Motor insurance Policies

Motor insurance Policies

Motor insurance is a necessity for car drivers in Nigeria. The costs for repair/replacement of the cars or other property, or medical costs of the victims are far too high to risk being without coverage. Most motor insurance products are divided into two categories - third-party liability and first-party insurance.

The owner of the policy is the first party, who has contracted with the second party, the insurer, for the coverage; and the third-party is the other person(s) in the accident, or the person(s) whose property the policy-owner damaged.

Third-Party Liability

There are two types of third-party liability policies:

·         Bodily injury liability – this pays other people for damages the policy owner has done to them, such as medical expenses , lost wages , and pain and suffering

·         Property damage – this pays other people for damages done to their property

First-Party Expense

There are many forms of First-party coverage, out of which some are essential. First-party coverage is used to repair damages to the policy-owner and his or her passengers in the event that:

·         The policy owner was not at fault in the accident

·         No one was at fault in the accident

·         The driver at fault cannot be found (e.g., a hit-and-run)

·         The driver at fault does not have adequate means to repair the policy owner’s damages

The most important types of first-party coverage are collision, comprehensive, uninsured/under-insured motorist, and Medical Payments/Personal Injury Protection (PIP) insurance:

·         Collision/Comprehensive - Collision coverage guarantees the policy owner’s car will be repaired or replaced in the event of an accident, no matter who was at fault.

·         Uninsured/Under-insured – Uninsured/Under-insured Motorist coverage pays the policy owner and his or her passengers for pain and suffering, lost wages in the event that the driver at fault cannot be found, has no insurance, or has too little insurance to cover the damages.

·         Medical Payments - Covers medical and funeral expenses to the policy-owner and his or her passengers, regardless of who is at fault in the accident.

·         Non-Policy-Owners - Pay out appropriately regardless of who is driving the car at the time of the accident.

·         Stolen Cars - The owner of a car is not responsible for third-party damages resulting from or during the theft of his/her car.

Travel insurance is a must

Travel insurance is a must

Over the last few years, an estimated 30% - 50% of holiday goers have become ill or injured whilst on holiday. With the world becoming a global village with international travel becoming more frequent, it is very important to take out travel insurance when travelling. Becoming ill or getting injured is not in our hands, so it’s always best to be safe.

It’s not only health related issues that may occur whilst on holiday, there are also other holiday risks such as travel delays, loss of passport and loss or delay of baggage, and even hijack. The high costs of medical treatment abroad, the risks of relying on inadequate medical facilities in some countries and the real possibility of losing your most valuable possessions, makes travel insurance the most important thing for travellers.

There are many travel insurance companies available that offer affordable, comprehensive and reliable travel health insurance policies in Nigeria. Each travel insurance company offers different coverage plan, the full coverage will cost more while the basic plan is taken out more often.

Here are a few of the things that you will find in the travel insurance plans:

· Travel Personal Accident (Death, loss of limb, and Permanent Total Disablement)

· Personal liability for accidental injury to third parties or accidental damage  to their property

· Emergency Medical and Air Ambulance Expenses including Evacuation and Repatriation of Mortal Remains

· Hospital expenses

· Loss or delay of checked baggage

· Loss of passport

· Travel delay

· Flight cancellation and curtailment

· Loss or theft of money

· Hijack

Explanation of different types of insurances

There are many different types of insurance available, some you may find to be very important and necessary, while others you take out just to be safe. Here we have a few of the most used insurances:

1.   Health Insurance – this type if insurance pays for your medical expenses and can be included to cover disability or long-term nursing or custodial care needs.

2.     Motor Insurance – motor insurance is one of the most used types of personal insurance. It is a requirement that you purchase some kind of insurance coverage to drive legally in the country. Motor insurance can be divided into two basic coverage areas: liability and property damage.

3.    Life Insurance - Life insurance is protection against financial loss resulting from death. Your chosen insurance company will pay your beneficiary a specific amount of money when you die in exchange for timely payment of premiums.

4.  Travel Insurance – many travel insurance plans include Travel Medical Insurance, Medical Evacuation, Trip Cancellation/Interruption, Travel Delay, and Baggage coverage.

5.   Homeowners Insurance – there are different types of insurance for different types of home owner. Whether you are renters, owners of mobile homes, people seeking bare bones coverage or those living in homes that are very old, it is important to insure the roof over your head.

6.     Unemployment Insurance – Unemployment insurance is a temporary source of income. He/she will receive a weekly/monthly payments for a chosen period of time.

7.    Business Insurance – this insurance is simply spreading and managing the risk among many business owners. There are risks that, while they may never occur, are so destructive that it makes sense to plan ahead and manage the risk.

8.     Dental Insurance - although it’s not an insurance that everyone takes out, many those to have that as a backup. A few companies offer a form of dental benefits for individuals with two types of plans, referral plan and buyers' clubs. Individuals pays a monthly fee to a third party in return for access to a list of dentists who have agreed to a reduced fee schedule.

9.     Pet Insurance – this insurance helps you pay your veterinary bills for your pets. It covers accidents and illnesses, check-ups, vaccinations, and dental cleanings.

PARTICIPANTS IN THE INSURANCE INDUSTRY

More often than not, the public experience with insurance revolves round the marketers, insurance agents and brokers that patronize them for business, as well as some insurance companies that they see around. To them the world of insurance is limited to the aforementioned stakeholders without fully understanding the roles they play in the value chain. The insurance industry comprises various participants or stakeholders who perform different roles within the market. They play significant roles in the insurance industry, and we shall be discussing the participants along with their roles and functions within the industry. Participants in this industry include the regulator, insurance companies, intermediaries such as insurance brokers and agents, loss adjusters, loss assessors, marine cargo superintendents and surveyors.

The Regulator
The insurance industry is regulated by the National Insurance Commission (NAICOM) established by NAICOM Act No. 1 of 1997 with the primary objective of ‘enhancing the administration, supervision, regulation and control of insurance business in Nigeria’. NAICOM was established to render the following services:
a. Establish standards for the conduct of insurance business in Nigeria;
b. Approve rates of insurance premiums to be paid in respect of all classes of insurance business;
c. Approve rates of commissions to be paid in respect of all classes of insurance business;
d. Ensure adequate protection of strategic Government assets and other properties;
e. Regulate transactions between insurers and reinsurers in Nigeria and those outside Nigeria;
f. Act as adviser to the Federal Government on all insurance related matters;
g. Approve standards, conditions and warranties applicable to all classes of insurance business;
h. Protect insurance policyholders and beneficiaries and third parties to insurance contracts;
i. Publish for sale and distribution to the public, annual reports and statistics on the insurance industry;
j. Liaise with and advise Federal Ministries, Extra Ministerial Departments, statutory bodies and other Government agencies on all matters relating to insurance contained in any technical agreement to which Nigeria is a signatory;
k. Contribute to the educational programmes of the Chartered Insurance Institute of Nigeria and the West African Insurance Institute.

The law governing insurance business in Nigeria is the Insurance Act of 2003.

Insurance Companies
Participating actively in the value chain are the insurance companies. They are often referred to as ‘underwriting firm’ or ‘insurer’. They are companies that offer insurance policies to the public, either by selling directly to an individual or through an intermediary. An insurance company can either be life, general or composite (selling both life and general insurance business). Insurance
companies offer policies such as individual and group life, health, fire, burglary, marine, motor vehicle, home insurance, etc. to the insuring public on collection of a consideration called a premium from the policyholder with a promise to restore the policyholder to the position he occupied prior to the occurrence of the unfortunate loss. The beauty of insurance is to put smile on the face of the policyholder after suffering an insured loss. Any company interested in transacting as an insurance company in Nigeria must be registered and licensed by the National Insurance Commission as provided in Part II of the Insurance Act 2003 before it can commence operation.

The three categories of registered companies are:
• Life Only: Licensed to sell individual life, group life and health insurance policies. Current minimum capital base or Shareholder’s Funds is N2billion.
• Non-Life Only: Licensed to sell all classes excluding that licensed under Life Only. Classes allowed include motor, marine, fire, pecuniary, liability, aviation, engineering and energy. Current minimum capital base or Shareholder’s Funds is N3billion.
• Composite: Licensed to sell all classes, Life and Non-Life inclusive with minimum combined Shareholder’s Funds of N5billion.

Reinsurance Companies
These are companies established to act as ‘insurers’ to the insurance companies.
As the insurance companies act as ‘insurers’ to the policy holders, the reinsurance companies act as ‘insurers’ to the insurance companies. More often than not, insurance companies accept businesses that exceed their capacity. In order to manage the risk exposure, they transfer part of the risk to another party, called a reinsurance company, so as to manage their risk portfolio and exposures. The arrangement is called ‘reinsurance’ and it’s normally agreed at the beginning of the year between the insurance company and the reinsurance company.

The Intermediaries
Within this insurance industry are intermediaries who act as go-between between the insurance companies and policyholders. Chief among them are insurance brokers and agents. Insurance brokers are professional firms registered and licensed as stipulated under Section 36 of the Insurance Act 2003.

An insurance broker can only be a firm whose fulltime occupation is to place insurance business to various Insurers and must be headed by a duly qualified Chartered Insurance Practitioner. Brokers may deal with a number of insurers and may, in their dealings with customers, act on behalf of the insured (the customer) or on behalf of the insurer.

An agent is certified to also source insurance business from the insuring public to be placed with various insurers. Insurance agents may be tied to a specific company, which means they can only sell on behalf of that company (i.e. Captive Agent), or could be Independent Agents, who can sell for as many companies as they are affiliated to.

Both insurance brokers and agents ordinarily earn commission for their services which is a defined percentage of the premium paid by the insured. Alternatively insurance brokers can work on a fee-based retainer basis with the insured, as against earning a commission for their services, while agents work strictly on a commission basis.

Actuary
An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries provide expert assessments of financial security systems, with a focus on their complexity, their mathematics and their mechanisms. Actuaries, by employing mathematical modelling, evaluate the likelihood of the occurrence of an event and quantify the contingent outcomes in order to minimize losses, emotional and financial, associated with uncertain undesirable events. Since events such as death cannot be avoided, actuarial valuation helps to minimize financial impact when they occur.

Loss Adjusters
They are independent professionals, also known as Claims Adjusters, who are appointed by the insurance companies in the event of a claim, to investigate and research into the cause of a loss, assess the extent of damage, communicate with the policyholder in order to substantiate each aspect of the claim, negotiate with the policyholder on the cost of repairs for the purpose of making an offer of settlement to the insured. They belong to an umbrella body called the Institute of Loss Adjusters of Nigeria (ILAN).

Loss Assessors
On the other hand, a loss assessor is appointed by the policyholder to negotiate fair and equitable claims settlements on their behalf after suffering a loss or damage. A loss assessor helps the policyholder to maximize their claim. Typically, they negotiate settlement with the insurance company on behalf of an insured.

Marine Superintendent and Surveyors
Marine superintendents and surveyors are independent professional firms appointed by insurance companies to supervise the discharge of marine cargo or imported merchandise on their behalf.

The scopes of their duties are as stated below:
1. To liaise with the insured and/or their clearing agents in order to ensure that the necessary information/documents concerning each shipment is/are obtained prior to the arrival of the carrying vessel within Nigerian territorial waters.

2. To inspect and report the condition of the hatches and holds whilst the vessel is lying alongside the berth.

3. To inspect and report the condition of the goods (containerized or otherwise) whilst on board the vessel.

4. To supervise the discharge and report any case of damage, loss or shortage ex vessel.

5. To note the seal number of each container discharge ex vessel.

6. To keep proper surveillance on each consignment and supervise the delivery as well as unpacking, giving details of any shortage or damage.

7. To hold the negligent party responsible for any loss or damage on behalf of the underwriters or cargo interest by a duly signed letter of protest addressed to the carriers and/or their agents and/or Nigeria Ports Plc/ Nigeria Airways and/or Road Carriers.

Policyholders
A policyholder, also known as ‘insured’ or ‘assured’, is that individual or company who, upon the payment of a certain sum of money called a premium to the insurance company, agrees to transfer a risk of uncertain event that, should the event occur, the insurance company would indemnify the policyholder for the loss suffered. A policyholder is the ‘owner’ or sometimes the beneficiary, of an insurance policy. Click here for more

INTRODUCTION TO INSURANCE

Life is full of risks – some are preventable or can at least be minimized, some are avoidable and some are completely unforeseeable. What is important to know about risk when thinking about protection is the type of risk, the effect and impact of that risk, the cost of the risk and what you can do to mitigate the risk.

Different types of risk abound, because life itself is a risk. Unfortunately, many people do not know what to do to mitigate these risks. If living is a risk, then every human being is expected to carry one form of protection or another. One can then confidently say that “if risk is like a smouldering coal that may spark a fire at any moment, then insurance is our fire extinguisher”.

So many people have attempted to define or explain insurance, but the simplest definition describes insurance as 'a form of risk management in which the insured transfers the cost of potential loss to another entity in exchange for monetary consideration known as the premium'. In other words, insurance allows individuals, businesses and other entities to protect themselves against significant potential losses and financial hardship by transferring such risks to a third party at a reasonably affordable rate.

Fundamentals of Insurance
The fundamentals of insurance revolve around pooling risks. This is to say that a large group of people who want to insure against a particular loss pay their premiums into what we can call an insurance bucket. Because it is expected that the number of the insured individuals is large, the insurance company can use statistical analysis to project what their actual losses will be within the given class. It is safe to assume that not all insured individuals will suffer losses at the same time or at all. This allows the insurance company to operate profitably and at the same time pay all claims that may arise.

The Risk Management Process
After an individual has determined that he would like to insure against a loss, the next step is to seek out insurance coverage. There are many options available to the individual but it's always best to shop around. One can go to the insurer directly through a company salesperson or sales outlet or indirectly via an intermediary such as an agent or broker, who can bind the policy.

The process of binding a policy is simply that of writing an acknowledgement identifying the main components of the insurance contract. It is intended to provide temporary insurance protection to the consumer pending a formal policy being issued by the insurance company. It should be noted that an agent could work exclusively for one insurance company or be a representative of the insured.

There are two types of agent:
1. Captive Agent: Captive Agents represent a single insurance company and are required to sell products/policies only on behalf of that one company.
2. Independent Agent: Independent Agents represent multiple companies and work on behalf of the client (not the insurance company) to find the most appropriate policy.

An individual can also purchase an insurance product from a broking firm, even though brokers are skilled intermediaries more geared towards rendering services to large, small and medium scale enterprises rather than individuals.

Underwriting
Underwriting is the process of evaluating the risk to be insured. This is done by the insurer when determining how likely it is that the loss will occur and how much the loss could be, and then using this information to determine how much the consumer should pay to insure against the risk. The underwriting process will enable the insurer to determine which applicants meet their approval standards. For example, an insurance company might only accept applicants that they estimate will have actual loss experiences that are comparable to the expected loss experience factored into the company's premium amount. Depending on the type of insurance product you are buying, the underwriting process may examine your health records, driving history, insurable interest, etc.

The concept of 'insurable interest' stems from the idea that insurance is meant to protect and compensate for losses an individual or individuals who may be adversely affected by a specific loss. Insurance is not meant to be a profit centre for the policy's beneficiary. People are considered to have an insurable interest on their lives, the lives of their spouses (possibly domestic partners) and other dependants. Business partners may also have an insurable interest on each other and businesses can have an insurable interest on the lives of their employees, especially key employees.

For insurable interest to exist, there must be a legally recognized and enforceable relationship with either an individual, a physical asset/item or an activity or event for which a negative financial outcome could arise in the occurrence of an event or series of events.

Insurance Contract
The insurance contract is a legal document that spells out the coverage, features, conditions and limitations of an insurance policy. It is critical that you read the contract and ask questions if you don't understand the coverage. You don't want to pay for the insurance policies and then find out that what you thought was covered isn't included.

Different Types of Insurance
There are some salient facts to note whilst buying an insurance policy. First, a consumer should understand that an insurance policy is a contract issued between the insurance company and the insured. Second, this contract provides that the insurance company will reimburse the insured in the case of loss or peril suffered; in return, the insured will pay premiums steadily, monthly or yearly as agreed, to the insurance company.

Third, the type of insurance must be listed in the insurance policy. Fourth, the insurance policy only covers the damages or losses which are more than the amount of the deductible or excess amount; every insured is required to bear a first proportion of every insurance contract, usually a fraction of the total value at risk. Last, this contract also has to include the value of the insured item and the insurance premiums.

Focus on Six Different Types of Insurance
Motor Insurance: Under the policies of motor insurance, coverage is provided for any damage caused by accidents (to the third party at least). The insured needs to pay the premium either on a one off annual basis or on a period basis (i.e. monthly or quarterly) to the insurer, who in turn provides compensation to the insured in the case of accidents and mishaps. There are three types of automobile insurance coverage – liability coverage to third parties, physical damage coverage to one's vehicle, and theft of vehicle or damage as a result of attempted theft. You can choose which coverage you want but the liability coverage is minimum compulsory cover by law.

Life Insurance: Life insurance is a plan which provides protection to the insured and his family with financial coverage in the case of death. To avail the benefits of a life insurance policy, the policy holder has to pay a premium to the insurer for a certain period of time. Benefits payable under a life policy can be specifically channeled towards events such as a child's education, taking out a mortgage, taking out loans, burial expenses, general living expenses, etc.

Health Insurance: Under this type of cover, medical expenses are covered. When an insured person needs medical treatment due to illness or accident, the insurance company provides coverage for his expenses, such as doctor fees, hospital fees, cost of medications and other related management bills.

Home Insurance: Home insurance provides compensation for any mishap that occurs to your home. Coverage is provided according to the policy and premium paid by the homeowner. There are various types of home insurance plan that you can choose from to suit your needs. You can cover either the property or its content or both, while cover can be arranged against fire damage, theft/burglary, flood water damage, wind storm damage, etc.

Disability Insurance: Disability insurance is the financial coverage provided to an individual when he loses his ability to work due to any illness or accident. There are two types of disability policy: Short Term Disability (STD) and Long Term Disability (LTD). In Short Term Disability, compensation is provided for a period usually subject to a maximum of two years. On the other hand, if you buy the Long Term Disability plan, you can get benefits for the rest of your life. Disability is defined as one's inability to make or earn a living according to a trade or skill learned or acquired over time such that cover purchased is against projected earnings over the short or long term period.

Business Insurance: If you have a business organization, be it small or big, you should always opt for business insurance policies to protect it from different risks. Under business insurance, you can buy policies that provide coverage for business property and liability. The most popular business insurance policy that is purchased by various business concerns is BOP (Business Owners' policy). BOP is a combined package that provides coverage for property insurance, business interruption insurance and liability protection. You could also buy each of these covers separately.

Conclusion
Given the fact that we face different risks daily, insurance represents a simple and cheap way to transfer these risks to specialized and licensed companies who have capacity and skills to indemnify you against losses. Therefore, it is not just important to protect yourself with insurance products, it is equally important to make your purchases from the right insurers.

Health insurance in Nigeria

Health insurance in Nigeria

Health insurance in Nigeria is very important, it is a guarantee that all medical/hospital costs will be paid without stress. Without health insurance, the patients and their relatives are having to pay for treatment, admissions, drugs, tests from their pockets or taking out loans with high interest rates. In these situations the patients becomes more unwell or a relative has fallen ill due to the stress caused in raising the funds to pay for the medical care.

The National Health Insurance Scheme is the regulatory and umbrella body for Health Insurance in Nigeria, it provides oversight for the Health Maintenance Organisation (HMO) and other organisations that are involved in the provision of Healthcare Insurance. The Health Maintenance Organisations are private or public incorporated companies registered by the National Health Insurance Scheme for the purpose of managing the provision of health care services.

There are many benefits of getting a health insurance plan, including:

· Payments for routine and regular screenings to enable early detection of potential/genetic health conditions e.g. screening for diabetes, cholesterol checks, vaccinations, mammograms etc.

· Hospitalisation: Admissions cost have risen by a huge step, daily charge ranges are from tens of thousands of naira to hundreds of thousands of naira, depending on the hospital and the ailment.

· Emergency care: So many people die from emergencies; sometimes because there is no money to get the needed appropriate healthcare. Services and devices to help rehabilitate an injured person also come with the package e.g., prosthetics, pacemakers for heart care.

· Pharmaceutical drugs: Prescription drugs should not be third options in healthcare management plans if money is not the first consideration.

· Laboratory tests

· Doctor visits/ check-up payments: There will be no need to miss that doctor appointment because you are worried about getting the doctor’s consultation fee.

· Paediatric care: Children’s health needs are covered by health insurance up to and including dental care, eye care etc.