According to Ebere Nwoji, the establishment of a claims advocacy agency to serve as a middleman in disputes involving claims between insurers and the insured public is the result of pervasive mistrust and lack of faith in insurance service providers.
Untrust between insurance companies and the insured public has been sown, in part, by problems with claims payment and claim denials.
As a result, insurance management has lost over time the popular support of Nigerians. The majority of the time, the insurance companies and the insured disagree on the policy’s scope of coverage. For the insured, insurance coverage is insurance coverage whenever and wherever it is needed, and claims must be paid as soon as there is risk, whether or not that risk is specifically referenced in the policy document.
However, every policy and insurance contract has a maximum of coverage and claims requests and payments should be restricted to that unless an extension has been paid for.
The aforementioned events have significantly increased the public’s mistrust of insurance experts, to the point where Nigerians at all levels no longer take insurance operators seriously or consider their services worthwhile.
Over the years, this unfavourable perception has greatly increased the distance between insurance experts and the clients they are supposed to be serving.
Efforts by insurers
Insurance companies, for their part, have been looking for solutions by using conflict resolution organizations like the consumer complaint bureau and alternative dispute resolution organizations.
The National Insurance Commission (NAICOM), which serves as the industry’s regulator, and the Nigeria Insurers Association both report the number of disputes that were settled through these channels on an annual basis, but the fact remains that they have largely failed to reduce the mistrust that exists between insureds and insurers.
An ex-chairman of the Nigeria Insurers Association (NIA), Mr. Gus Wiggle, took action to establish a forum where he recently brought insurance practitioners and customers to a round table to brainstorm on how to bridge the enormous gap created by non-payment of claims and its attendant distrust. The need to eliminate this mistrust and bring the insuring public and the insurance managers to an equilibrium point in terms of genuine claims definition and payment was what motivated him to take action.
Wiggle is in a better position to gather insurance technocrats for such a brainstorming session that is intended to solve this lingering distrust problem to deepen insurance penetration in Nigeria by improving policyholder education. Wiggle’s positions in the Nigerian insurance industry as the former NIA Chairman, council member of the Chartered Insurance Institute of Nigeria (CIIN), and a member of the steering committee National Insurance Summit 2015 and National Inclusion Strategy.
The 2022 Insurance Advocacy Conference, with the theme “Catalising Insurance Through Better Claims Experience,” was put on by Carefirst Consult, whose lead consultant is Wiggle.
Wiggle highlighted the question of whether there was a lot or not of mistrust between customers and insurance companies in his welcome speech.
He urged conference attendees who worked in the insurance industry to determine the source of the mistrust or to disprove it.
In cases of contentious claims settlement, he claimed that his organization acts as a mediator to bring the insured and the insurance buying public to an amicable resolution.
Speaking during the conference, Mr. Odunayo Bammeke, a former group general manager of risk management and insurance at the Nigerian National Petroleum Corporation (NNPC), defined the conference’s subject and stated it meant employing claims experience to make insurance a way of life for every potential insured.
He referred to the settlement of claims as the sole indicator of trust and the first step in gaining consumers’ trust.
He maintained that all claims, whether automated or not, should be customer-friendly.
He added that claims statistics should be adequately analyzed, especially rejected claims, and that what insurers sell is claims experience.
“It might well present a chance to increase the range of product add-ons.
He claimed that insurers needed a mindset shift away from the presumptions that all claims were fraudulent and that particular consumers and risks were being unfairly profiled.
In his advice to the insurers, he advised the underwriters of insurance to strive for a better level of self-regulation.
Additionally, he believed that claim staff evaluations should be centered on the turnaround time from notification to settlement rather than how much the department is able to save the business.
Additionally, he recommended the insurers to include customer satisfaction surveys in their system after each claim procedure.
Adetola Adegbayi, Executive Director Technical and Operations of Leadway Assurance, identified four business trust models that insurers should adopt: integrity, result, intent, and capabilities.
She defined the claims ratio as the proportion of insurance claim expenses a company pays out compared to the premiums collected during the fiscal year. She believes that a good claims ratio should be between 75 and 90 percent.
She outlined the various business insurance classes that were provided in 2021 and their claims ratios, pointing out that the amount of fire insurance during that time was N47,888.27 billion, with a 72.22 claims ratio. With a claims ratio of 40.85 and gross premium income of N36,587.63 billion, General Accident.
Motor has a claims ratio of 40.13 percent with N47, 515,23 billion. Marine and aviation generated N33, 107.78 billion total gross premium income with a 39.03 percent claims ratio. The industry saw an average loss ratio for fire insurance of 88.31%.
She clarified that industrial homes have a higher loss percentage.
According to Adegbayi, the motor loss ratio for the time period was 39 percent, indicating that insurers were underpaying claims either because individuals were not filing them or because they had a tendency to be very forgiving after an accident.
Because they lack the time to insist on claims procedures, she said people who forgive are probably not wealthy enough and suggested that they hire attorneys to represent them instead.
Results of Mistrust
A close assessment of current events in the sector reveals that mistrust and its detrimental effects have continued to be the biggest obstacle to the expansion of the insurance industry over the years.
Previously, several business owners worked to improve the sector’s reputation and instil some legitimacy and goodwill into it. They achieved this by starting a publicity-based image-washing campaign.
As a result, they were forced to form the insurance industry image committee, which was presided over by the late Yinka Lijadu, an industry veteran. This had little impact, leading NIA and NAICOM to establish the consumer complaint bureau.
The bureau’s job was to make sure that legitimate claims are paid promptly. Any member of the insurance public who has unresolved claims should file a complaint with the customer compliance bureau, which is present at both the NIA and NAICOM.
The bureau, according to NIA, is a venue where unhappy claimants can file grievances against insurance providers in Lagos.
The necessity to improve the public’s negative view of the insurance business was cited as a key justification for the bureau’s introduction by Mr Olusola Ladipo-Ajayi, the then-NIA chairman.
“Over the years, incidents of underwriters’ unsatisfactory response to the settlement of claims seem to have contributed to the poor public perception of insurance as a financing option,” he claims.
“Today, we want to cast off the burden of the disgraceful past and create a new beginning for the insurance industry, one that is based on the fundamental tenets of trust and absolute good faith.”
According to him, the NIA came up with the idea of creating a Customer Complaints Bureau after conducting a thorough analysis of the situation, particularly with regard to confidence-building mechanisms. This bureau is set up to provide the necessary platform for intervention in cases of dispute that cause delays or non-settlement of claims.
He claims that the bureau’s goals are to act as an alternative dispute resolution mechanism, offers an impartial opinion on disagreements that might arise in any insurance transaction between association members and policyholders, and lower the cost of obtaining justice in regard to insurance-related matters, particularly those involving association members.
Others, according to him, include fostering timely and effective service delivery as well as building confidence between the insurance business and the public that purchases insurance.
According to Ajayi, the bureau would participate in discussions, give information, respond to inquiries, and assist in formulating solutions to problems that might be presented before the body.
According to section 8(a) of the National Insurance Commission Act No. 1 of 1997, the NAICOM’s Complaints Bureau was a division created inside the organization. It provides as a forum for the public to file grievances against insurance providers and middlemen. The Bureau is not a substitute for the legal system, where some legal conflicts must unavoidably be handled. The National Insurance Commission Act No. 1 of 1997’s section 8 allows the Commission to conduct investigations into the activities of insurance companies and intermediaries, and its conclusions may be relevant to this provision.
The commission stated that the bureau was to deal with all insurance disputes resulting from insurance policies issued by registered insurers, including unreasonable delays in resolving legitimate claims, denials of liability when the complainant is convinced that there is liability, and other issues relating to the fulfilment of obligations by insurance companies and intermediaries.
The issue of the unfavourable perception that results from claims denial have remained despite the fact that these bureaux have been resolving cases of delayed claims. As a result, an independent insurance technocrat established a new claims advocacy organization called Carefirst Consult.
When asked to describe the claims behind Carefirst Consult, Wiggle responded, “Carefirst Consult is for third parties. Since we have been in the insurance industry for 36 years, we have encountered a number of problems that have occasionally manifested in the claims settlement process. It became more noticeable during the Endsars when insurance companies began to reveal some of the fine language in the policy documents to the insured and reminded insurance purchasers that some of the policies did not cover their risks.
What do riots and strikes have to do with automobile insurance? At that time, insurance firms released their fine print, but the question is: Was the insured subject to it?
Wiggle observed that this signalled the start of a deteriorating relationship between insurers and those who are insured.
He claimed that First Care Consult had entered the market to broker the missing alignment between insurers and the insured.
“For the insured, we are aware that there have been numerous incidents involving third-party motor insurance, but they are unsure of how to proceed. This is because the majority of them purchase third parties without understanding the extent of coverage. You see them roll up their sleeves after an accident and begin to beat themselves, so we try to educate them that they shouldn’t do that instead of taking pictures of the wreck and, if they have insurance, taking pictures of their insurance papers as well as mine before contacting the insurance company.
He stated that the majority of insurance companies now have automated help desks, which make filing and processing claims incredibly simple.