FAILURE OF MARKET AGREEMENT: INSURERS MUST PAY CLAIMS-LADIPO-AJAYI
By ROSEMARY ONUOHA
AS it has become obvious that operators in the insurance sector cannot regulate pricing of insurance risks following the failure of the market agreement, they should be ready to pay claims when the need arises irrespective of whatever premium they charged.
Chairman of Nigerian Insurers Association (NIA), Mr. Olusola Ladipo-Ajayi, who made this assertion stressed that insurers who charge any rate for risks have no excuse not to pay claims because they are the ones that charged the rate for the risks in the first place.
According to Ladipo-Ajayi, since it is now obvious that insurance operators cannot regulate themselves, they have no excuse not to pay claims. He regretted that the insurance industry is flooded with professional yet a lot of them are waking from the wrong side of the bed everyday and doing the wrong things.
Meanwhile it will be recalled that insurance professionals agreed to lay aside the market agreement entered into by underwriters in 2009 and consider other means of doing business.
At the 2011 Chartered Insurance Institute of Nigeria (CIIN) Educational Conference in Ibadan, there was a consensus by professionals that the market agreement has not been beneficial to the sector because it has not been religiously implemented by underwriters.
As a way of checking ethical breaches, promote discipline and improve service standards in the market, the Nigeria Insurers Association (NIA) commenced implementation of a market agreement. The agreement which stipulates infractions and penalties was signed by all the Chief Executive Officers of NIA member companies.
However, almost two years after the agreement was entered into, no company has been sanctioned for failing to abide by the agreement even when companies break it on daily basis.
However, Vanguard investigations revealed that the inability of NIA member companies to agree on uniform pricing for risks forced the Association to commence review of the initiative leading to the eventual jettisoning by professionals.
Some market operators argued that the market agreement could not work because many insurance practitioners still underwrite from largely outdated and irrelevant rate books. But they said that the sector can overcome the challenge of non payment of claims only if risks are priced appropriately.
Mr. Jacques Coetzer, managing director of UBA metropolitan Life stated 'If pricing is right, then the possibility of paying claims is great because at the core of claim certainty lies the balancing act in the pricing and quoting process.'
Underwriters, according to Coetzer, should underwrite each piece of business individually taking into account cover requirements and group distribution in gender, income, age and occupation as well as take deliberate decision not to involve in such sharp practices that has been the bane of the industry all along, stressing that it is very hard but it can be done.
Chairman of Cornerstone Insurance Plc, Mr. Adedotun Suleiman noted that the business of insurance is done on the basis of charging commissions which are authorised by law, but series of illegal fees that have been introduced is killing the business and giving the industry a lot of negative perception.
In his words 'These unauthorised charges are corrupting the system and causing corruption to be legalised. Insurance operators should look for creative, acceptable and innovative ways of doing business.'