No Premium No Cover: Insurance Companies Under Pressure

’s investigation has revealed that insurance companies are under serious pressure as a result of the full implementation of the National (NAICOM)’s  Guideline on Premium Collection and Remittance otherwise known in the market as ‘No Premium No Cover Rule’ which came into force on January 1, 2013.

Based on a random survey conducted  by , three major pressures now confront insurance companies:

#1: Prompt Claims Payment

Underwriters are more than ever before being pressured by clients and brokers to pay claims faster and speedily.

Prior to to the implementation of the No Premium, No Cover regime, underwriters could pay claims at their own pace after Discharge Voucher had been executed. Since clients and brokers now pay premium in advance, enormous pressures are being exacted on the underwriters to pay claims within days of  receipt of  signed Discharge Vouchers. Infact, Underwriters/insurers are now being pressured by brokers to sign Service level Agreements (SLA) on Claims turnaround time

Analysts forecast that in the near future, underwriters might be compelled to clearly state the settlement period in their policy documents or as an addendum.

#2: Collection of Part /Instalmental Premium

Most Insurers are torn between whether to collect part- premium or reject it since the ‘No Premium No Cover’ guideline issued by NAICOM was not too explicit on the situation.  NAICOM has now moved quickly to clear the air on this citing decided cases on Partial/instalment and non payment of premium stating that anything short of receiving the insurance premium in advance makes the contract null and void ab initio.

Download NAICOM Circular on No Premium No Cover Here

#3:

are powerful players in the Nigerian insurance market. Brokers control over 80% of the the businesses generated in the industry. Brokers who did not agree with NAICOM’s insistence on implementing the No Premium No Cover rule adopted ‘Siddon look’ approach and never bothered to study the implementation guidelines. These brokers are thus reluctant to issue credit notes and premium receipt notification to the underwriters to enable them cover documents (certificates and policy documents). Rather, they want the documents issued without complying with the guideline. Since the balance of power favour the brokers, most underwriters (insurers) find it difficult to confront them.

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