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

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.