Group Life Insurance: Delay in Release of N5.4bn Premium Funds Stalls Contract Renewal


By Ebere Nwoji

The federal government’s delay in releasing about N5.4 billion funds for the payment of premium for the Group Life Insurance of the federal civil service workers is said to be a major factor inhibiting the renewal of the contract which expired three months ago, THISDAY checks have showed.

This is despite the prevailing no premium no cover law guiding insurance contract in Nigeria at present.

Insurance operators have insisted that should anything happen to any of the federal government’s employees whom the group life insurance  contract is meant to protect, they are not obliged to pay any compensation given the prevailing ‘no premium no cover’ regime.

Section 4 (5), of the Pension Reform Act, 2014 states that “Every employer shall maintain a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee and premium shall be paid not later than the date of commencement of the cover.

But in the case of federal government workers, the group life insurance contract for the year expired since July and the delay in its renewal has elicited criticisms from the general public.

THISDAY gathered from sources close to the Office of Head of Civil Service of the Federation that bureaucratic processes, contest for supremacy between the National Insurance Commission (NAICOM) and the Office of the Head of Service, and the non-release of the projected N5.4 billion funds for premiums by the Ministry of Finance were responsible for the delay in renewal of the policy.

The sources explained that the renewal will go through processes; first  the certification of the underwriters by the Bureau of Public Procurement (BPP), secondly the approval by President Muhammadu Buhari and lastly, request for release of funds by the finance ministry.

According to a source, the BPP had certified 20 out of the 21 insurance companies forwarded to it for the underwriting of the Group life insurance renewal of the civil servants, adding that though they had also written to NAICOM for confirmation but till date, NAICOM has not responded. However, he maintained that the Head of Service has no option than to go ahead with the list already certified by the BPP, which also was among the companies that NAICOM had already published in a newspaper advert as having been licensed by the commission.

Further, he indicated that though the Head of Service has commenced processes for the renewal of insurance of federal government assets, it has decided to conclude that of the Group Life Insurance in order not to over burden the government with so many requests for funds.

According to the source, there is no other problem regarding the policy renewal but government is just going through some processes.

He recalled that in February, this year, the government published an advert inviting insurance practitioners to apply and that took six weeks. After six weeks submission, it took government some time to process all their papers and after it had shortlisted those it wanted, it needed certificate of no objection from the BPP.

“After the response was received, we had to write to Mr. President for approval. So, since the day we got that approval from Mr. President, we’ve continued with the processes of making sure that the perfect thing is done before we present to the Ministry of Finance for payment. There is money for it, it is in the appropriation and nobody had told us that there is no money to pay for it.

“It is usually N5.4 billion annually for civil servants. That’s the figure and that had been recurring for the last three or four years. For this current one, I think we shortlisted 21 insurance companies and BPP gave us certificate of no objection for 20. And we can only work with those approved by the BPP and that approval has been confirmed by Mr. President, said the source.”

On the relationship between the Office of the Head of Service and the NAICOM, he maintained that the role of NAICOM begins and ends in advisory capacity as the apex regulator of the insurance sector and adviser to the government agencies on insurance matters.

He explained that though NAICOM could advise it, it is not bound to accept such advice as long as the processes of engaging under writers were in tandem with the law.

 “NAICOM is regulating the industry. That is the insurance companies, the underwriters and brokers. They are the one registering them, they are the one giving them their licenses and they only act as adviser to the government agencies like the Head of Service. Their role ends with advisory. As long as we make sure that those we are using are those licensed by NAICOM, we think we have done due diligence. And they cannot and will not say that we have not consulted them.”