In fulfilment of their claims obligation to policyholders, three insurance companies paid out over N170 million to the management of the Nigerian National Petroleum Corporation (NNPC) under the Group Life cover. Leading the underwriters in the payment is ARM Life Insurance Company Limited which doled out over N141.86 million, followed by AIICO General Insurance Company Limited with over N18 million and Lasaco Life – N10.5 million.

According to the details obtained by us, the claims were paid to the families of the corporation’s workers who were beneficiaries of the Group Life Insurance under the Compulsory Insurance Act. The breakdown revealed that AIICO paid its claims in respect of three deceased workers, ARM Life did same in respect of 22 and Lasaco paid on behalf of two.

The Pension Reform Act 2014 makes group life insurance compulsory for all employees to be covered under the scheme. Specifically, this Act affects employers in the public and private sectors having more than five employees. Section 9 (3) of the Pension Reform Act 2004 stipulates that every employer, to which the Act applies, must maintain Life Insurance Policy in favour of the employee for a minimum of three times the annual total emolument of the employee.

Under the policy, total annual emolument is defined as the basic salary, transport and housing allowances and shall not include bonuses, overtime, directors’ fees or other fluctuating emoluments.

The guidelines for life insurance policy for employees jointly issued by the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom), revealed that the employer is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to the contributions to be made by the employer to each employee’s Retirement Savings Account. Although the current claims payment is for the past years, the Corporation had earlier in the year released a whopping sum of $79.4 million as premium to cover its risks for the current year.

The development was seen as a reflection of new financial lease enjoyed by insurance operators and a confirmation of a recent disclosure by the Commissioner for Insurance, Mr. Fola Daniel, that the Federal Government was leading by example by ensuring release of premium by ministries, departments and agencies (MDAs) as a way of supporting the ‘No Premium, No Cover Policy.’

Mutual Benefits Assurance Plc, Custodian and Allied Insurance Plc and over 100 insurance brokering firms, were said to have benefitted from the largess, which has Mutual Benefits as the lead insurer and Hogg Robinson as lead broker. Daniel had declared that the insurance industry’s ability to pay claims had increased significantly, stressing that the non-implementation of the Insurance Act 51 (NO Premium, No Cover) led to poor cash flow in the industry.

He said: “It is the duty of the commission to protect insurance companies and one of the ways to do this is to ensure that part of the Insurance Act that would enhance their performance are duly implemented. About 90 per cent of premiums reside in collectibles prior to ‘No premium, no cover’, resulting in inability to pay claims due to poor cash flow. “In other climates, the underwriters are the lords and not the other way round where the brokers become the lord.