This is a very interesting topic that is usually glossed over by the regulator and the operators. The real challenge with timely claims payments is the inadequate premium charged for risks. The insured and his Broker is sure that the claim will crystallize within the insured periods and they are confident that the claims would be paid. But the insurers struggle to get placement of risks at what we term “at all, at all”, hoping that there will be no claims.
The moment the claims crystallize, the insurers would keep the claims at bay, while scavenging into the next insurance contract years, to be able to meet up with an amount substantial to plead with insured and their brokers. In doing this, insurers collapse the risks pools, while scavenging. Thus, premium paid for Motor insurance pool would be diverted to settle fire claims.
The minimum actual premium for General risks should be 10% of Sum insured. This should not be negotiable and NAICOM is in the best position to peg and monitor minimum premium.
In practice what do we have? Insurers charge .0025% of Sum Insured and they claim that it’s a viable risk. What’s viable to Strong potential leading insurer, certainly will not be viable to Medium level insurer. But the two struggle for position in the same risk schedule.
Emphasis on insurance should be shifted from Professionalism to Personal Branding. This way, premium charged for risks will appreciate exponentially and thus claims payments will be swifter.
A good example is to compare the premium that people bet, with the premium for insurance risks. In Bet arena, the rule is for every 350,000 bets at N10,000.00, 5- people will receive N50,000.00 each.
Let the actuaries rework the insurance premium and NAICOM should make the results an important regulations subject.
(Enough Gas lighting.) By U Ofurum, Insurance Expert.
