Regulatory Challenges in Insurance Premium Payments and Claims Settlement in Nigeria: A Critical Appraisal of the Insurance Act, 2003

Abstract

This article critically examines the regulatory challenges in insurance premium payments and 
claims settlement within the context of the Nigerian Insurance Act 2003. The study highlights key 
provisions of the Act, particularly the principle of “no premium, no cover,” which denies insurance 
coverage in cases of non-payment of premiums. While the Act stipulates that premiums paid 
through brokers are deemed received by the insurer, it also imposes a 30-day window for brokers to 
remit payments, with penalties for non-compliance. Despite these regulatory measures, the article 
identifies weaknesses in the claims payment process, notably Section 7, which mandates that 
claims must be paid within 90 days of liability acceptance. The potential for insurers to exploit 
delays in accepting liability to avoid timely payment of claims is also discussed, as insurers may 
impose frivolous conditions or demand unnecessary documentation. The article further explores 
the role of the National Insurance Commission (NAICOM) in enforcing claims settlement, 
including penalties for non-compliance. It concludes by recommending reforms to address the 
regulatory gaps and ensure more efficient and consumer-friendly practices in Nigeria's insurance 
industry, focusing on enhancing transparency, reducing delays, and improving enforcement 
mechanisms to protect policyholders' rights.