NAICOM laments Nigeria’s 46.1% claims ratio
By Patience Ikpeme
The National Insurance Commission (NAICOM) has lamented that Nigeria has the lowest claim ratio in the world, at 46.1%.
The globally accepted standard for claims is 60 to 90%, which places Nigeria way lower compared to other countries.
Insurance companies have been urged to invest more in creating awareness in form of advertisement, which will be detailed enough on how claims can be made.
The claims ratio is another measure used in the insurance industry to assess the proportion of premiums paid out in claims to policy holders.
In his speech during a retreat for insurance journalists in Akwa Ibom, the Commissioner for insurance, (CFI), Mr Olorundare Sunday Thomas cautioned insurers who default on claims payment to policy holders to desist from such act, as there will be strict penalties for default.
Mr Sunday Thomas also stated that the commission will name and shame defaulting insurance companies.
Mr Sunday Thomas said fore-warning has been sent out to insurance companies in form of letters to alert insurance companies to their responsibilities.
“With respect to claims, we have done a lot and we are still doing alot to ask insurance companies to be alert to their responsibilities. Recently we issued letters to insurance companies to begin to advertise, asking those who have claims to come up with their documents to enable them conclude documentation and effect payments. We have written and asked them, and given them a time frame in which to get this done” he said.
He warned insurance companies not paying claims to fully documented policy holders to be prepared to be named and shamed, and still be made to pay the claims.
Mr Sunday urged insurance companies to willingly go ahead and pay claims. And also applauded them on the claims they have paid so far
Also speaking at the event, the Assistant Director, Corporate Strategy and Special Duties, Dr Usman Jankara said “claims ratio means how much of the money you collect is actually paid back to the insurance policyholders who have suffered the claim”
He further noted that Nigeria’s claim ratio is the lowest in the world , standing at 46.1% against the globally acceptable average standard of 60–90%.
“For operators it’s good business, but from a regulatory perspective, we tell you that a low claim ratio is not a good phenomenon for our insurance industry” he said.
Dr Usman further explained that when the claim ratio is too low, it means that very little is being paid back to policy holders for every premium paid. When this happens, it means that the value proposition presented is not adding any value.