IGI, Standard Alliance, AIICO top list as NAICOM slams defaulting insurance operators

The National Insurance Commission (NAICOM) has received commendations from industry experts for its recent decision to publish a comprehensive report highlighting unresolved claims within Nigeria’s insurance sector.

This unprecedented move has been hailed as a significant step toward fostering transparency and accountability within the industry, compelling insurance firms to uphold their obligations to policyholders.

The report, which lists grievances from 1,571 policyholders, highlights a longstanding issue of unpaid claims and disputes between insurers and their clients. By making these details public, NAICOM aims to enforce accountability and ensure that insurance companies settle legitimate claims without unnecessary delays.

The document, published on NAICOM’s official website, categorises complaints across various insurance segments, including motor insurance, group life, education policies, bonds, annuities, and other risk-related policies. The report provides insights into the number of grievances lodged against different insurance firms, revealing the scale of unresolved claims within the sector.

According to the data, Industrial and General Insurance (IGI) Plc recorded the highest number of complaints, with 327 unresolved claims, followed closely by African Alliance Insurance Plc, which had 282 complaints. Standard Alliance Insurance trailed behind with 229 complaints, while A&G Insurance Plc and AIICO Insurance recorded 80 and 65 complaints, respectively

Other insurers on the list include Allianz Nigeria with 31 complaints, Anchor Insurance with 9, AXA Mansard with 15, Capital Express with 19, Consolidated Hallmark with 13, and Coronation Insurance with 29 complaints.

Similarly, companies such as Cornerstone Insurance (8 complaints), Custodian Insurance (9 complaints), Great Nigeria Insurance (GNI) (37 complaints), and Goldlink Insurance (28 complaints) were also mentioned in the document.

Among others, Leadway Assurance recorded 18 complaints, Mutual Life had 20, NICON Insurance had 36, Nem Insurance had 14, and NSIA Insurance had 12 complaints. Prudential Zenith recorded 15 complaints, Royal Exchange Prudential had 51, SANLAM Insurance had 24, Sovereign Trust recorded 13, STACO Insurance had 42, Tangerine Life had 20, Universal Insurance had 8, Veritas Kapital had 10, and Zenith General had 10 complaints.

Among the insurance companies with fewer customer complaints, Stanbic Insurance recorded the least with just one complaint. Heirs Life followed closely with two complaints, while FIN Insurance, Mutual General, Emple General, Sterling Assurance, and Tangerine General each had four complaints.

Guinea Insurance, NAIC, REX General, KBL, and Sunu Assurance recorded five complaints each. Regency Alliance and Lasaco had six complaints, while Prudential Zenith and Linkage Insurance had the highest among this category, with seven complaints each.

Gus Wiggle, founder and principal consultant at Carefirst Consult, lauded NAICOM for taking a bold step toward bringing sanity to the insurance industry.

“The trust issue has long been the Achilles’ heel of the insurance industry and a major reason for the poor penetration of insurance in Nigeria. NAICOM is addressing customer concerns and proactively resolving complaints,” Wiggle said.

He noted that while the policy action might have both positive and negative impacts on the reputation of affected insurance firms, it serves as a wake-up call for companies to improve their services.

“For insurers with a high number of complaints, the negatives include loss of customer trust and loyalty, decreased patronage, and increased regulatory scrutiny. However, for those committed to improving, this could be the push they need to identify operational weaknesses, comply with industry standards, and rebuild their reputation,” Wiggle added.

He emphasised that non-compliant insurers who fail to settle claims fairly should face penalties, including fines and potential withdrawal of their operating licenses.

Wiggle further warned that the public disclosure of unresolved claims could have financial repercussions for some insurance firms.

“Companies struggling with liquidity may find it difficult to settle outstanding claims, leading to further financial strain. If they lack sufficient funds to meet obligations, their ability to write new business and generate income will be severely impacted,” he said.

He advised insurers to reassess their pricing models and risk management strategies to ensure sustainability. Additionally, reviewing reinsurance arrangements would help cushion the impact of large claim settlements on their financial health.

While many see NAICOM’s directive as a step in the right direction, Wiggle acknowledged that it also exposes systemic weaknesses within the insurance industry.

“On one hand, this demonstrates NAICOM’s commitment to protecting policyholders and ensuring compliance. On the other hand, it reveals deep-rooted challenges in claims settlement, which can erode public confidence,” he noted.

Wiggle emphasised that merely resolving claims does not necessarily address the fundamental causes of disputes, such as inefficiencies in claims processing and governance shortcomings. He underscored the need for regulatory reforms to enhance compliance and strengthen governance within the industry.

He noted that the National Insurance Commission (NAICOM) has been actively working to improve consumer protection and streamline claim settlement processes. According to him, the commission expects these efforts to align with international best practices while ensuring adequate consumer safeguards. Wiggle further highlighted the importance of establishing stricter standards for claims settlement, including clear timelines and structured procedures for resolving claims.

Chima Nwachukwu, an advocate for a new insurance culture in Africa and author of “when life happens”  fictional series, also weighed in on the development. He described NAICOM’s decision to make the complaints public as a necessary step towards greater transparency and accountability.

“The days of shielding insurance companies from public scrutiny are over. This disclosure puts insurers on notice, compelling them to improve their services and rebuild public trust,” Nwachukwu stated.

While acknowledging that the public listing of complaints could initially harm the reputation of the firms involved, Nwachukwu stressed that, in the long run, it will benefit the industry by fostering consumer confidence. “People are more likely to patronise insurers when they are assured that their complaints will be treated seriously,” he added.

Nwachukwu also emphasised that policyholders must have clear avenues for redress, which NAICOM’s decision reinforces. “In every transaction and contract, there must be windows for the aggrieved to seek redress, and that, in my view, is what the National Insurance Commission is communicating to the public.”

He pointed out that the 1,571 complaints highlight critical issues in the industry, questioning whether they stem from a liquidity crunch, poor actuarial evaluation, or management failures. “When you look at the number, 1,571 in comparison to the 1 per cent penetration figure,  the question is how did we get there?’ What was responsible for the number of complaints for an industry struggling to win the trust and confidence of the public? Was it a case of liquidity crunch, poor actuarial evaluation, poor claim handling or management failures?.”

According to him, “It is when we are able to evaluate the cases and understand what constitutes the complaints can we safely determine the potential financial pressure it may have on the insurers involved.Generally, every claim takes away money from the insurer’s coffer and that is why it is often assumed by the public that a company is under financial stress when a claim is delayed or avoided.”

Commending NAICOM’s efforts, he stated, “The Commission is saying to the aggrieved insured, ‘we are not only treating your case, we are letting the world and everyone having similar challenges know they can be heard, and that the Commission is there for them.’”

Nwachukwu further stressed the need for greater public awareness, stating, “If potential consumers and consumers of insurance products and services are well educated, informed, and aware of the nature of the products and basic requirements for claims, the numbers may probably look different.”

He urged stakeholders to collaborate in bridging the knowledge gap, particularly through creative means such as storytelling. “To increase the penetration figure from the abysmal low 1 per cent to 10 per cent as we project at the WHEN LIFE HAPPENS FICTIONAL WRITERS INSURE INITIATIVE, requires greater commitment from all stakeholders.”

The high volume of complaints against insurers in Nigeria underscores deep-rooted challenges, including weak corporate governance, inefficient claim settlement processes, and regulatory lapses. The experts suggest that NAICOM must take further steps to: strengthen regulatory oversight to ensure insurers comply with claim settlement standards, foster a culture of corporate governance that prioritises policyholder interests, establish an independent complaints bureau to handle consumer grievances and provide alternative dispute resolution mechanisms and launch consumer education initiatives to increase awareness of insurance policies, rights, and dispute resolution processes.

As Nigeria’s insurance sector struggles to regain public trust, stakeholders anticipate further regulatory interventions to enhance consumer protection and align the industry with international best practices. According to the experts, with increased transparency and enforcement, NAICOM’s recent action could mark the beginning of a transformative shift in the Nigerian insurance landscape.