The market association for insurance underwriters, the Nigerian Insurers Association (NIA), has expelled Standard Alliance Insurance and two others from its membership.
The other two are Industrial and General Insurance Company Limited (IGI) and Niger Insurance Plc.
Following the development, the body also ordered the three firms to remove its logo from their letterheads and official documents forthwith.
The NIA took the decision because of the firms’ failure to honour their obligations to policyholders.
In a public notice signed by Yetunde Ilori, its Director General, the NIA stated that the “The Governing Council has approved the expulsion of the three companies from its membership for failing to meet their obligations to Policy holders, thus negating the principles of insurance”.
Ilori added that ” the affected companies should cease forthwith from using the association’s logo on their letterheads and their official documents’.
One of the cases in point which concerns Standard Alliance Insurance is that of a certain Mr.Ogbamosa who took an Income Protection Policy (IPP) with policy number IPP/10/0007796/IKJ with the company. The company had agreed to pay him N1, 436,790.54 as benefits on its discharge.
Two years after the discharge however the company has continued to default on the payment of the valid claim. Statutorily, insurance companies have a window of 90 days within which to pay once the discharge voucher has been issued.
“I signed my discharged voucher from Standard Alliance Insurance Co since April 5, 2019 for the sum of N1.44m and has written two reminders to both the company and NAICOM but up to this moment, nothing has been done by both parties”, Ogbamosa said.
Earlier this month, Sunday Thomas, the Commissioner for Insurance and CEO, NAICOM, was taken to task on this and other related matters by journalists.
Asked why the Commission could not intervene by providing the struggling firms with financial lifeliine, he said it was beyond it’s remit to do so
Thomas said the commission can only support firms through its supervisory practices to assist insurance firms to tackle their challenges.
“The insurance law does not give us the power to grant bailout to ailing insurance companies. However, through supervisory practices, either through On-site and Off-site reviews, we take a look at certain indicators that an insurance firm could hit insolvency, and we assist in an advisory capacity”.
“We also handle the issue of capital injection that would meet liabilities. Any company that fails to meet recapitalisation requirements would be cancelled. The issue is about liquidity, not solvency.
He explained that the commission had several times gave marching orders to failing companies to pay up agreed claims on which discharge voucher had been issued but noted that the general state of the economy has prevented the firms from selling their assets to liquidate their obligations.
He noted that many of the firms have good and valuable assets but their problems are about liquidity while efforts to dispose of some of these assets to pay their clients have been fruitless.