Introduction
LAST week we discussed guidelines on Group Life Insurance Policy for Employees, jointly issued by the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom) pursuant to the provisions of the Pension Reform Act (PRA) 2014 relating to procurement and maintenance of Group Life Insurance Policy in favour of employees. We did discuss the legal framework; general requirement; eligibility of insurance companies; and group life insurance coverage. Today we will be discussing required documentation; operational terms; death of an employee; settlement of claims; sanctions and reviews.
Required Documentation
The employer shall provide, at the minimum, necessary information of its employees and beneficiaries as required in the Know-Your-Customer (KYC) guideline issued by NAICOM. Each employee shall obtain a Group Life Insurance Certificate from the insurance company.
The certificate stated above, shall be accompanied by a schedule which shall indicate, amongst other things, the period of coverage, renewal date, number and details of staff including their gross total emoluments, the benefit payable, the annual premium and date of payment.
The employer shall display a copy of the Group Life Insurance certificate in a conspicuous place within the premises, for the information of the employees, and as evidence of having taken such policy.
Where the employer fails to notify the insurance company of the employee’s death as above, the employer shall be liable to pay the death claim from its resources. Where the employer failed to carry out a Group Life Insurance on behalf of his employee and death occurred in active service, such employer shall be liable to pay the 300% of the gross emolument for the Group Life Insurance Policy to the beneficiaries of the deceased employee in line with the provisions of the PRA 2014. Where an employer fails to insure its employee up to 300% of their gross emoluments as defined above, the employer shall be liable to pay the difference to the beneficiary of the deceased employee.
The employer shall be required to commence renewal negotiations in writing two (2) months before the expiration of the subsisting insurance cover. The employer shall conclude negotiation for renewal before the last day of the subsisting cover.
The employer shall make payment of the insurance premium before the commencement of the cover.
Where an employer fails to effect payment of premium at the stipulated time, the insurance company shall report such failure to PenCom through NAICOM within fourteen (14) days of non-receipt of premium.
Operational Terms
The sum insured for the purpose of Group Life Insurance shall be at the minimum 300% of gross annual emolument.
The Group Life Insurance Policy document shall clearly define the procedure for filing and settlement of claims.
The premium rates payable on Group Life Insurance Policies shall be within the rate table stipulated by NAICOM.
Death of an Employee
Where an employee dies, the employer shall immediately notify the insurance company and commence processing death benefits claim on behalf of the deceased employee, as prescribed in the operational terms of Group Life Insurance Policy and in all cases, not later than (365) days from the date of the incident giving rise to a claim.
Where the employer fails to notify the insurance company of the employee’s death as above, the employer shall be liable to pay the death claim from its resources.
Where the employer failed to carry out a Group Life Insurance on behalf of his employee and death occurred in active service, such employer shall be liable to pay the 300% of the gross emolument for the Group Life Insurance Policy to the beneficiaries of the deceased employee in line with the provisions of the PRA 2014.
Where an employer fails to insure its employee up to 300% of their gross emoluments as defined above, the employer shall be liable to pay the difference to the beneficiary of the deceased employee.
Notwithstanding the provisions above, any employer who fails to maintain a Group Life Insurance Policy for the benefits of its employees is in contravention of the PRA 2014.
The employer shall provide at a minimum the necessary information of its employees and beneficiaries as required in the Know Your Customer (KYC) issued by NAICOM.
Missing Employees
Where an employee is missing, the employer shall report to employee’s Pension Fund Administrator (PFA).
The PFA, after its due diligence and necessary confirmation, shall notify and request PenCom to set up a Board of Inquiry for the missing employee.
The PFA shall submit all necessary documentary evidence required for constituting the Board of Inquiry for a missing employee as stipulated in the Regulation on the Administration of Retirement and Terminal Benefits issued by PenCom.
The documentary evidence required shall include the police report, letter of confirmation of disappearance from the employer, employee’s passport photograph, newspaper publication of the missing employee and any other document as may be required from time to time.
The Board of Inquiry set up by PenCom shall determine, having regards to available information and all relevant circumstances, whether it is reasonable to presume the missing employee dead.
PenCom shall communicate the decision of the Board of Inquiry to the employer, the Insurance Company, the PFA and NAICOM.
Where the Board of Inquiry presume the missing person dead, the provisions of section 8 of the PRA 2014 shall apply.
Settlement of Claims
The insurance company shall communicate acceptance or rejection of liability in respect of death claims from the employer not later than 90 days after the claim has been delivered.
The insurance company shall settle claims not later than 90 days after the issuance of discharge voucher.
Any complaints relating to claims settlement shall be resolved with the insurance company. Where such complaints remain unresolved, the employer shall notify NAICOM.
The employer shall notify NAICOM of any dispute, discrepancies or non-settlement of claims within the time specified above, and copy PenCom.
The total sum due as proceed of the Group Life Insurance policy of the deceased shall be paid directly to the named beneficiary(ies).
Sanctions
PenCom shall impose administrative sanctions against any employer for non-compliance with any provisions of the guidelines.
Where an insurance company violates any provisions of the guideline, the insurance company shall be sanctioned appropriately by NAICOM.
Review
The guideline is subject to review undertaken jointly by NAICOM and PenCom from time to time.
Conclusion
The above concludes our discussion on the Revised Guidelines on Group Life Insurance Policy for Employees. We hope that the guidelines will go a long way in assisting employers, employees, pension desk officers and union officials on the provisions, processes and procedures of group life insurance policy. Once more, we wish to remind all that the guideline is on the websites of both PenCom and NAICOM.
