Claims settlement in insurance contracts from a consumer protection perspective in Cameroon

Author:Comfort Fuah Kwanga
Position:Department of Common Law, Faculty of Law and Political Science University of Douala, Cameroon
Pages:37-53
SUMMARY

Everyone in the society is faced with the possibility of one or more hazards that are part of life will sooner or later befall him and may occasion some loss. This misfortune is uncertain as to the time and period when it will occur and this amongst others include: fire outbreak, accident, and even death. This necessitates the need for people to go for insurance policies which suit their various... (see full summary)

 
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Claims settlement in insurance contracts from a consumer
protection perspective in Cameroon
Lecturer Comfort Fuah KWANGA
1
Abstract
Everyone in the society is faced with the po ssibility of one or more hazards that
are part of life will sooner or later befall him and may occasion some loss. This misfortune
is uncertain as to the time and period when it will occur and this amongst others include:
fire outbreak, accid ent, and even death. This necessitates the need for people to go for
insurance policies which suit their various needs in order to permit co mpensation in case of
loss. Most consumers of insurance products are “short changed” in the process because
very few take the trouble to read through their insurance policies in order to ascertain and
understand the terms and conditions. The result is that most often when a claim arises and
it is disco vered that the loss is not covered by the terms of the insurance contract, there is
the tendency of blaming the insurance companies. This paper posits that: there are of
course some “bad eggs” in the industry who manipulate consumers. However, the paper
holds th at this unpleasant quagmire is often due to lack of understanding of the terms of
insurance contracts in general and consumer apathy in particula r. The essence of this study
is to re-iterate th e need to communicate the rules of the insurance game, thereby
minimizing some of the misunderstanding and problems faced by consumers.
Keywords: claims settlement, consumer protection, insurance contracts, Ca meroon.
JEL Classification: K12, K15
1. Introduction
Consumer protection is all about making sure that the consumer is not
treated unfairly in any way, be it in the provision of services or products. Consumer
protection is an essential component of any financial system
2
. In the area of
services, financial services play a major role. The pride of place it occupies in the
society cannot be over emphasized. This is because it facilitates, enhances and
reinforces the growth of commerce and industry both at the national and
international levels by providing the means for developing other areas of the
economy. It does this in two ways. First, it acts as a major financier of
infrastructural development. Again, it helps in creating a safer operating
environment for commerce and industry to thrive by offering security and peace of
1
Comfort Fuah Kwanga - Department of Common Law, Faculty of Law and Political Science,
University of Douala, Cameroon. E-mail: cfuah@yahoo.fr.
2
D. Armeanu, N. Istudor, M. F. Sgârdea and A.-M. Burcă, Analysis of the Romanian Insurance
Market based on Ensuring and Exercising Consumers’ Right to Claim, „Amfiteatru Economic”,
vol. XVI, No. 36, May 2014, p. 550.
38 Volume 7, Special Issue, October 2017 Juridical Tribune
mind to economic operators. Thus, without financial services, the consumer will
not be able to manage other areas of his life in order to maintain a decent living.
Insurance is considered to be one of the pivotal players in the financial
industry. It stands out as first among equals in this sector because of the edge it has
over and above other members of that class. Like banking and financial
institutions, insurance provides means for investment and financing of projects but
unlike them, insurance is the only means of risk spreading and compensation
financing.
3
Human life is full of many uncertain risks and to avoid the undesirable
outcome of such risks, it is necessary to turn towards insurance. No society can
actually prosper without the mechanisms of risk bearing to which we are exposed
on a daily basis.
4
Insurance is meant not only to cushion the consumers from the
effect of the harsh realities of life, but also to enhance their quality of life. One
thing, which is very certain, is that calamities such as deaths, fire outbreaks,
burglaries, accidents, sickness etc. must occur but the only uncertainty is when.
Insurance is meant to tamper the effect of these calamities when they occur. Thus,
the loss of the bread winner of the family need not signal the end of the children’s
education or that the family will live in penury.
5
However, there is strong insurance apathy in Cameroon. It would seem that
most Cameroonians have a very poor opinion of insurance as a means of protecting
their interest in the event of loss. Cameroonians have tales of disappointments at
the hands of insurance companies or insurers.
6
They actually believe insurance
companies are simply out to make money rather than pay claims. It is thought that
insurance companies are prompt to collect premiums but slow to settle claims made
against them by the insured and beneficiaries who are less well informed of the
mechanism of insurance.
7
As such claims avoidance is the major reason for
consumer apathy towards taking advantage of insurance services for his protection.
Insurance companies need to embark on prompt settlement of claims. This will
create awareness, confidence and more people will go for insurance. Most people
refrain from insurance because of the poor attitude of some insurance companies
and their intermediaries.
8
The aim of this paper is to examine claims settlement vis-a vis consumer
protection in Cameroon, with the view of making the consumer more aware of his
rights and the insurance companies more alert to their duties.
3
Insurance touches nearly every domain of economic and social activities: maritime, air, persons,
personal property, enterprises or collectivities and risk such as fire, natural catastrophies’,
automobile risk, medical and child education.
4
J. M. Fotso, “Les Defis de l’Assurance au Cameroun”, Collection Harmattan, 2011, p 10.
5
Insurance companies have been known to take up the responsibility of children’s education and
family upkeep where parents took up insurance policies before death.
6
Insurance is an operation which in general pu ts into relation the insurer who is considered as a
powerful party and the insured who is the weak party in the contract. The insured most often suffers
from multiple abuses.
7
M.S Ntumnde, Insurance Law in Cameroon, Presses Universitaires d’Afrique, Yaoundé Cameroon,
2012, p. 15.
8
Some insurance companies actually settle claims but there are some bad eggs in th e industry which
has led to such consumer apathy.

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