Claims procedure

The main reason individuals and corporate bodies take up insurance is that if the peril insured against occurs, they would be restored to the financial position they were before the fortuitous event. In insurance, we refer to this act as the principle of indemnity. But before the financial restoration takes place, there are laid down procedures the policyholder must follow.

One, if an incident likely to lead to a claim occurs the policy holder is expected to notify his insurance broker, who will in turn notify the insurance company. Where he has no broker, he should notify his insurance company by mail, call or a letter. Failure to notify the insurance company within the stipulated period, which is usually generous, can lead to avoidance of the claim. Let me quickly add that if a policy holder is involved in an accident and he is at fault, he should not accept liability. His job is to give a true narrative of what happened in the claims form; the insurance company is intelligent enough to make rational decisions. Accepting liability is enough grounds for the insurance company to avoid the claim, which will now devolve to the policy holder.

Next, the insurance company will send a claims form. Where there is a broker, he guides the policy holder in completing the claims form. The policy holder will get an estimate for repairs, replacement or reinstatement, as the case may be. Where a police report is needed, for example in vehicle accidents, the policy holder will add it. Photos showing the scene of the incident or damaged portions of the subject matter of insurance are also required. The documents are then put together and forwarded to the insurance company.

If it is a small claim, the insurance company will do the adjustment internally and make an offer to the policy holder. But where the claim is big, especially for commercial insurance policies, a loss adjuster is appointed by the insurance company to adjust the claim. After the loss adjuster is done, the underwriter will make an offer to the policy holder. If the policy holder is satisfied with the offer, he accepts it. He will then complete the discharge voucher (DV) from the underwriter and in some cases get paid 24 hours after signing the DV. Brokers can also complete the DV on behalf of the client, but the client decides which account the claim money is paid into or in whose favour the cheque is written.

Where the policy holder is not satisfied with the underwriter’s offer, he can make a counter offer. Both parties may go back and forth until they come to an agreement. Where they are unable to agree, they go to arbitration. Both parties can settle for one arbitrator or each party will appoint an arbitrator. Both arbitrators will, in turn, appoint an independent arbitrator. The arbitrators will meet and come to an agreement. Where the agreement of the arbitrators does meet the expectations of one or both parties, they can seek further remedies at the Complaint Desk of the National Insurance Commission (NAICOM). NAICOM is the regulatory body of insurance practice in Nigeria. Aggrieved parties can also seek redress at the Nigeria Insurers Association, the trade body of insurance companies in Nigeria, and the Nigerian Council of Registered Insurance Brokers (NCRIB), the professional body of registered insurance brokers in Nigeria.

When all these options fail, an aggrieved party can seek redress in a competent court with jurisdiction to hear the case. Please note that going for arbitration is precedent to going to court. It is a condition in the insurance policy and failure to observe it will void the party’s legal efforts.

Before a policy holder can be entitled to claim, he must observe the terms of the insurance contract some of which we discussed last week. Failure to do so might make the underwriter avoid the policy. This is another reason why I advise members of the insuring public to procure their insurance through a registered insurance broker. Your broker would have broken down your policy for you at inception and advised you on what to do and what to avoid so that you do not run afoul of policy conditions exceptions and warranties.