The Insurance Consumers Association of Nigeria (INSCAN) has pulled its weight behind the enforcement of the 'No Premium, No Cover' policy in the country by the National Insurance Commission (NAICOM) and insurance operators.
The umbrella organisation for consumers of insurance services in the country, however, appealed to the operators to introduce premium financing programme to bridge the gap between the time policyholders would renew their policies and when premium payable would be remitted to the insurers.
Rising from an emergency meeting of the National Executives, State Chairmen and Coordinators of the association in Lagos recently, members of the association stated their unalloyed support for the full enforcement of the policy by the industry.
They also made a strong case for the introduction of premium financing in the industry to bridge the gap between when policies will be renewed and when premium for the cover gets to the insurers.
"Our association is in total support of the enforcement of section 50(1) (2) of the Insurance
Act, 2003 by the NAICOM with effect from January 1, 2013 as the provisions relate to the insured, the underwriting companies and the insurance brokers.
"We hereby enjoin the Nigerian insurance industry to consequently establish the premium financing concept as a line of business in the manner it obtains in other jurisdictions to solve this very simple problem," they suggested.
Their resolutions were communicated in a statement titled, "No Premium, No Cover Provision - Section 50 of the Insurance Act, 2003", the association noted that insurers would be justified if they repudiate claims where no premium has been paid for the cover except as provided in Section 69 of the Insurance At, 2003 regarding third party liability claims as from the aforementioned date.
The association also made case for the pro-rating of risks and premium where the full premium could not be paid upfront saying "an insured person need not pay the total annum premium debt at the inception of the cover but the insurance company will be justified to pro-rate its cover to the extent to which the deposit premium is able to carry the risks."
Insurance companies, according to the association should recognise the fact that the effective date of the enforcement is January 1, 2013 and that their customers expect fairness, equity and good conscience to prevail in their relationship business relations among other things
INSCAN is a non-governmental, non-profit organisation of the insurance consumers. Its main objective is to protect the general interest of the insurance consumers in Nigeria and to foster unity and progress between the insurance industry and the general public.
The association also creates awareness as to the importance of insurance and standing in the middle between the insurance companies and the insured whenever there is a dispute for amicable resolution vis-a-vis compensation in the country.
Just recently, NAICOM issued a "Guidelines on Insurance Premium Collection and Remittances", signalling the death of providing insurance covers on credit and guiding both insurance brokers and underwriting companies on to go about collecting and remitting insurance premium to beneficiaries.
The guidelines directs as follows:
"All insurance covers shall only be provided on a strict 'no premium no cover' basis. Consequently, only cover for which payments have been recovered directly by the insurer or indirectly through a duly licensed insurance broker shall be recognisable as income in the books of the insurer.
"Any insurer who grants cover without having recovered premium in advance or premium receipt notifications from the relevant insurance broker shall be liable to a penalty on the sum of N500,000 in respect of each cover so granted and in addition, may be a ground for suspension of the license of the insure".
In the same manner, the guidelines provided that insurance brokers, lead underwriters and primary underwriters must notify insurers, co-insurers and reinsurers as the case may be of any premium collected on their behalf within two days of receiving such premium.
"All insurance brokers shall within 48 hours of receiving insurance premium on behalf of any insurer, notify the insurer in writing in each case, of the receipt of such insurance premium. All such notifications shall be accompanied by the broker's credit notes acknowledging indebtedness to the insurer. An insurance broker who fails to notify the insurer of any premium received on his behalf shall be liable to a penalty of not less than N250,000 in each case of failure to notify," the commission directed.