Over 50, 000 insurance policies lapse during Covid-19
Since April last year, when Covid-19 first sent the country into lockdown, 50, 022 long-term insurance policies have lapsed due to missed payments.
The scenario was far rosier for short-term insurance cover, which saw 850 policies elapse in the same 18-month period.
The bombshell was dropped in parliament by Minister of Finance and Economic Development, Peggy Serame, recently.
Serame was responding to questions from Bobonong Member of Parliament (MP), Taolo Lucas, who had wanted to know the number and type of personal insurance packages/policies that lapsed due to skipped payments of monthly premiums since the outbreak of Covid-19.
In response, the Minister revealed that out of 86, 000 policies in the short-term insurance, only 850 had lapsed.
“For long-term insurance, there were 50, 022 lapses; and 32, 990 surrenders out of 384, 636 policies,” she disclosed.
Serame explained lapses refer to the policyholder’s failure to meet the premium obligations, whilst surrender refers to voluntary termination of the policy by the insured.
“A client is allowed to surrender the policy and receive a surrender value, which is the paid-up sum, less administration and termination costs as contained in the policy document,” she pointed out.
Responding to an enquiry of whether there is a law or regulation that empowers insurance companies to take all or a larger part of policy accruals when an insurance package lapses due to missed payments, Serame said there is no such a law.
“There is no law or regulation in place that empowers insurance companies to take all or a larger part of policy accruals when an insurance policy or package lapses due to failure of payment of monthly premiums,” noted the Finance Minister.
Serame explained the law instead protects the insured and encouraged policyholders to report non-compliance by insurance companies to the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), in accordance with the Authority’s mandate of ensuring fairness within parties.
Furthermore, Serame told parliament there is no law that allows the Ministry to reinstate insurance policies or packages that lapsed during the State of Emergency (SoE).
“Therefore, there is no need to review the law as the insurance contracts by nature, specify the terms of the policy including reinstatement of the policy for example where the policyholder has cleared arrears or outstanding premiums.”
This refers to a range of insurance products that provide you either with an income in the long term – usually when you retire – or a lump sum of money should you become permanently disabled or pass away.
Generally speaking, this covers your possessions.
It refers to car insurance, home insurance, cellphone insurance, travel insurance, etc.
Your short-term insurance cover is influenced by circumstances such as your age and gender.