The issue of claims payment in insurance contract is viewed as main reason why insurance business exists. Ebere Nwoji reports that insurers and their stakeholders now view claims settlement, which nurtures public trust and corporate integrity as currency for insurance contract
Over the years, lack of public trust, failure by some insurance managers to prove the integrity of their corporate entities through payment of genuine claims when risk occurred have been the bane of insurance sector growth. It has also robbed the insurance sector off the much-desired mass patronage.
With the result that whereas virtually every Nigerian including uneducated rural dwellers have embraced banking services many years ago, most Nigerians including the educated class jettison even the compulsory insurances. Against this backdrop, insurance sector has taken the lowest position among all sub sectors of finance services sector. For instance, pension sector, hitherto an aspect of insurance today prides itself in accumulation of over N32 trillion assets as at May 2026, while insurance sector’s total assets as at the end of Q4 2025 stood at N4.78. Total premium of the industry, which represents its annual turnover stood at N2.3 trillion as at the end of 2025.
Often, poor patronage of the insurance sector by the public, which is main reason for the sector’s low turnover and minimal contribution to the GDP is attributed to lack of awareness of value of insurance to the people, poverty level among Nigerians and poor image of the industry.
Insurance Managers and Claims
But recently insurance managers embraced the fact that seamless genuine claims settlement, trust and integrity have remained the currency for insurance contract.
This by interpretation means that the right to claim payment stands as a medium of exchange within an insurance ecosystem. Meaning that without seamless genuine claims payment, insurance contract is grossly incomplete and of no effect.
Claims payment in insurance contract serves as spice that attracts potential policyholders to insurance patronage.
Insurance claims according to experts is a formal request for compensation made by a policyholder from an insurance company for loss (es) suffered under the terms/conditions of the policy.
Claim payment repositions a policy holder to his former financial position before the occurrence of the risk. This being the case, anytime an insurance underwriter repudiates genuine claims, it amounts to double losses for the insured as he suffered both loss of premium, he paid to cushion the effect of the unforeseen and the loss of his property involved in the peril.
Therefore, experts viewed that insurance business is all about claims payment and claim is the main reason a policyholder takes up an insurance policy.
According to the experts, without claims being paid by insurance companies, people are not likely to take up insurance policies. In every insurance contract, there is always a promise that when the eventuality (claim) happens the insurance company as a risk bearer will be there to compensate the insured/policyholder.
Claims payment in Nigeria
But here in Nigeria, especially in the early years of insurance practice, often when claims come, insurance managers will find a way to wriggle out of payment by devising various means of interpretation of very ambiguous clauses written in tiny italics letters which were not made visible and clear at the beginning of the contract. This marked the beginning of the mistrust by Nigerians till date. Indeed, even with increasing level of financial literacy among Nigerians, many are yet to willingly see the need to buy insurance. They prefer to carry their risks and rely on faith.
The development has so damaged the industry’s image that members of the insuring public see every insurance practitioner as dubious person while the industry is seen as the most unreliable and unrealistic part of finance services sector.
NAICOM’s View
The former commissioner for insurance, Mr Fola Daniel once addressing insurers on the need to take claims payment seriously, said the best advertisement insurers could do is to pay genuine claims without delay and argument.
According to him, when a policy holder easily receives claims for risk he insured against, the policy holder will automatically become an example for the insurance sector.
In line with the former commissioner’s line of reasoning, the Managing Director and Chief Executive officer of Heirs Insurance, Mr Niyi Onifade, explained the relevant position occupied by claims in insurance contract. He spoke at a press briefing to announce achievement recorded by his company in its five years of operation. He said claims settlement, trust and integrity together form currency for insurance policy contract.
Traditionally, insurance contracts typically pay claims in fiat currency, but emerging models such as captive insurance, peer-to-peer insurance, or blockchain-based parametric policies allow claim pay-outs to function more like a currency in that they are transferable, divisible, or usable for future coverage.
Insurance sector analysts therefore said claims payment serves as a test instrument for determining the extent to which an insurance company lives up to the ‘utmost good faith’ promise. In other words, claim payment serves as brand image of an insurance company as well as parameter for measuring the integrity of any insurance underwriting firm and its management.
NIIRA and Claims Payment
The importance of claims payment in insurance business and the need to put to an end the era of delayed or denied claims compelled insurers to assign special position to claims issue in the Nigeria Insurance Industry Reform Act 2025.
Indeed, the Act going by its stipulations on prompt claims settlement and policy holders’ protection has proffered solution to the lingering problems of delayed claims and lack of mass patronage of insurance.
The Act is explicit on its stand on fast claims settlement and streamlining of claims processing which will engender mass patronage of insurance.
Section 210 of NIIRA 2025 requires all insurers to adhere to strict deadlines for claims processing and payment. The section introduced specific provisions to ensure faster and more efficient payment of claims by insurers.
It requires all insurers to settle claims in writing by the insured or entitled parties within the timelines specified in the National Insurance Commission’s (NAICOM) Service Charter, but no later than 60 days of notification.
NIIRA said failure to comply with these requirements attracts a penalty, in addition to compound interest on the claim amount, to discourage unnecessary delays.
It enforces a “zero-tolerance” policy on delayed claims to restore public confidence in the insurance sector. The Act generally aims to streamline the claims process by introducing several measures, including in addition to enforcing a “zero-tolerance policy on delayed claims” to restore public confidence in the insurance sector also expanding acceptable modes of communication to include electronic means, such as email, for delivering policy documents and potentially other claim-related communications, which aids efficiency.
It also aims to removing the requirement for a police report for motor accident claims, unless there is a death or serious bodily injury, provided there is sufficient proof of loss or damage. The act also has a definite stand on protection of policy holders’ interest.
Following the Act’s mandate on claims payment and its zero tolerance to non-payment of claims which the Commissioner for Insurance, Mr Olusegun Ayo Omosehin said he would implement to the later, most insurance firms now digitalise their claims settlement process to ensure payment of simple claims that do not require loss adjusters’ attention within 24 hours.
Digitalised system
To reverse the trend, insurers have employed technology, a development that has set some of them apart from the rest. Topping the list of these companies are; Heirs Insurance which said it has democratised insurance in such a way that policy holders could get their claims paid within 24 hours of sending and receiving discharge voucher.
The Managing Director, Onifade said holders could buy insurance with their phone and receive claims through the same process.
He said with AI assisted model of claims processes especially the Prince AI chart board launched by the company policy holders could file their claims through WhatsApp, through App or web.
Other firms with digitalised insurance payment process include Universal Insurance plc which has developed a fast claims payment system using AI for instant remote motor inspections via smartphone, eliminating physical assessment.
Also, Unitrust Insurance has deployed the Webplug App and WhatsApp Chabot to cut turnaround time promising claims settlement within 24 hours of document receipt.
Most of these fast claims paying underwriting firms utilise platforms like FastClaim, an AI powered app adopted by underwriters which allows insurance practitioners take photos of damaged vehicles with AI assessing severity and generating repair estimates instantly.
Some firms also partner with insurTech firms which enables them to connect customers with digital claims platforms across different insurers.
Negative observation
Analysts have observed that most times when claims of high magnitude occur from certain policies, the issue of “he who pays the piper dictates the tune”, often rears its head.
This means that because it is the underwriter that pays adjusters’ fee, they give the conditions for their payment by mandating the adjusters to reject or delay genuine claims payment on such risks.
Sector analysts said if insurers actually want to demonstrate that claims settlement, integrity and trust stand as currency for insurance contract, they should desist from such sharp practices, allow the adjusters to do their assessment job objectively and pay the emanating claims without unnecessary delays and argument. They argued after all their reason for venturing into insurance business is to collect premium, protect the insured when risk occur through seamless claims payment.
Given the important position of claims payment in insurance contracts, sector observers said every insurance firm that is worthy of patronage should develop its own fast claims payment model to make claims payment seamless and redeem the industry’s image.
