Nigeria’s Insurance companies often rely on section 57 (1) of the Insurance Act to deny
administrators or executors’ rights to receive policy proceeds under a life insurance policy on the
demise of a policyholder.
Our commercial litigation team recently challenged a leading insurance company for refusing to
pay an administratrix of the estate of a policyholder.
Background
The movable, intangible, and immovable properties of a deceased person and other belongings of
a dead person is known as an estate in law, and in law, insurance policies are intangible
properties.
In Nigeria, each State of the Federation has an estate administration law, while the Administration
of an estate in the Federal Capital Territory is under the Administration of Estate Act.
Usually, should Okon die without a Will, persons interested in his estate will approach the
Probate Registry of the State High Court where Okon died or a probate registry of the State where
he has an immovable property.
Suppose Okon owned immovable properties in different States. In that case, the persons
interested, acting by themselves or a lawyer, may obtain a letter of Administration without Will
from one State and reseal the letter of Administration in other States.
Resealing is a legal term for applying to another state government to recognize the letter of
Administration by allowing the administrators to pay the estate fee – a form of post-humous tax –
to transfer Okon’s interest in those properties to the administrators.
However, when Ziglar died after making a Will, a document that distributes her estate to named
persons, her executors managed her estate after obtaining a letter of probate under similar
circumstances described above.
An administratrix is a singular term for administrators. Our commercial litigation team
challenged an insurance firm that sought to exclude the policy proceeds from the estate of a
deceased policyholder.
The insurance firm relied on section 57 (1) of the Insurance Act in a weak attempt to exclude the
policy proceeds from the estate under the pretext that an alleged next-of-kin’s interests in the
policy ranks higher than the administratrix’s.
What about Section 57 (1) of the Insurance Act
other event without inserting in the policy the name of the person interested in it or those
whose benefit or on whose account the policy is made.”
Our commercial litigation team submits that section 57 (1) of the Insurance Act provides for a policy’s validity and not the Administration of the policy proceeds, which is governed by the Administration of estate laws.
To underscore the legislative intention, we highlight that policy wagering is the mischief or social anomaly section 57 (1) of the Insurance Act sought to correct.
Porous means of identification of Nigerians before the advent of the NIN (National Identification Number) increased wager policy in Nigeria, which the section forbids.
There is no actual conflict – save in the imagination of the insurance firms – between the
Insurance Act and the Administration of the Estate laws – a matter on which we are unaware of
any judicial pronouncements.
Moreover, a named beneficiary under section 57 (1) of the Insurance Act is limited to the
policyholder and not a stranger, including a next-of-kin.
The section speaks to the validity of a policy vis-à-vis “inserting in the policy the name of the person
interested in it”. The persons interested in the policy following a policyholder’s demise are the
administrators or executors.
Furthermore, the last lap of section 57(1) of the Insurance Act applies where a father or an
employer buys insurance for his daughter or employees respectively – it is a mere legal scarecrow
for insurance firms to lazily waive section 57(1) of the Insurance Act before a legal representative
of a policyholder.
Nevertheless, section 57 (1) of the Insurance Act sets the conditions for a valid policy. At the same time, the Administration of Estate laws provide for the Administration of the Estate of a
deceased policyholder.
Within the precincts of the judicial norm of a community reading of the legislation, section 57 (1)
of the Insurance Act cannot reasonably limit a legal representative’s interests in a policy even if
there is a named next-of-kin.
Conclusion
Although commercial reasons justify an alternative dispute resolution approach, Nigeria’s
jurisprudence is insufficiently developed and remains largely undeveloped.
Globally, businesses use legal scarecrows against their customers, and the Nigerian judiciary’s
snail speed promotes the unintended culture of legal scarecrows among some service providers
and other companies in Nigeria.
Yet, section 57 (1) of the Insurance Act speaks to a policy’s validity and bears no consequence on
estate administration in Nigeria.
SRJ Legal is an education law firm. We complement our education law practice with fintech and commercial dispute (litigation). At the same time, we provide corporate counsel
services to businesses and individuals, including families.
