Dilemma As Unpaid Claims Set Policy Holders Against Insurance Firms

Aggrieved policy holders have turned on the heat in the insurance sector over non-payment of claims by ailing companies.

Mack Ogbamosa, Wunmi Chroma, Ankurufu Tsonga, Toyin Olayinka, Dosunmu-Adeyemi Oluwatoyin, Shola O’Neil, and Eka Esang are in a dilemma. Also in this boat are Eze Charles, Gentle Onyeoma, Abidemi Aladelola, Cynthia Inofe and Vera Ogulu. They all invested in some insurance products in companies such as IGI Insurance and Standard Alliance Insurance. At the maturation of their investments, things fell apart and years after, they are battling to get back their money.

Ogbamosa invested in an Income Protection Policy (IPP) with Standard Alliance Plc in 2009. By March 2017, he had paid N3,321,075. In 2017, he requested to terminate the policy because of his daughter’s ill health which required surgery. The company’s marketer, Mr. Philips Igho, advised that he should take a loan using his policy as collateral. He was given a loan of N2 million at 15 per cent interest. After liquidating the loan, his account officer, Lola Fajobi, advised him to write for the termination of the policy in 2019. He signed the discharge voucher of N1,436,790.64 kobo in the presence of Fajobi on April 5, 2019.

“For more than two years now I have been fighting to get my money from the company,” he said.

He has written many letters to both Standard Alliance and the National Insurance Commission (NAICOM) over the issue.

For O’Neil, his trouble also has to do with Standard Alliance Life Insurance. He invested in an ‘Income Assurance Plan’ maturity benefit, which matured in May 2020.

“The investment was done in June 2010 for 10 years. As the name implies, it is meant to protect my income. Nearly one year after maturity, I am yet to get my payment, despite several efforts and visits to the company’s office in Effurun-Warri. On my first visit, I was told it could take up to three months to process my claim. I felt it was irresponsible to have me wait for three months when the company knew from the first day that the policy would mature in May 2010. Up to date, I have not been paid. I have also engaged NAICOM via their Twitter handle, but that too has failed to yield any result. My experience with Standard Alliance is a very painful and sad one and it is the same for many others like me who besiege their offices daily. The regulatory agency should note that this is one of many reasons Nigerians are sceptical about taking up insurance policies. NAICOM, which has the responsibility of, among others, protecting insurance policyholders, should take up this matter and ensure that Standard Alliance lives up to its commitment to me and pay my overdue matured benefit,” he said.

Chroma also invested in a Standard Alliance policy and contributed for 10 years.

“Now they are nowhere to be found in Akure. Their number isn’t going through. God punish all of u thieves,” Chroma said.

Like Chroma, Tsonga is also after Standard Alliance. However, Esang’s and Charles’ cases are against Niger Insurance. Esang said the company is owing him N1 million for over two years. Aladelola, Inofe and Ogulu want IGI to pay them for policies that have long matured.

Obligation

The obligation of an insurance company comes under both common law and statutory law. An insurance company’s duty of good faith and fair dealing means it must always act in the client’s best interest. This responsibility, implied in all insurance agreements, prevents the company from acting in bad faith in transactions involving claims.

Hundreds of clients who had various insurance policies with the companies are frustrated as the companies’ marketers, agents, managers and top officials at their various branches have gone underground and become incommunicado.

Standard Alliance troubles

The company has not held its Annual General Meeting (AGM) for two years. Also, its account has been hidden from the public since 2018. Besides, the Nigeria Insurers Association (NIA) also does not have Standard Alliance’s result as shown in their yearly digest.

The company’s independent auditor, BDO Professional Services, in its report signed by Olugbemiga A. Akibayo on August 7, 2018, admitted its liquidity challenge.

“Without qualifying our opinion, we draw attention to the shortfall of N1.477 billion in assets cover indicating that the company was not able to generate adequate liquid assets to cover the policy holders’ funds. Due to the large number of policies underwritten by the company, there is a risk that the revenue recorded in the financial statements and the flow of premium information from the underwriting systems to the financial reporting ledger may not be completely accounted for,” the report said.

All efforts to get the reaction of the company from the Divisional Head, Human Capital Management/Administration, Richard Ohoreoghene, failed.

In a reply to our enquiries, NAICOM’s Head, Corporate Communications, Mr Rasaaq Salami, said: “Your complaint has been forwarded to the Complaint Bureau Unit of the commission for necessary action. They will reach out to him.”

Niger Insurance’s battle

Niger Insurance Plc has been battling to sell off the company’s real estate and investment property valued at N15 billion since 2019 to improve its liquidity and ensure reserve adequacy for better business operations.

The company was one of the biggest insurance companies in the sector but is now unable to pay claims worth billions of naira.

Its Managing Director/Chief Executive Officer, Edwin Igbiti, told The Nation on phone, that the property has been put on sale but it has been difficult due to the economic challenges.

He said: “We were paying the claims. But the accumulation of claims on the ground has continued to rise and that is why it looks as if we are not paying at all. The delay in claims is due to the challenge of getting buyers for the assets that we aim to sell.

“Presently, investors are doing due diligence. But the best option we are looking at is to sell the assets quickly because the asset is our money and once, we dispose of them; the money will be at our disposal to unlock our liabilities.”

IGI’s dilemma

IGI Insurance was also one of the leading brands in the sector. Unfortunately, the company has been struggling for almost a decade now.

Industry observers said the death of the founder and Executive Vice Chairman/CEO of the company, Remi Olowude, who died in 2014, further drove the company into more troubles.

IGI had been recording a poor performance in the insurance market as the company failed to submit its financial results to the regulatory authorities as and when due since 2012. Also, the company has not paid its staff for some time now.

In 2015, NAICOM issued a regulatory order on the company and took over its operations. The commission directed IGI to appoint an auditing firm from amongst KPMG, PWC and Deloitte to conduct a comprehensive financial review of the company and submit the report to the commission within two weeks of the date of the regulatory order.

The firm was to undertake a comprehensive review of IGI’s accounting system; conduct capital verification and validate the financial position of the company as of July 31, 2015.

The company’s spokesperson, Mr. Steve, in a telephone conversation with the newspaper, said: “There is no doubt that we have some challenges. What we have been doing is to get investors to inject fresh funds into the company. We have also been trying to sell our assets but we have a challenge in getting buyers due to the economic challenge. We keep giving all our claimants confidence that we will pay and we are not running away. They should please be patient with us.”

NAICOM feeling the heat

The Commissioner for Insurance, Mr. Sunday Thomas, said he is deeply pained by the inability of the companies to pay claims to the aggrieved policyholders.

“We don’t want a situation that will bring about a run on the insurance sector. Imagine today, if somebody complains that he cannot get his money from the bank and CBN pays from the bank’s deposit. What do you think will happen to even those who don’t have issues accessing their funds? There is a likelihood that they will think that something is wrong. People will run to both healthy and unhealthy companies to withdraw their money and the company will die even before its time.

“But beyond this, the statutory deposit is mostly small and may not be able to pay off all liabilities. So how do we approach this? The most likely thing is that we are going to have to do it on a first-come, first-serve basis. Will this be fair to all? The largest amount in their statutory deposit is probably around N300 million for life and non-life companies while composite companies have N500 million. So how many claims can we pay with this? If, for instance, a corporate concern like Mobil applies to the deposit for an outstanding claim, what will be left to use for small policyholders that have smaller claims to collect? What are you going to tell them? The option is there to be used and we believe that some of the steps that we are taking when what will be in the statutory deposit will be big enough, things will be different. In any case, we don’t believe that we will still have companies that will be owing to the extent of us trying to access their statutory deposit.”

When asked if the commission can stop the companies from receiving new businesses and why it has not done so, Thomas said: “Yes, we can and we have done it before. We have stopped some companies from taking new business but we don’t have to announce it.

“We are concerned about all the stakeholders. The law requires us to be concerned about the policyholders and other stakeholders. I can feel the anger and pain of all claimants and I assure them that we are doing everything in our power to address the issue.”

Expulsion claim

The Nigeria Insurance Association (NIA), the umbrella body of all insurance companies in the country, is said to have expelled Niger, IGI and Standard Alliance from the association.

The Chairman, Mr. Ganiyu Musa, had earlier told reporters that the association was been doing some house cleaning.

“We have to be very harsh as it were now. We have an active committee on discipline and conflict resolution. The committee has been strengthened and empowered. We now go beyond the usual refrain or chastisement to taking active steps to discipline erring members. As we speak, we have a few of our members that have been suspended and some are about to be expelled. In a few weeks when the whole processes are completed, we will release the names of the erring companies to the public.

“We believe it is very important to send the message to our members, that when you carry the NIA badge, it should count for something. There is no amount of marketing that you can do, if the experience of the insuring public is bad, then we cannot make progress in the insurance industry. We believe that after cleansing yourself of bad image, we can go back to the public to say all the good things that insurance stands for,” he said.

IGI denied the speculation that it had been expelled.

Its spokesman said: “Yes, it is true that the NIA received complaints from our clients, but we have since resolved it. The only issue is on reconciliation as NIA refuse to remove the claims we have paid from their record. We also had a problem on reconciliation of our membership subscription that we are meant to pay which we are about to do.”

Standard Alliance and Niger Insurance did not respond to our enquiries on the ‘expulsion’.