Why claims settlement can still be denied by insurance companies – Naicom
By Favour Nnabugwu
Inasmuch as the National Insurance Commission, Naicom, does take lightly to non payment of claims, the regulatory body said there still grounds where claims can be denied.
Assistant Director, Compliant Bureau Life, Mrs Augustina Onojake Steve in her paper delivered at the just concluded Naicom seminar for financial Journalists in Uyo, Akwa Ibom said that there are grounds for repudiation or rejection of insurers to pay claims.
On the circumstances under which insurance companies can reject claims settlement include: The claim is fraudulent and cannot be substantiated with material facts; Notice is not given to the insurer at all or within a specified period or a reasonable time; The claim will violate public policy; The insurance contract is illegal; There is no insurable interest in case of life; There is a breach of utmost good faith; When the policy holder did not pay premium in line with Section 50 of Insurance Act 2003 (No premium, No cover); and there is a breach of a fundamental term of the insurance policy.
She highlighted reasons for delays in claims settlement can be due to the following reasons: Delay in notifying and submitting the claim form to the insurance company, Losing the insurance policy document, Non-submission of necessary documents, Making a claim after the deadline has passed and lack of timely Premium Payments.
Steve who elaborately analysed insurance claims acknowledged that the rate of payment of claims by insurers had tremendously improved unlike past years when there were frequent repudiation of claims payments which of course, cast the sector in bad light.
While highlighting the need for verified claims payment, she said: “To an insured, claims payment is the end product of insurance service. Once an insured pays the premium, all he or she expects from the insurer is to be indemnified at the critical time.
“Ability to pay claims is the real test of a solvent insurance company. The quality of claims administration can make or mar an insurance company.”
She emphasised the importance of claims to the growth of insurance industry, adding that these benefits cannot be underestimated or overlooked by any serious minded insurers.
According to her, “Payment of claims drives Policy holder’s loyalty to the insurance company, boosts Policy holder’s acquisition and recurring revenue of insurance company, publicizes the company, improves trust and promotes Insurance market development.
She concluded that insurance companies should endeavor to off set claims saying “Ideally, a prudent claims settlement promotes customer contentment and allegiance. In other words, claims settlement is the activity of insurance companies that truly portrays what they are there for, because claims settlement is the reason for insurance contract.
“Lack of trust and confidence in the Nigerian insurance industry resulting from non-settlement of claims constitute one of the biggest challenges of the industry. Non settlement of claims have negatively impacted confidence in the industry”.
Thus, insurance companies should endeavor to settle claims promptly because Claims payment in insurance contract serves as spice that attracts potential policyholders to insurance patronage.”
