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by Nike Popoola
Director-General, Nigerian Insurers Association, Mr. Sunday Thomas
The
Federal Government has removed the requirement for the presentation of
letters of administration by relatives of deceased workers before they
can get the insurance benefits of their breadwinners.
Letters of administration are an official
court order appointing someone as the administrator of a deceased
person’s estate where no valid Will exists. An administrator derives his
powers to act from the grant of the letters of administration, and
where the letter is not granted, an administrator cannot act.
The Director-General, Nigerian Insurers
Association, Mr. Sunday Thomas, told our correspondent that the decision
to remove the requirement for letters of administration as a
precondition for the payment of group life insurance policy benefits was
one of the amendments in the Pension Reform Act, 2014, which was signed
into law on July 1 by President Goodluck Jonathan to replace the 2004
version.
According to him, the insurance benefits
of deceased workers will no longer be transferred into their Retirement
Savings Accounts with the Pension Fund Administrators, but will now be
paid directly to the relatives of the workers by insurance companies.
The decision of the government will make
more people to now demand and get the insurance benefits of their
deceased relations. Before now, many relatives of deceased workers had
abandoned the quest to get the insurance benefits of their loved ones
who died in active service due to stringent rules guiding the issuance
of letters of administration.
Insurance operators say the Group Life
Insurance Policy, which originates from the PRA 2004, does not allow the
beneficiaries to have easy access to deceased workers’ claims when the
need arises.
Section 9 (3) of PRA 2004 states, “The
employer shall maintain life insurance policy in favour of the employee
for a minimum of three times the annual total emolument of the
employee.”
The insurance claims will be transferred
to the Retirement Savings Account of the deceased worker and can only be
accessed by the beneficiaries if the worker made a Will before he died.
In the absence of a Will, the beneficiary
must present the letters of administration, the process of which
sometimes take years to get.
This impediment, insurers noted, had
often discouraged relatives of deceased workers from demanding for the
insurance claims when their breadwinner died.
Thomas said the presentation of letters
of administration was not a requirement of the insurance companies, but
that of the PFAs.
“The delays that arise in transferring
the benefits from insurance firms to the PFAs when there are a group
life insurance claims and demand for letters of administration have been
removed. The provision of the insurance law regarding payment of claims
is now being implemented, which means the main beneficiary will be paid
directly and that reduces the delay that occurs in claims settlement,”
he said.
Before the advent of the PRA 2014, he
explained that claims used to be paid into the RSAs of the workers, with
the PFAs enforcing the requirement for letters of administration.
The only ground on which an insurance
company will now ask for the letters of administration, according to
him, is if the deceased worker did not leave any beneficiary behind.
The director-general said the PRA 2014
had also elevated the status of insurance firms in the management of the
Contributory Pension Scheme in terms of administration of retirement
benefits by giving the National Insurance Commission a chance to have
its representative on the board of the National Pension Commission.
Thomas said this would enhance shared regulation, synchronisation and alignment of policies between the two regulatory bodies.
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