Claims Management and Procedure in Nigeria’s Insurance Sector

Articles Finance

A Cross Border Insight

By Thyword Nnadi

The operational activities of insurance industry in Nigeria spans over decades and these activities have enjoyed legal protection vis-à-vis legal obligations on the key players. Notably, insurance companies have contributed to the development of economy and business growth in Nigeria. It is pertinent to note that parties in insurance contract are obligated to observe the contractual terms which finds its bearing on the valid elements of a contract whilst also being in conformity with the provisions of Insurance laws and regulations. Undoubtedly, the Parent Law that regulates the insurance sector in Nigeria is the Insurance Act[1] whilst noting about thirty-five other legislations that governs the insurance sector. Interestingly, it is the right of the policy holder to make claims on an insurance institution where the need arises and the policy holder is entitled to receive the amount of claim made so long as he is not in breach of the contractual terms. The body that regulates the insurance sector is the National Insurance Commission(NIC). In exercise of the powers conferred on the NIC under the National Insurance Commission Act(NICA) and extant laws, they have the powers to make guidelines which must be followed to ensure there is seamless resolve and settlement of claims in Insurance sector. This guideline with respect to the subject matter will be dealt with holistically herein.

Definition of Terms

Claims Management means and includes all the managerial decisions and processes concerning the settlement and payment of claims in accordance with the terms of insurance contract.

On the other hand, an Insurance Contract is a Contract under which one Party (the insurer) accepts significant insurance risk from another party (the policy holder) by agreeing to compensate the policy holder if a specified uncertain future event (the insured event) adversely affects the policy holder.

Keywords: Claims, Management, Procedure and Insight.

Claims Management Requirement:

The law requires insurance institutions to develop, document and implement claims management policies and procedures for all of its lines for business. The aforesaid guideline must conform with international standards, best practices and must address external market conducts, interactions or communications between the insurer and the consumer as well as internal control mechanisms in ensuring that the aforesaid external interactions work effectively. The guidelines and documented claims policies and procedure will be taken into account in assessing unreasonable delay in the settlement of claim by such insurer for the purposes of the Insurance Act.

Furthermore, an insurer is required in law to include as part of its policies and procedure, settlement timelines for claims for all types of business and shall ensure that these timelines reflect the principles of good market conduct.

The insurer shall ensure that all the claims settlement process is handed fairly, promptly and in accordance with the terms of the insurance contract and company policy. It is required that the insurer shall have fair and efficient handling of claims which shall be approved by the Board of Directors, reviewed and updated periodically.[2]

Processing of Claims

In processing of claims, the insurer is required to establish a claim file containing information which includes but not limited to policy number, name of policyholder or claimant, information of claimants, description of the loss, claim file number claim form, documented evidence of agreements or settlements, name of broker or agent if applicable.  Further to the foregoing, the insurer is required to update the claims file and document all actions taken as part of the claims management process in order to address certain issues which may tend to arise. It is to be noted that the policyholder has a right to engage the services of a solicitor or adjuster where the processes were though followed but not satisfactory.

Also, the insurer is required to implement a management reporting system to track the timeliness of claims settlement and other pertinent information. The management is expected to review the age analysis of outstanding claims, claims reported but not yet documented or adjusted, claims reported, adjusted but not yet accepted, claims accepted but not yet paid and as well as the adequacy of claims.

The Procedure

  1. Notification

Notification of the claim is to be made by the policy holder in line with the policy conditions provided that the claimant makes use of any fastest means of communication to the insurer, designated person, department or through the intermediary by direct reporting, telephone call, text messages, Email, Fax, letter, Use of Social site or Website and any other form of technology. Such notification must be acknowledged by the insurer within two (2) days. Where the above notification is received by an intermediary, such intermediary will transmit the notification to the insurer not later than two (2) working days.

Furthermore, when a policyholder or claimant reports a loss, the insurer, broker or agent is required to make available a proper claims form for the class of business, with clear instructions as to how the form shall be completed. This must be done within two (2) working days of receiving notification of a claim. The completed copy of the aforesaid form will be forwarded back within two (2) working days from the date of receipt of the claims form, where the initial contact was a broker or agent who acts on behalf of the policy holder. The law further requires that when a loss is reported, the insurer, broker or agent shall advise the policyholder or claimant to co-operate in the investigation by providing the insurer with relevant information to ensure timely processing of the claims.

It is important to note that, it is the duty of the insurer to advise the policyholder on the consequences of giving false information or submitting incomplete particulars.  Further to the above, the insurer is expected to inform the policyholder or claimant if an independent adjuster will be engaged to conduct a survey or assessment. Where the insurer uses independent adjuster or other intermediaries, the  competence and qualifications of such persons are to be verified and only two persons are registered for the above purposes.  Most notably, the insurer is required to hire the adjuster within two (2) working days from the date of receipt of the completed claims form accompanied by all relevant documentation. Further to the foregoing, the adjuster is required to submit the assessment of damage report within (10) working days after receiving the instruction from the insurer, however, a specified grace period may be allowed provided that the claimant or policyholder is duly put on notice. Where the insurer does not engage the services of an adjuster, the insurer shall then, conduct an investigation into the reported loss within five (5) working days of receipt of claims form accompanied by all relevant documentation.[3]

  • Acceptance/Rejection After Assessment:

Upon the receipt of the assessment report, the insurer is required to notify the Claimant or Policy holder within five (5) working days of its acceptance or rejection of the claims.

  • Claims Settlement

After acceptance of liability and agreement has been reached between the insurer and policyholder or claimant on the amount of claims, the insurer shall ensure the issuance of discharge voucher not later than five (5) working days from the date of acceptance of lability. Importantly, once an agreement has been reached and payment effected, a copy of the release or agreement signed by the policyholder or claimant shall be retained in the policyholder or claimant’s file.


Albeit the claims management process, circumstances abound where the insurer may disagree or be reluctant in making settlement or where settlement is made, such a settlement is deemed not satisfactorily made to adequately ameliorate or indemnify the loss. Where this ensues and provided that the policyholder is not in breach of any terms agreed upon, the policyholder reserves the right to express his grievance through the appropriate Arbitration Panel agreed upon by the parties and in line with the documented policies as required by the law[4]  or file an action in court for breach of contract and claim damages, where Arbitration Clause is not contained in the policy documents between the parties provided that pre-action notice is brought to the attention of the insurer prior to the institution of the action or within 7 days after commencement of the proceedings before  judgment in the suit.[5]

In court, the claimant is expected not to only prove the existence of the valid elements of the contract between the parties but also, must demonstrate proof of loss.

This was rightly held by the Court of Appeal in the case of GREAT (NIG) INSURANCE PLC V ZEAL TRUST LTD (2021) LCN/15009(CA), where Justice Ebiowei Tobi (JCA), stated that “. . . the insured is expected to prove that he has suffered a loss, and this is done by way of documentation. The level and nature of documentation depends on the class of business. Failure on the part of the claimant to prove his loss convincingly or satisfactorily within a reasonable time may lead to repudiation of liability.

In the afore-cited case, the Court of appeal affirmed the decision of the lower court and held that the claimant, on a balance of probabilities had proved its claims substantially under the two insurance contracts it entered with the defendant and awarded Fifteen  Million Naira (#15, 000, 000.00) and Two Million, Three Hundred Thousand Naira (#2,300,000.00) respectively against the defendant.

[1]  2003.

[2]  Reg 3.1.3 Market Conduct and Business Practice Guidelines for Insurance Institutions in Nigeria.

[3] Reg 3.3.12 Supra.

[4] Reg 3.7.1(c) supra.

[5] Section 69 (2)(a) of the Insurance Act supra.

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