Impact of Indemnity Legal Principle on Settlement of Claims in Nigeria Insurance Company
Chapter One
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To ascertain the impact of indemnity legal principle on settlement of claims in Nigeria insurance company
- To find out what the perception of the public is towards insurance companies.
- T ascertain the relationship between indemnity legal and settlement claim in insurance company
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INSURANCE OBLIGATIONS
Samples of commonly available professional indemnity insurance policy documents were reviewed in order to better understand the obligations imposed upon professional valuers as the insured party. Two policies will be examined for the purpose of this discussion; however, the policy providers will not be identified. These policies are a general professional indemnity insurance policy (Policy A) and a valuation industry specific policy (Policy B). It is important to note that these policies are indicative only of general practice and it is necessary to specifically review any policy wording carefully to identify the actual notification obligations of the insured under that policy. Policy A is a general professional indemnity insurance policy that provides similar cover for loss incurred by the insured party subject to stated exceptions and limitations. Loss is defined to mean payment made pursuant to any legal obligation regarding a claim, as well as the costs of any defence (as defined). Policy A defines claim by reference both to formal legal process and as “the receipt … of any written demand for civil compensation or civil damages or nonmonetary civil relief”. The insured has an obligation to provide “written notice” of any claim “as soon as practicable”. Relevant documentation must be provided to the insurance company as soon as possible and in any event not later than 90 days after the end of the period of cover. Policy B is a policy that is targeted to property valuers and is stated to provide cover (to an agreed maximum) for claims made arising out of conduct by the valuer in breach of their professional duty to their client. The amount covered extends to cover the reasonable costs of investigation and defence of any claim. This policy is subject to a number of limitations and exclusion provisions as well as requiring the use of specifically worded disclaimer clauses in certain types of valuations. Of relevance here is that Policy B obligates the insured valuer to give to the insurance company “as soon as practicable”, and in any event before the end date of the policy of insurance, written notification of any claim and to send to the insurance company all relevant legal documents. The issue for this paper arises in respect of what is meant by the term claim. Similarly to Policy A, Policy B defines a claim to be both a legal document served as part of legal proceedings, whether in relation to litigation or arbitral process, which contains “a demand for compensation” and “the receipt of any demand for compensation. The policy later clarifies that it covers the insured, subject to stated exceptions, in respect of claims made against them “and notified” to the insurance company. This brief analysis of just two policies reinforces the difficulties valuers face in dealing with spurious claims. While both policies are broader than mere liability policies, as they protect the insured for loss arising both from litigation and mere demand (Pioneer Road Service Pty Ltd v QBE Insurance Ltd (2002)), this imposes other obligations on the valuers as the insured party regarding the requirement for notification of any demands received. This obligation is not limited to notification of formal court issued documentation. Although the insured valuer may not have breached any obligation owed to their client, in order for a valuer to have cover against any future liability arising from that transaction, they must notify the insurance company of any demand received by them. This includes notify any disputed or specious demands. This means that even if the valuer disputes the allegation, or does not intend to claim as the amount is below their excess (deductible), or the claim is never pursued, they need to advise their current insurer on renewal, or if looking to change insurers their proposed new insurer. Commonly renewal notices and applications forms specifically advise the (prospective) insured party of this obligation, and for a new application provides an area in which relevant information may be included. If the insured does not provide details of all demands received they risk their policy (if the failure to disclose is held to be fraudulent) being avoided (Section 28(2) ICA); or, more commonly, the insurer’s level or liability being reduced to put the insurer in the position they would have been in but for the failure (Section 28(3) ICA). While a claim for damages may be a matter that can be defended, the requirement for notification of potential claims cannot. Without notification now, or in the future advice of any demand received before renewal or granting of new cover, the insurance company will be within their rights to reduce a claim or avoid the policy or decline coverage. Without appropriate insurance cover, the valuer then will not be in compliance with their licencing obligations.
BEHAVIOUR OF FINANCIERS
There is a difficulty in discussing current financier behaviour in that, without a reported decision, reliance must be placed on anecdotal evidence found through examination of news stories, and drawn from personal conversations. That the practice has occurred, and continues to do so, is clear as recounted to the author by a senior industry representative (X, 2014). Changes to property prices stemming from changed development plans in the area in which the property is located (i.e. the proposed shopping centre being postponed; or construction of the next stage of the master planned community, which includes the swimming pool or gym, being slowed due to lack of demand), however, are beyond the crystal ball of even the most experienced valuer. What is also impossible to factor in is the potentially high risk lending practices that were, and arguably still are, engaged in by some financiers (Gaynor and Walsh, 2011).
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to impact of indemnity legal principle on settlement of claims in Nigeria insurance company
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on impact of indemnity legal principle on settlement of claims in Nigeria insurance company. 200 staff of selected insurance companies in Uyo was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain impact of indemnity legal principle on settlement of claims in Nigeria insurance company
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of indemnity legal principle on settlement of claims in Nigeria insurance company
Summary
This study was on impact of indemnity legal principle on settlement of claims in Nigeria insurance company. Three objectives were raised which included: To ascertain the impact of indemnity legal principle on settlement of claims in Nigeria insurance company, to find out what the perception of the public is towards insurance companies, to ascertain the relationship between indemnity legal and settlement claim in insurance company. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected insurance companies in Uyo. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up direct sales officers, marketers, senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Although there is the implementation of the Professional Indemnity (PI) Insurance, the enforcement is still lacking. To resolve or at least encounter the problem, the insurance companies should address this long-plagued issue. Since the data collected from the highly experienced professional as well as the supporting literature review, this outcome is significant as a basis to support and assist the insrancce decisions of improving the current condition of PI Insurance in Nigeria. Besides that, all parties involved have a significant role and the industry as a whole must collaborate and focus on promoting the effective implementation of PI Insurance among the companies
Recommendation
- A research on the impact of the run-off cover as the probability of claims made against a business after it closes and ceases operations is quite high. It is also essential for client protection as well as gives financial security to retired partners.
- A research on PI Insurance is to be made compulsory, will engineers be able to afford it especially the small medium consultants and to come out with some essential provisions in the mandatory PI Insurance scheme. Besides that, the aftermath of the implemented PI Insurance must be emphasized too as it may lead to large hikes on premiums as in the case of lawyers.
References
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- Anonymous. (2015). The history of insurance. Retrieved December 5, 2015, from http://cdn.knightlab.com/
- APCC. (2012). Professional indemnity insurance guidelines in the building and construction industy. Retrieved December 6, 2015, from http://www.apcc.gov.au/
- Beattie, A. (2008). The history of insurance. Retrieved December 5, 2015, from Investopedia website: http://www.investopedia.com/articles/08/history-of-insurance.asp
- Borscheid, Peter, & Haueter, Niels Viggo. (2012). World insurance: the evolution of a global risk network. Oxford University Press.
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