NAICOM simplifies claims process to boost insurance sector

Joy Agwunobi

For years, the Nigerian insurance industry has grappled with a persistent crisis of public trust. While many Nigerians recognise the value of insurance in providing financial protection against unforeseen losses, skepticism remains widespread. This distrust stems largely from the negative experiences of policyholders who have encountered significant challenges in accessing their claims.

Reports of prolonged payment delays, outright refusals, and burdensome documentation requirements have further weakened confidence in the sector. As a result, insurance has become one of the least trusted financial services in the country, discouraging individuals and businesses from fully embracing it as a reliable safety net.

The persistent lack of trust in Nigeria’s insurance sector has significantly contributed to its alarmingly low penetration rate, with less than 2 per cent  of the population actively subscribing to insurance policies.

Comparative reports show that Nigeria’s insurance industry continues to struggle in gaining traction, lagging behind several African counterparts. In contrast, countries like South Africa and Kenya have achieved higher insurance penetration rates, largely due to stronger consumer confidence. The skepticism in Nigeria is not without basis, as many policyholders have shared experiences of being shortchanged or frustrated by cumbersome claims processes.

According to FT Partners’ fintech industry research, South Africa leads the continent in insurance penetration by market share at 12.2 per cent, while advanced EMEA countries record 8 per cent, Kenya follows with 2.2 per cent , Egypt stands at 0.6 per cent, and Nigeria remains at a significantly low 0.4 per cent.

Against this backdrop, the National Insurance Commission (NAICOM) has taken a decisive stance, urging insurance companies to simplify their claims processes and honour their contractual commitments. The regulatory body emphasised that a transparent and hassle-free claims settlement process is essential to restoring public confidence and ensuring the sector’s long-term growth.

NAICOM stressed that making claims payments more accessible and efficient would not only improve the industry’s reputation but also enhance consumer experience.

At the 17th meeting of the Insurance Committee, a bi-monthly gathering of insurance executives and NAICOM officials in Lagos, the primary focus was on the urgent need for operators to regain public trust. Olusegun Ayo Omosehin, the commissioner for insurance and CEO of NAICOM, underscored that the most effective way to regain public confidence is through seamless claims payments.

Omosehin emphasised that the focus of his administration is not just on claims payment but on ensuring that claims are settled without unnecessary stress. He stated that his leadership is particularly keen on making the claims process easier and reducing the difficulties policyholders face.

“It is not just about paying claims; it is about making the process as smooth and hassle-free as possible for the insured,” he said.

Despite claims being paid by insurers, Omosehin expressed concerns that the industry has not seen a significant reduction in outstanding claims. This situation, he noted, is unacceptable and requires immediate intervention. To address this challenge, he urged insurers to work closely with brokers and customers to expedite the resolution of pending claims.

To address this, he urged insurers to collaborate with brokers and policyholders to find ways to reduce outstanding claims. He disclosed that NAICOM has set up a committee to streamline documentation requirements, making it easier for claims to be processed. A meeting involving the technical committee of the insurance industry, the Nigerian Council of Registered Insurance Brokers (NCRIB), and the Nigerian Insurers Association (NIA) has been scheduled to deliberate on reducing excessive documentation, which is often the primary cause of payment delays.

A major focus of the commission’s reform efforts is Third-Party Motor Insurance claims. Omosehin revealed that NAICOM would soon release new guidelines to streamline claims arising from these policies. He explained that, in the past, claims were rarely pursued under third-party insurance due to weak enforcement and the low premium rate of N5,000. However, with stricter enforcement measures now in place and the premium increase, insurers must be prepared to honour claims under the policy.

“As a Commission, we are committed to strictly enforcing the law and taking swift action against any insurer failing to meet their claim obligations. Simply put, if a company cannot honor legitimate claims, it has no place in our industry,” Omosehin asserted.

Beyond claims processing reforms, NAICOM has also called on insurers to enhance training for their agents. Many policyholders have fallen victim to misrepresentation and mis-selling of policies due to poorly trained agents. To tackle this issue, NAICOM has mandated insurers to ensure that their sales representatives are adequately trained to provide accurate information about insurance products, thereby reducing instances of mis-selling.

The commission’s renewed efforts signal a turning point for Nigeria’s insurance industry. By enforcing stricter regulations, simplifying claims procedures, and addressing public concerns, NAICOM aims to restore confidence in the sector. If these measures are effectively implemented, the industry may finally shed its reputation for inefficiency and build a more trustworthy relationship with Nigerian consumers.