In the CIMA region, late claims settlement – or even non-payment – is one of the main factors that has a lasting impact on public confidence in insurance products and, consequently, on insurance penetration, which stands at less than 3%. For many stakeholders, there is an urgent need to reform claims management mechanisms if the sector’s image is to be restored and new foundations for its growth laid.
Against a weak insurance culture, poor claims management contributes to the erosion of trust between policyholders and insurers. Unfortunately, this phenomenon is a reality in the CIMA zone. It is characterised by prolonged delays in compensating policyholders or victims, or by non-payment, and is attributable to factors both internal and external to the companies.
For the CEO of SOREC-Assurances in Senegal, Ndiouga Kandji, insufficient cashflow is cited as one of the main causes of non-payment of claims.
“Without sufficient cashflow, the company may be forced to resort to delaying tactics, either to postpone payment of the benefit or to rely on the weariness or discouragement of policyholders and/or victims. Due to insufficient cashflow, companies may even stop paying claims during the final quarter of the year, in order to meet the liquidity ratio as at 31 December,” he emphasises.
These unhealthy practices, he notes, undermine the confidence of policyholders and beneficiaries, he stressed.
In addition to the cashflow issue, there is a lack of communication between the policyholder or claimant and the insurer during the claims process, the uncontrolled length of time taken to process claims despite the existence of procedure manuals, the shortcomings of inter-company recourse systems, and disputes between insurers and reinsurers that hold up payments. According to Soro Gninadema, director of claims and litigation at Atlantique Assurances Côte d’Ivoire, the failure to speed up claims settlement is due to administrative bottlenecks across the company’s various departments.
In the accounts department, for example, the problem lies in a lack of understanding of technical principles, a lack of awareness of or neglect of the company’s obligations, a disconnect between the claims procedure and the accounting procedure, and cashflow pressures and term deposits. As a result, claims are pushed to the back burner and the time taken to issue cheques is prolonged, he laments.
At the senior management level, priority is given to VIP clients and emergencies or disputes, as well as to account and investment management. As for factors external to insurance companies, Kandji continues, these relate to delays in receiving accident reports, incomplete details in reports of personal injury accidents, and the slow resolution of cross-border claims.
Frequent disputes over the content of medical reports
Taking the specific case of the management of compensation for victims of road traffic accidents in the CIMA zone, the Nigerian magistrate Mahamadou Salissou Elhadji Attaher considers that delays or prolonged waiting times can be attributed to abuses during the settlement process (persistent failure to comply with the scales), frequent disputes over the determination of liability and the lead negotiator in complex accidents, frequent disputes over the content of medical reports, the dysfunction of bodies responsible for the amicable settlement of disputes, and the lack of familiarity with the provisions of the CIMA Code among legal practitioners.
In view of these shortcomings, which negatively impact the image and credibility of the CIMA insurance market, structural and sustainable solutions must be implemented.
Consultant Ndiouga Kandji recommends that the market implements organisational, technological and operational innovations capable of modernising claims management. This should begin with the decentralisation of claims management to direct offices and branches located outside capital cities, the establishment of a proactive system for managing motor personal injury claims, the monitoring of the application of claims handling procedures, and a system for the systematic and continuous identification of claims ready for payment.
To reduce the internal processing time for claims files, magistrate Attaher suggests, amongst other things, digitising the procedures for investigating claims and settling claims, whilst increasing staff numbers, particularly in the claims and accounts departments; and reviewing and extending certain liability scales, relying much more on liability in concreto.
Transforming claims management into a driver of trust
He also calls for the reactivation of dormant national arbitration commissions; raising policyholders’ awareness of their role in the amicable settlement of disputes, of motor third-party liability insurance products, and of the role of national directorates; and modernising and intensifying inspections of insurance companies to ensure compliance with the CIMA Code. Not to mention the need to organise training workshops for magistrates on the application of the provisions of the CIMA code relating to compensation for victims of road traffic accidents.
“Public confidence in insurance companies rests on the fair and timely settlement of claims. Motor third-party liability insurance is the showcase of all insurance operations and is a sector upon which the credibility of insurance companies depends, given the prominent place it occupies in their portfolios. Therefore, stabilising this sector opens the door to growth across all insurance sectors,” he concluded.
It is therefore important for the market to define strategic directions to transform claims management into a driver of trust and innovation. According to Kandji, continuing to stabilise the sector should be the top priority.
“Effective claims management in a market, first and foremost, requires that the insurance companies operating within it are solvent and understand that their primary duty is to meet their obligations towards policyholders and beneficiaries, before seeking to make a profit. That is why we should encourage the national supervisory authorities and CIMA to continue their work to clean up the markets,” he insists.
Making claims settlement a market priority
The implementation of a policy of transparency in claims management within companies is therefore necessary.
“In many companies, claims management is not transparent; policyholders and victims come up against the all-powerful position of the companies, and do not always understand the reasons preventing their compensation. To put an end to this lack of transparency, an operational communication system should be put in place as soon as a claim is reported and the victims identified,” he suggests.
In this regard, artificial intelligence (AI) can offer a solution for successfully implementing this necessary, far-reaching transformation of claims management at various levels. This includes the automatic processing of claims, the extraction of data relating to the policy involved in the claim, the automatic verification of contractual cover, the automatic application of the CIMA liability scale in the event of a motor claim, and the automatic response to queries from policyholders and beneficiaries. But without losing sight of the human role.
“The future of claims management will no longer be 100% human nor 100% cent digital; it will be hybrid,” concludes Kandji.
In addition to these solutions, Soro Gninadema adds that improving claims settlement requires effective advice and support for the policyholder from the sales representative: better presentation of insurance products, constant monitoring of the portfolio, taking into account feedback from the claims department, and making claims settlement a market priority.
Gninadema also highlights regular training for claims adjusters, the introduction of direct compensation for policyholders, the digitisation of processes, the acquisition of high-performance specialist software, the allocation of dedicated claims archivists, the streamlining of the intermediary network, and compliance with production procedures.
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