The Nigerian Insurers Association (NIA) says its member companies will honour claims arising from COVID-19, even as it confirms full reinsurance backing.
The umbrella body of insurers also said that though the COVID-19 is a strange sickness that was never before, anyone who had taken a life insurance and suffers loss as a result of this sickness will be compensated adequately.
The Association also said also that their reinsurance partners will have no reason to reject claims arising from the COVID-19 pandemic, either death or permanent disability.
“The cover provides for life benefit, so any incident by this cause will be honoured, Tope Smart, chairman of the NIA said.
This is a situation like no other one ever, no statistics, so I do not see any reinsurance company rejecting claims from COVID-19, Moruf Apampa, executive director, Operations, FBN Insurance said.
Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself from the risk of a major claims event. With reinsurance, the company passes on some part of its own insurance liabilities to the other insurance company.
According to analysts, the capital buffers of some of the largest reinsurance companies have been significantly shrunken by the financial market declines seen in the last few weeks because of the COVID-19 coronavirus outbreak, potentially reducing their ability to weather any major catastrophe events that occur.
And with stock markets around the globe generally down 20 percent or more over the last two or three weeks and other asset classes also significantly impaired in terms of value, fears are that the capital buffers of reinsurance companies have become smaller as a result.
But a Willis Re report shows that while COVID-19 dramatically disrupted the financial markets, reinsurers took a measured approach to the April renewals – which saw significant rate increases on loss-affected accounts and more modest rises on loss-free business.
According to the report, the global reinsurance sector moved smoothly to the new working-from-home model following the COVID-19 outbreak and was able to provide uninterrupted service.
“Having demonstrated its ability to manage the operational challenges of COVID-19 so far, the global reinsurance industry is well placed to demonstrate its ability to manage the longer-term financial challenge and continue with its mission of providing support to primary insurance companies and their policyholders.” said Willis Re global CEO, James Kent.
He also said that the timing of the COVID-19 disruption fortunately coincided with the global reinsurance market being in a very strong financial position supported by strict regulation.
