Nigeria.
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