The rising rate of insurance claim defaults is unsettling in the sector, and the insured is fast pitching against the insurers.

Already, some of the aggrieved policyholders have threatened to take it out against insurance agents who sold them policies but did not, at the expiry of the contract, stand by them to get their claims paid by the insurance firms.

Findings showed that some policyholders have gone to the extent of threatening the agents.

Checks revealed that some non-claim-paying insurance firms have weak financial bases while others are battling various internal challenges.

The Guardian gathered that no fewer than eight insurance firms have defaulted, owing policyholders N38.5 billion in claims and annuity payments as of the second quarter of 2024, according to the industry data.

The sector reported claims of N297.9 billion and paid claims of N259.4 billion. However, rising from what was owed as of the second quarter of 2024 to date, the industry may be owing insurance policyholders close to N50 billion.

The concerned companies had earlier collected yearly premiums from policyholders but became illiquid and failed to compensate policyholders.

Also, those selling annuity plans among them were equally denying annuitants’ payment. When they fulfilled their obligations, they usually came late, after several protests from customers.

The most abused insurance policy by the underwriters is a third-party motor policy, which is being sold at N15,000 per annum.

The default is because most motorists do not request claims because of the bureaucracy involved.

The companies see these premiums as free money, which they have survived on for years while some of their managing directors and top officers live off it.

For years, some firms have not briefed their shareholders through yearly general meetings nor filed their yearly financial statements to the National Insurance Commission (NAICOM).

Nigerians are concerned that if this continues, the issue of trust which has been a major challenge in the sector will worsen, leading to a loss of economic value.

This has been a major challenge in the industry.

In some cases, firms with huge claims only attend to N100,000 and N200,000 requests.

While the erring underwriters mostly claim they are looking for foreign investors that would invest in them to make them financially stronger and stable, the regulator keeps mum, tolerating their excesses despite several complaints.

This violates the stipulations of the Insurance Act 2003, which mandates NAICOM to close down defaulting companies after six months and evidence of five complaints of failure to pay claims promptly.

Checks showed that the nonchalant to claim issue had continued for years in the industry until recently when the commission ordered African Alliance Insurance Plc. to resolve and ensure the settlement of outstanding claims and submit turnaround plans to the commission for consideration.

This follows complaints by annuitants and insurance claimants against the insurance company regarding the company’s delay and inability to fulfil its obligations as and when due.

The commission had earlier summoned the board of African Alliance Insurance and ordered the company to settle outstanding payments due to customer complaints.

In addition, the board was equally directed to immediately submit a turnaround plan for addressing the challenges faced by the company, which necessitated putting the company under the Commission’s Regulatory Order.

Given the heightened challenges, NAICOM said the company should expect further actions if it failed to address the issues within the timeline the company was given. (The Guardian)