Leadway Assurance explains consortium role in FCT group life cover

Underwriting firm, Leadway Assurance Company Limited has faulted reports alleging default on the part of a consortium of insurance companies (including Leadway Assurance Company Limited) to meet the obligations on claims’ payments due to deceased staff members of the Federal Capital Territory Administration (FCTA), under its Group Life Insurance scheme.

The Company said “the value of insurance is in safeguarding individual wealth and it is responsibility as insurers, to ensure that it protects the insured and pay their claims when they have suffered losses especially when a loved one has passed on.

According to the underwriting firm, the facts of the matter are that the FCTA Group Life Insurance scheme was being handled by a consortium of underwriters starting from 2007 to date; while certain claims were reported between 2007 and 2012.

“The process is that every notified claim must be properly documented before a discharge voucher can be issued. Payment is then made in accordance with the policy contract subject to any prevailing law governing payment of benefit at the time of settlement, which, in this case, was the Pension Reform Act (PRA) 2004.”

“Some of the claims received were not properly documented and so could not be concluded till 2015 when full documentation was received.”

“By the time payments were due to beneficiaries, the Pension Reform Act (PRA) 2014 was in effect”

“Before the PRA 2004 was amended by the PRA 2014, life assurance benefits had to be paid to the deceased employee’s Retirement Savings Account (RSA) with their named Pension Fund Administrator (PFA). Access to the deceased account could then only be secured under a Testamentary WILL of the deceased or by Letters of Administration issued to deceased legal representatives under Probate following intestacy.

•The review of the PRA 2004 came as a result of public outcry on the difficulty/inability of the families of deceased persons to promptly access life assurance benefits from the RSA of the deceased persons.

•The PRA 2014 now allows benefits to be paid directly to the named beneficiaries of the deceased persons and the responsibility for compliance is on the insurer.

•In keeping with the PRA 2014, we issued our cheques in favour of the named beneficiaries of the deceased members of the FCTA.

•The FCTA is however insistent that for all claims reported prior to the PRA 2014, payment must be administered through the named PFAs of the deceased members in accordance with the PRA 2004 rather than as amended in 2014. It should be noted that some payments had already been issued in the name of beneficiaries and collected.

•In order to prevent further hardship to claimant beneficiaries while a tussle continues between the FCTA and insurers, the decision was finally made that payment cheques will be reissued in the name of the requisite PFAs as required under duress by the FCTA. The only delays being experienced are for claimants whose PFA details are not provided or where the claims substantiating documents have not been provided.

The foregoing shows clearly that this is not a situation of insurers refusing to pay claims as alleged, but rather the employer of deceased persons  insisting on a tenuous position which, to prevent further hardship to the claimant beneficiaries, the consortium of insurers have acceded to.”

In closing, the statement said “The insurance industry is one that we are carefully building up with the help of stakeholders each of whom must understand that the value of an insurance contract is in the claims that are paid. Also, now more than ever, the National Insurance Commission, the primary regulator of the Nigerian Insurance Industry, is committed to enforcing standards of conduct governing the Industry and by extension ensuring better protection for policy holders, beneficiaries and third parties to insurance contracts. Indeed, according to verifiable industry statistics for 2014 (NIA, Agusto& Co Insurance Industry Research Report), over N20.78 billion was paid cumulatively for Life Business alone, of which Leadway’s proportion was 26 percent (N5.5bn). This indeed is why we are all in business. We therefore appeal, that there must be concerted efforts to ensure the growth of insurance rather than propagate further distrust and suspicion, the Company pleaded.