The Untold Story of Dana Air Crash and Unpaid Insurance Claims
Dana Airlines has resumed flights in the Nigerian air space. But whilst the insurance industry may have honoured most of its obligations that arose from the ill-fated Dana airlines flight No. 992 in Iju, Lagos, many remain in limbo as to why claims on passengers that lost their lives in the accident are yet to be paid fully. Nnamdi Durugives an update on the issues.
Dana Airline’s Boeing MD 83 aircraft flight No. 992 crashed on June 3, 2012 into Iju area of Lagos State, killing all the 153 passengers and crew on board as well as another 10 on the ground. The aircraft, which crashed in a densely populated area, also destroyed several properties on the ground as well as a house whose occupants included a couple that died, rendering their three young children orphans.
Following the agitation of Nigerians who alleged negligence on the part of the airline, the Federal Government suspended its operational license and restored it four months after. The airline has since gone back to business, leaving many Nigerian wondering why the government allowed other aircraft from the airline’s fleet resume flights while families that lost their loved ones are yet to be fully compensated.
Dana Aviation Insurance
The management of Dana Airlines and insurance companies, both local and foreign, agreed to insure its fleet of aircrafts at a premium of $1,448,206 (equivalent of N225.92 million).
A reliable source confirmed that the deal which was brokered by Aon Plc saw Lloyds of London taking 70 per cent of the premium which amounts to N158.14 million ($1,013, 745) while 30 per cent amounting to N67.78 million was retained by the local insurers.
In the local market, Prestige Assurance Plc its lead insurer and took on 8 per cent of the risk. The co-insurers include Leadway Assurance Company Limited, which took on 7 per cent of the risk; NEM Insurance Plc took on 5 per cent of the risk; and Sterling Assurance Plc that took 3 per cent of the risk.
The other co-insurers are Continental Reinsurance Plc with 3 per cent of the risk, Aiico Insurance Plc, which absorbed 2 per cent of the risk and Standard Alliance Insurance Plc with 2 per cent.
Whenever and wherever Dana claims is mentioned, most Nigerians associate it with the controversies over the insurance claims arising from the accident. But contrary to this belief, claims that arose from the air disaster are multi-faceted.
However, several claims arose from the air disaster and it involved not only the eight regular insurers on the Dana group insurance account, which Prestige Assurance led.
The claims, particularly those made on other insurers other than the regular insurers on the account included individual and group life assurance claims and personal and group accident claims.
These are aside from the aviation claims that are being resolved by the appointed representatives of the reinsurer Llyods of London. The aviation claims could be classified into life, aviation hull and cargo as well as third party claims.
Individual Life Claims
These are claims presented to various life insurers by relative of some of the passengers who lost their lives in the accident. For those passengers who had life assurance policies, their relatives would have made claims on such policies by now.
Most of these claims may have been finally settled by the affected life insurers by now except where there are problems stopping the affected life insurers from paying claims to the designated beneficiaries.
This is particularly because, in every life policy, the assured is expected to clearly name the beneficiaries of the policy in the event of death of the life assured. All the insurance company had to do in this case is to notify the families who come up with all the necessary documentations to enable them claim on the policy.
Group Life Claims
Another very important aspect of the Dana air crash claims which many Nigerian have almost totally over looked is the group life assurance claims.
The Pension Reform Act, 2004 mandated employers to take out group life assurance to the extent of 300 per cent of individual workers’ annual salary for the benefit of their respective employees. Related to this too, is the fact that many organisation before the mandatory group life assurance, have different group life policies in place in addition to the one made compulsory by the act.
At the death of affected passengers in the air disaster, the policies triggers and claims made by the organisations whose staff lost their lives in the crash may have been met by now.
Some of the organisations whose group life policies may have been met include the Central Bank of Nigeria (CBN), Nigerian National Petroleum Corporation (NNPC), office of the Head of Service of the federation (OHOSF) for victims who may have worked for the Federal civil service and other organisations in the private sector.
Most of these claims may have been fully settled, except where there are problems with the named beneficiaries, including where the named beneficiary may have died and the victim was unable to change it before the accident.
Personal and Group Accident Claims
As in the case of life assurances, individuals and groups may have had in place personal or group accident policies which triggers when the insured sustains injuries in the air crash.
In this case and going by the fact that there is no survivor in the air crash, except in the case of victim on ground who may have any of such insurances, there would be no claims in this regard.
This is because the policy triggers not on death but when the insured sustained injuries as a result of accidents.
However, for any ground victim that may have had personal or group accident policies, his or her claim may have been settled by now.
Dana Aviation Claims
This is what comes to the mind whenever the Dana crash arises and here lies the problem lie. These claims cover the lives of passengers, aircraft hull and cargo.
Claims that may have risen from the air disaster with regard to the hull and cargo is expected to be resolved amicably since the value of the aircraft hull and the cargoes it is carrying could be ascertained with precision. Also, this involved negotiation between the insured and the insurers without any third party involved and there are global rules on how to calculate liabilities in this regard.
It is only the passenger and third party claims that are problematic because, the claimants are third parties under the contract and may have not had a good understanding of the insurance contract that exists between the airline and the insurers.
The third party claims include life of affected people and victims who lost their lives on ground, properties destroyed as a result of the accident or those destroyed in order to gain access to the accident site.
Complaints of Irregularities
Some relatives of the crash victims alleged irregularities and deliberate delay in the payment of the initial compensation on the trio of the management of Dana Airline, Prestige Assurance Plc and the foreign reinsurer, Lloyds Syndicate of London represented by Clyde and Co and its Nigerian representatives, Yomi Osikoya & Co.
While some raised an alarm that their names were advertised as having collected the $30,000, they were yet to receive any such money from any of the parties others alleged that they were short-changed by the trio, having been paid $15,000 instead of the full amount.
Some others accused the managements of Dana Airlines and Yomi Osikoya & Co were threatening them to withdraw the suit the instituted against Dana Airlines in the United States even as another would-be beneficiary alleged that the airline’s management and legal representative of the reinsurer forced him to go through a DNA test and secure a Letter of Administration but still refused to pay him or his proxy the said $30,000 initial compensation.
Payment So Far
As at last month, the lead insurer on the Dana Airline account, Prestige Assurance confirmed that 81 relatives of crash victims had received the initial $30,000 as at December 1, 2012, adding that the remaining 70 per cent of the claims would be paid to them when they meet the necessary claims conditions, including presentation of valid letters of administration from the state government.
None of the victims’ families have received compensation in full including the man who claimed he has submitted a letter of authority empowering him to administer the estate of his late daughter.
Prestige Clears Self
The lead underwriter for the Dana Airlines, Prestige Assurance has absolved itself from all blames regarding delays in payment of the initial compensation to relatives of the crash victims, saying it was neither responsible for negotiating nor verifying claims made by the bereaved families and that its duties under the contract stops at contributing its share of verified claims.
The Managing Director of the company, Dr. Anand Mittal, responded to allegations made against the insurers and absolved Prestige Assurance from blames with regard to the complaints of the stakeholders.
He said Prestige Assurance has paid $2.609 million dollars as at last month, being compensation to victims of the deceased and legal fees to relevant organisations handling various aspects of the claims.
According to him, the payment of the initial $30,000 compensation to families of the crash victims ran into trouble when multiple relatives started laying claims to the benefit of some victims.
According to him, Prestige Assurance role stops at paying its share of verified claims on the advice of the legal representative of the reinsurer, Lloyds of London, Yomi Osikoya & Co. which is the firm handling all the claims on behalf of its principal.
He explained that, it is the responsibility of the reinsurer based in London to verify and negotiate claims arising from the accident through its Nigerian agent in line with the insurance contract as approved by NAICOM.
Mittal emphasised that under the insurance contract, the job of Prestige Assurance in its capacity as lead underwriter is limited to making available 30 per cent of every verified claims on behalf of all the co-insurers; adding that it was not concerned about how the reinsurer and its representatives arrive at the final claims figures.
Mittal however, challenged those making the allegations to come up with proofs of the misbehaviours as alleged. The insurer noted that it is not its duty to prying into how the reinsurer investigates the claims and how he negotiates with victims’ families to arrive at the amount of the claims, particularly the liabilities claims which amount could only be determined by the court or through negotiation with all the parties affected but assured that with adequate proofs, it will take the issue with the reinsurer.
Letter of Authority
A necessary condition for the settlement of the aviations claims to relatives of victims of the air crash is the presentation of a valid letter of authority by the claimant. This is actually the root of most of the allegations and counter-allegations on the Dana Claims.
Letter of Authority is a legal document empowering any holders to administer the estate of the deceased and as such with such a letter, the holder is qualified to claim the benefits payable on the live of his relative.
This document is usually issued by government and as usual it is not something that one could walk into a court room or any government office and come out with it. This is issued after series of investigations to ensure that the personal is the lawfully appointed or rightful administrator of the deceased estate.
Most relatives of the victims of the accident have not been able to obtain this document from government talk more of presenting it to the insurers. This is a major cause of delay in settling the claims
Many Nigerian men are married to more than one wife and in some cases the second and other wives are secret wives and mistresses who have children for them. There are cases where these secret wives also lay claims to the benefits payable on the lives of the deceased.
Related to this, is the case where there are distrust between the wife or husband of the deceased and the victim’s families. This usually results to multiple claims on the life of a deceased passenger. When this happens, the insurers should do all the necessary to ensure that the rightful person is paid or it may have to pay the claim more than once.
What was obvious in such cases, particularly with the payment of the initial US$30,000 preliminary claims on the lives of the victims is that the insurer splits the cheque and pay the various claimants.
Need for Awareness
The insurance industry may have earned a bad name and suffered an image crisis as a result of complaints of unsettled commitments with regard to the accident even when it is clear that the industry may have played its part creditably in the face of suffering by relatives of the victims of the air disaster.
The industry, particularly the insurers on the Dana Group account and those that may have settled various claims arising from the accident should come up with relevant publicity to create awareness that insurance actually pays, when the conditions of the contract are met by the insured or beneficiaries of the policies.