Claims Payment as Currency for Insurance Contract

The timely and genuine settlement of insurance claims is paramount, serving as the fundamental currency and the very reason for the existence of insurance contracts, according to industry stakeholders.

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The issue of claims payment in insurance contract is viewed as main reason why insurance business exists.

Historically, the Nigerian insurance sector has struggled with public trust and growth due to the failure of some insurance managers to honor genuine claims when risks materialized. This has significantly deterred public patronage, contrasting sharply with the widespread adoption of banking services, even among uneducated rural dwellers. Consequently, the insurance sector occupies a low position among Nigeria's financial services sub-sectors, with its total assets and premium income lagging far behind sectors like pensions.

Insurance managers now widely acknowledge that seamless claims settlement, coupled with trust and integrity, forms the bedrock of insurance contracts. This means that the right to claim payment acts as the medium of exchange within the insurance ecosystem. Without efficient and honest claims processing, an insurance contract is considered incomplete and ineffective. Experts view claims payment as the vital element that attracts potential policyholders to insurance.

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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.

An insurance claim is defined as a formal request by a policyholder to an insurance company for compensation following a loss covered by the policy. Successful claim payment aims to restore the policyholder to their previous financial position. When an underwriter repudiates a legitimate claim, the insured suffers a double loss: the premium paid and the loss of their property or asset.

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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.

Therefore, experts stress that the insurance business fundamentally revolves around claims payment. Without consistent and reliable claims settlement, individuals are unlikely to embrace insurance policies. This underscores the critical need for the industry to prioritize and improve its claims handling processes to rebuild public confidence and drive sector growth.

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Meaning that without seamless genuine claims payment, insurance contract is grossly incomplete and of no effect.