Claims payment, and transformation in the insurance industry

The story of how insurance services in Nigeria respond to claims payment is changing rapidly as a claim was paid in less than two hours, after an incident was reported, a situation which has won the applaud of analyst in the sector.

The irony of it is that the old age long impression that insurance companies don’t pay claims continues to linger, and is transferred from one generation to the other, by those who have not had any experience or taken out any insurance policy in their life.

This remains a major problem for the nation’s insurance industry that must now tell their story, about the good things the industry is doing, how they are paying claims, helping people to return to their businesses after loss, or how dependants of deceased people got on with life after the death of their beloved ones.

Insurance is helping families to pay their children’s school fees, pay house rents, pay mortgages and sustain standard of living after demise of their bread winners.

Like the minister of Finance, Kemi Adeosun said recently, insurance pays huge sums of money on claims annually but nobody tells the story, PFAs pay huge amounts of money monthly on benefits and no one is telling the story, but the only people that talk are those who have issues with their claims.

This is why the on-going rebranding campaign in the insurance industry must be refocused, to tell the story and tell it well.

A recent experience of a Consolidated Hallmark Insurance (CHI) customer, who had an accident with his insured car and got his claims paid in less than two days, was unbelievable, indicating a major transformation that has taken place in the Nigerian insurance industry, which should not go unmentioned.

The customer had taken out a comprehensive motor cover with CHI for his Toyota Camry, and has paid premium for the year before his car had the accident.

Uchenna, the customer tells his story to BusinessDay.

“I had an insurance policy with CHI and I had paid my premium for the year. I was driving my car two weeks ago on a Saturday evening after visiting a friend at his office at about 7pm. There was some traffic at Ilepo Round About, along Iyana-Ejigbo Ikotun Road, and my lane was directed to move by people controlling traffic there. To my surprise, a jeep came from behind and hit my car damaging the boot, back rear light and the bumper, while I also hit a Sienna Car right in my front. Before we knew what happened, the jeep escaped and we were left to our faith.”

“I took photograph of my car, showing the damages, and on Monday at about 11am I contacted CHI, my insurance company and reported the incident. I thought they were going to feel bad because I have brought problems to them, but surprisingly, they were very sympathetic, and more concerned about my safety, asking “hope you did not sustain injuries.”

“They asked me to send the photograph of the accident car, and also contact my mechanic to send a quotation, while they also sent me a claims form to fill and submit immediately. As soon as my mechanic sent me a quotation and I forwarded to them, they called him on the telephone number in the invoice he sent, agreed with him the cost of repairs and purchase of damaged parts. Before 4 pm on that same Monday, they sent me discharge voucher and their offer, and I completed the form and returned same”.

“The most exciting thing about this interaction was the promptness, and the eagerness to ensure I was settled very quickly, so the chain of email communication was unbelievable, far from the impression so many people have about insurance.”

According to Uchenna, before the close of work on Tuesday, his claim was paid into his account, and before then, he was receiving regular mails that his cheque was being processed; that his payment will be made soon and this came to pass, the insurance customer said.

Insurance companies in Nigeria have proven in recent times that they are liquid and have the required capacity to meet claims obligation when losses crystallise. This is evident in quantum of claims paid in major losses that have hit the industry in the past few years.

Examples are millions of dollar claims paid on Dana air crash, billion naira claims on Nigerian Bottling Company fire incident; Dangote factory fire claims and Friesland Foods West African Milk Company (WAMCO) flood claims.

In 2014 insurance companies in Nigeria paid total claims amounting to N87.007 billion; This rose to N105.22 billion in 2015. As at 2016 financial year, underwriting companies in Nigeria paid claims totaling N119.63 billion, which is no mean feat when you consider the challenges associated with accessing fund for business, as well as associated high interest rates.

Modestus Anaesoronye