Payment of insurance claims to over 200 victims of the recent Dana Air crash in Lagos may suffer some delays as investigations have revealed that management of the airline may not have paid the full premium for coverage of the risk in the current year.
This means that the victims were not protected in the insurance contract entered by Dana Airlines with the insurance companies if the law of “No premium no cover,” a contract term in the business of insurance between the insured and the insurer, was to be applied in handling this case.
According to BusinessDay’s investigations, Dana was said to have paid premium to the international insurer Aon of London holding 70 percent of the total risk, while seven local insurers led by Prestige Assurance plc holding 30 percent were said to be owed their portion of the premium.
Apart from Dana Airlines, investigations also revealed that many other airlines in the country are in the habit of defaulting or delaying in payment of premiums, particularly to local insurers, breaching the terms of the contract. Section 50(1) of Insurance Act2003 stipulates that “the receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium paid in advance.”
Although the National Insurance Commission (NAICOM) has assured that the seven Nigerian insurance companies affected by the crash would pay claims arising there from promptly, the issue of non-payment of required premium has however been brought to the commission’s notice.
At a meeting between NAICOM and the representatives of the lead underwriter, Prestige Assurance and Lloyds of London , the issue came up but the commission insisted that due compensation has to be paid as soon as possible.
The value of the risk, BusinessDay learnt, is $4.5 million for haul while combined single limit is put at $350 million, all put together at $354.5 million.
Under the Montreal Convention, air carriers are strictly liable for proven damages up to 113,100 special drawing rights (SDR) (Updated from 100,000 on December 31 2009), a mix of currency values established by the International Monetary Fund (IMF), approximately $138,000 per passenger at the time of its ratification by the United States in 2003 (as of December 2011, around $175,800).
0 comments:
Post a Comment