AIICO Insurance, AXA Mansard Insurance, and Coronation Insurance’s contract liabilities rose by 20.61 per cent to N308.52 billion in 2023 as insurers’ poor attitude towards claims payment remains challenging.
In the unaudited financial statements for the year ended December 31, 2023, the three companies’ insurance contract liabilities rose by 20.61 per cent to N308.52 billion from N255.79 billion as of December 31, 2022.
The reports show that AXA Mansard reported the highest percentage as its insurance contract liabilities rose by 36.16 per cent to N75.03 billion in 2023 from N55.099 billion in 2022.
Coronation Insurance followed with an increase of 26.76 per cent to N16.25 billion from N12.82 billion, while AIICO Insurance posted a 15.64 per cent rise to N217.24 billion from N187.87 billion.
Insurance contract liabilities represent the estimated risk an insurance company (insurer) accepts from the insured (policyholder). It is the liabilities imposed on the insurer by the contract terms.
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Analysis of the reports by The ICIR indicates that the companies’ insurance contract liabilities of N308.52 represent 78.53 per cent of their overall liabilities of N392.89 billion.
AIICO Insurance’s overall liabilities stood at N269.61 billion, AXA Mansard, N97.16 and Coronation Insurance, N26.12 billion.
Further analysis reveals that of the gross premium (revenue) of N130.05 billion earned in 2023, only N97.78 billion was used in claims settlement.
Coronation Insurance posted a 34.73 per cent increase in gross income to N24.49 billion in 2023, AIICO Insurance 32.19 per cent to N72.42 billion, and AXA Mansard 11.72 per cent to N33.14 billion.
On the total claims settlement, Coronation Insurance reported the highest percentage of 73.34 per cent to N5.78 billion in 2023, followed by AXA Mansard’s 26.33 per cent rise to N39.696 billion, and AIICO Insurance trailed behind with a 12 per cent to N52.30 billion.
Bordered by the issue of unpaid claims, the National Insurance Commission (NAICOM), the apex regulator, in November last year, mandated the Nigerian Insurers Association (NIA) to advertise the list of unpaid claims by all insurance companies in prominent Nigerian newspapers.
The issue of claim payment in Nigeria goes back to history before the establishment of the NAICOM in the 1990s, the director of Relics Insurance Brokers Limited, Abu-uwesu Yakubu, told The ICIR.
Since the establishment of NAICOM, claims payment records have improved over the years, and he pointed out that the insurance industry needs a better record of claims settlement in this era, which was misleading even though there is still room for improvement.
“Claims payment, in simple terms, means putting the insured where he was before the loss or damage to the insured item occurred. In other words, it could be called indemnity, achieved through cash payment, repair, replacement or reinstatement,” Yakubu explained.
According to him, the insuring public should be enlightened to take appropriate actions and patronise insurance broking firms for their insurance needs instead of doing so directly.
He said, “Insuring through company marketers has many shortcomings, including that most of them need to be professionally trained before being thrown to the field with humungous production targets to meet.
“More so, such a marketer may have left the company between the time you took a policy and the time the claim occurred, placing you in a disadvantageous position to pursue the claim for payment.”
Also, rather than go through the insurance companies’ marketers, he said policyholders are advised to deal with the brokers – professionals who know the best ways of getting the insured the best-fit policies that would not raise issues at claims.
He noted that it was the broker’s duty to pursue the insured’s claim to a logical conclusion as an intermediary and agent to the insured.
Yakubu, however, urged policyholders to report underwriting companies that default in claim payment to NAICOM and NIA, as both bodies have the responsibility to query any company that defaults on contract liabilities.
He also urged policyholders to report the company’s managing director to the Chartered Insurance Institute of Nigeria (CIIN), which can query the managing director of the defaulting company in a personal capacity.
“If a broker is involved, report him/her and the broking company he/she represents to the Nigeria Council of Registered Insurance Brokers (NCRIB).”
A management consultant in the insurance sector, Ekerete Gam-Ikon, had said that with the implementation of the “No Premium, No Cover” regime and recapitalisation, most insurance companies in Nigeria had more money to address their needs, including giving priority attention to policyholders that reported claims.
The most recent statistics from the NAICOM shows that the Nigerian insurance sector gross premium rose to N551.4 billion at the end of the second quarter of 2023, as against N369.2 billion at the same time in 2022.
The total premium income comprised income generated from life and non-life insurance businesses. While non-life insurance includes motor insurance, fire, general accident, marine oil and gas, and other insurance coverage, life insurance covers individual, group life, and annuity.
