Insurance practitioner sues NIC

Edgar Kweku Wiredu, an insurance practitioner with 36 years experience in the industry, has dragged the National Insurance Commission (NIC) to court, over the introduction and implementation of a policy directive; “Limits on Motor Injury and Death Claims (CAP 2021)”.

Mr Wiredu, who is seeking an order for the NIC (defendant) to quash the said CAP 2021, has further filed an interlocutory injunction, to prevent the latter from enforcing the order on September 1, 2021.

Per the motion on notice for the interlocutory injunction, the insurance practitioner (plaintiff) is further urging the court to restrain the NIC and its agents, assigns, servants or connected persons that bear the responsibility of implementing or promoting the directive.

The injunction, which is sure to be moved on August 30, 2021, also seeks to halt the directive until the final determination of the substantive suit.  Per the writ of summons, dated August 23, 2021 and affidavit in support of the suit, the plaintiff seeks among other things;

Firstly, a declaration that the NIC’s directives entitled “Limits on Motor Injury and Death Claims (CAP 2021)” was against the express terms of the Insurance Act 2021 (Act 1061), specifically section 220 and 255, and consequently null, void and of no legal effect.

Secondly, an order directed at the NIC to expunge and delete the said CAP 2021 from the list of directives issued by the defendant to the insurance industry in Ghana.

Thirdly, an order of injunction against the NIC from implementing the said CAP 2021 and engaging in any consequential activities to promote the directive.

Fourthly, an order directed at the defendant to prescribe from relevant formula as envisaged under Act 1061 to compute compensation in respect of injury and deceased claims arising out of a motor accident.

Why the suit

According to the Mr Wiredu, the NIC has issued a directive, CAP 2021, to the insurance industry that was scheduled to take effect on September 1, 2021.

Thus, the implementation of the said directive would infringe on the rights of citizens who may be involved in a motor accident, especially third parties. It would also be a complete misinterpretation, which may also lead to misapplication of the true intent of section 220 and 225 of Act 1061 and other statutes.

Per the directive, the aggregate limit for private cars for individuals is GH₵150, 000; taxi is GH₵150, 000; minibus carrying up to 45 passengers is GH₵350, 000; buses or coaches carrying up to 65 passengers is GH₵700,000 and others GH₵350, 000.

The plaintiff added that after identifying the flaws in the directives, he wrote to the Commission to halt its implementation, but his efforts yielded no fruit.

He said “…I drew the attention of the defendant to the misinterpretation of section 220 and 255 of Act 1061 and its consequential misapplication and potential deleterious effect on the industry but all my efforts to halt the respondent’s attempts to give effect to its proposed limits on motor injury and death claims (CAP 2021) not yield any fruit till date.”

His explanation, in an email that was addressed to the insurance regulator and also attached to the writ, as an exhibit, section 255 is not asking anyone to determine the quantum to be paid anyone, spouse or dependant.

He continued that there is a difference between computation and limit, therefore, the NIC cannot replace the former with the latter, adding that directives are just administrative process, which cannot go contrary to the existing law.

Meanwhile, he argued that the law requires that the NIC prescribes a formula for computation of compensation in respect of injury and death claims settlement, following a motor accident and not a cap or ceiling.

What the section 255 says?

Avoidance of contracts of insurance of unlimited amount;

(1)   Subject to subsection (2), a contract of insurance entered into by an insurer after the commencement date, is void if it is a contract under which the insurer undertakes a liability the amount or maximum amount, of which is uncertain at the time when the contract is entered into.

(2)   This section applies to motor insurance contracts despite anything to the contrary in the Motor Vehicles (third party insurance) Act, 1958 (No.42).

(3)   The Commission, in consultation with the insurance industry shall by directives, prescribe a formula to compute the compensation in respect of injury and deceased claims arising out of a motor accident.

 What is CAP 2021?

The CAP 2021 is a policy guideline, which brings the practice of injury claim settlement within the provision of the law, particularly section 255 of the Insurance Act 2021, Act 1061.

CAP 2021 is structured into nine sections, which starts from the laws application to motor injury and death claims in the country, risks and provision that are covered under a motor insurance policy, standard claim areas and the eligibility for awards under motor insurance policy.
The other sections include; documents required for making claim, condition under which claim can be repudiated, injury claims and the limits on the payment for the different types of injury claims, death and funeral claims and the limits, treatment of fees paid to lawyers who helped claimants and definition used in the document.

For instance, CAP 2021, particularly on medical expenses, indicated that an injured person who received treatment from a private health facility is only entitled to payment that does not exceed twice the cost of similar treatment at a public hospital. Additionally, it states that in a circumstance that no medical bills were submitted, payment should not exceed GH₵1,000.00.

Furthermore, accident victims who earn salaries or wages and have endured temporary and permanent disability would not enjoy payment beyond 52 weeks income.

Those who will lose education and career progress opportunity, as a result of accident would be entitled to GH₵15,000 for education expenses and GH₵7,500 for apprenticeship. They are also to furnish the insurer with disability certificate every six months.

However, in a document titled CAP 2021-Directive on limits on Motor injury and death claims, dated July 12, 2021, attached to the suit, indicates to industry players that the said directive comes into force from September and all insurance brokers selling motor insurance are to ensure that the terms and conditions of the policies reflect the directive.