INTRODUCTION TO INSURANCE CLAIMS IN NIGERIA

An insurance contract creates a legal relationship between the insurer and the insured, whereby, the insured pays a small fee called an insurance premium to the insurer in exchange for the assumption of a larger risk which will or may arise in the future by the insurer. The essence of insurance is to reduce financial uncertainty and manage any future economic loss or liability. Therefore, it is the primary duty of the insured to pay the insurance premium as and when due and, the insurer to settle Insurance claims in Nigeria, due valid claims upon the manifestation of the contingencies in line with the insurance policy.

Unfortunately, complex administrative procedures and the abusive refusal of insurance companies to settle claims sometimes mar the settlement of due insurance claims in Nigeria, defeating the whole essence of the insurance contract. This article, therefore, considers;

1. Procedures for recovering a due insurance claims in Nigeria,
2. What to do when an insurance company fails to settle a due claim,
3. Ground upon which a due insurance claims in Nigeria may become unenforceable.

1. Know the provisions of the insurance policy: Often, policyholders neglect to read their insurance policy’s contents or leave it unread until they need to file a claim. This oversight can ultimately work against them, as they may be unaware of essential provisions that must be fulfilled to validate their claim. These provisions include notice requirements, claim filing timelines, and specific procedures.

Therefore, it is crucial for policyholders to thoroughly review their insurance policy promptly and regularly, to avoid potential complications and ensure a smooth claims process

• Give a Notice of Claim: This is the preliminary step required to recover insurance claims in Nigeria, which is usually contractual, but also, a statutory provision.^[1] The rules of notice of claim include;
• It must comply with the mode of notice in the insurance policy, which is often a written notice,
• Notice need not have been given by or by the authority of the insured,
• A notice to the insurance company’s agent is sufficient. Notice to an agent who assists the insured in making his insurance application is however not sufficient,^[2]
• Notice must be within the stipulated time as ruled in Cassel v Lancashire and Yorkshire Accident Ins. Co.,^[3] and where there is no stipulation as to time, it must be within a reasonable time.^[4]

• Submit the particulars and proof of loss or circumstance upon which your claim is triggered: Mere submission of notice is not sufficient; the insured also needs to submit particulars or proof of an event that triggers the claim. The essence is to allow the insurer to confirm the veracity of the claim. Section 54(1) of the Insurance Act provides that where an insurer requires an insured to complete a proposal form, the insurer shall draw up the form to elicit such information as the insurer considers material. Any information not specifically requested shall be deemed not to be material. Therefore, the insurance policy usually defines the scope of particulars of proof.

Section 71(2) of the act, however, provides that except as otherwise agreed, where one person is involved in an accident, a statement of fact by the insured, including a statement by an eye witness where there is one, and where the accident involves more than one person, a statement of fact by each person involved, provided the statements do not differ in material particulars will be sufficient proof.  Also, there need not be a police report except where death or serious bodily injury is involved^[5] or where it is an issue of car theft.^[6]

• Execution of a Discharge Voucher: After a due notification of claim, the insurance company may either accept liability or deny such, depending on their findings on the veracity of the claim. Where a liability is denied, the insurance company must, however, give a written notice of the reason for disclaiming liability within 90 days.^[7]

Acceptance of liability is often communicated by way of issuing a settlement offer, called the discharge voucher. The discharge voucher must be executed, that is, signed by the insured or such other person having the authority to do so, to signify that the claim has been accepted and settled. The insurance company is under a statutory obligation to settle the claims within 90 days from the issuance of the discharge voucher.^[8]

1. Petition the insurance company: While it may seem a waste of time, it is important to notify the insurance company of its failure to honour the insurance policy before resorting to other enforcement procedures.

• Petition the National Insurance Commission: Section 70(1)b provides that where any claim remains unpaid as provided in (a) above, the insured may request the Commission to effect the payment from the statutory deposit or the insurer and the Commission shall have the power to effect such payment.

• Institute an action in court: Section 69 of the act reserves the right of an insured to approach the court for the enforcement of an insurance claim. The appropriate court to institute such action is the Federal High Court.^[9] It is, however, important to confirm whether or not the insurance policy includes an arbitration clause upon which the appropriate action will be to bring an arbitration proceeding against the insurer.

There are certain grounds upon which an insurer may validly refuse to settle a claim, and the insured needs to prevent the occurrence of these circumstances, they include;

1. Failure of the insured to pay the premium as at when due,
2. Failure of the insured to comply with all conditions precedence for a valid right of claim, such as a requirement of timely notice. For example, in Cassel v Lancashire Accident Ins. C., it was held that failure to give notice of claim within 14 days from the occurrence of an event which lays the ground for the claim as stipulated in the insurance policy is detrimental to the claim of the insured.
3. Public Policy:A claim may become unenforceable on the grounds of public policy. For example, when illegality or fraud taints or forms the basis of the claim. In Beresford v Royal Ins. Co.,[10] the court held that one cannot enforce a claim under a life insurance policy where the insured committed suicide. Also, in Galloway v Guardian Royal Exchange (UK) Ltd.,[11] the court held that an insured should lose all claims where he fraudulently inflates the quantum of loss. The attitude of the court in circumstances of public policy issues is, however, not straightforward.

An insurance contract is a mutual agreement that promises financial protection in exchange for premium payments. However, the process of recovering due insurance claims can be fraught with challenges. This article has outlined the necessary procedures for filing a claim, the actions to take when a claim is denied, and the grounds on which a claim may become unenforceable.

Policyholders need to understand their rights and obligations under the insurance contract. By following the outlined procedures and being aware of potential pitfalls, policyholders can increase their chances of a successful claim settlement and maximize the benefits of insurance coverage.

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^[1] Insurance Act, s. 70(1)

^[2] Section 54(3) & (2)

^[3] (1885) 1 T.L.R. 495

^[4] Verelst’s Administration v Motor Union INsurance Ins. Co (1925)12 K.B. 137

^[5] Section 71(1)

^[6] Section 71(3)

^[7] Section 70(1)c

^[8] Section 70(1)a

^[9] Section 102

^[10] [1937]2 K.B. 197, 219-220

^[11] (1999) Lloyd’s Rep I.R. 209,

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