Enforcing Building Insurance


In this report, Ebere Nwoji writes on the need to enforce the law on building insurance in the country, following recent cases of building collapse

The recent collapse of a three-storey building in the Ita-Faji area of Lagos Island Local Government, in which many people including school children lost their lives calls for enforcement of the compulsory building insurance laws, which implementation has been lying low over the years.

Building insurance is one of the five compulsory insurances stipulated by insurance Act 2003, but has been far from implementation at both federal and state levels.

When THISDAY visited the collapsed building site, it was discovered that the building had no insurance cover and none of the dead or injured victims had any form of insurance.
Indeed, one of the land owners in the area told THISDAY that houses in the area have no insurance and that most landlords in the area have no knowledge of insurance.

During the visit, many people were wailing and relating to members of the media, their sufferings and hopeless conditions.
What was more worrisome was that some of the structures close to the collapsed building are also in deplorable conditions.

Clearly, the Ita- Faji situation was just one out of many cases of building collapses that have happened in Lagos and other parts of the country in recent times.
Barely three weeks ago, in Apo Mechanic village Abuja, a story building collapsed trapping six people and there was also another reported case in Ibadan, last week.

In addition, in recent times, fire outbreaks in markets have become more frequent.
Unfortunately, when these happen, with the exception of the Ita -Faji case where the Lagos State governor, Mr Akinwunmi Ambode, has promised to take care of the hospital bills of the victims, especially the school children, both the dead and surviving victims are often left to their fate.

For the dead victims, their dependents are often left without any form of compensation mainly because in most cases, owners of the building run away for fear of facing the wrath of the law.
Here in Nigeria, it is fast becoming the custom to expect government to take responsibility of certain things common knowledge should teach people to do to stay safe.

For instance, government, after the 2012 flood that rendered many people homeless, had mandated that people who built their houses near canals and other flood passages should remove such houses and look for safer places, but till date, people are still living in such areas and have not cared or planned for the unexpected.

Presently, people are still occupying houses with shaky foundations.
Section 65 of the Insurance Act requires the owner or occupier of every public building to be insured against liability for loss or damage to property or death or bodily injury caused by collapse, fire, earthquake, storm or flood.

The Act defines a public building as one to which members of the public have access for educational, recreational, medical and commercial purposes. The penalty for non-compliance is a maximum fine of N100,000 or one-year imprisonment or both.

Also, Section 64 of same Act, stipulates that for insurance of buildings under construction, every owner or contractor of any building under construction with more than two floors must take an insurance policy to cover liability against construction risks caused by his negligence or that of his servants, agents or consultants which may result in death, bodily injury or property damage to workers on site or members of the public.

This insurance policy also covers liability for collapse of buildings under construction. Failure to comply with this provision is an offence punishable with a fine of N250,000 or three years imprisonment or both.

Despite these laws, house owners and owners of building under construction care less about insuring their houses.
But insurers have stressed that this is not supposed to be as insurance firms are set up for the purpose of mitigating risks.

According to them, if Nigerians can take insurance covers especially the compulsory building insurance when there is collapse of this nature, insurance companies would be there to compensate the victims.

To the President, Chartered Insurance Institute of Nigeria (CIIN) and Managing Director Consolidated Hallmark Insurance Plc, Eddie Efekoha, insurers are now focusing on retail insurance that covers individual policies like building, life, motor insurances as the corporate insurance has been saturated and over marketed.

He urged insurers to look critically into retail insurance areas that take care for such policies, adding that there lies the future of insurance and safety of Nigerians and their assets.
Few years back when cases of building collapses became more frequent, some state governments started enacting their compulsory building insurance.

States such as Imo and Lagos states were at the fore front of this.
The Lagos state government had commenced the enforcement of compulsory building insurance on owners of buildings across the state. It had also established a safety institute where stakeholders in construction work can be trained and certified to prevent frequent cases of collapse buildings in the state.

The Director General of Lagos State Safety Commission, Hakeem Dickson, had said the state government would synergise with a consortium of insurance companies and the National Insurance Commission, (NAICOM) to achieve this.
He was of the view that if residents in Lagos embraced building insurance policy, it would save them from untold hardship, losses and the hopelessness associated with emergency situations.
He also stressed that insurance companies have the financial capabilities to compensate and pay claims to victims of disasters than government.

This decision by the state government then, was in line with long standing crusade by both the insurance industry regulator, NAICOM, the umbrella body of insurance underwriters, the Nigeria Insurers Association (NIA) and other stakeholders in the industry on enforcement of compulsory insurance nationwide.

They have for many years been agitating for implementation of sections 64 and 65 of the 2003 insurance Act.
Its enforcement waas been lying low until when NAICOM in collaboration with the industry operators kicked off campaign on the enforcement in the six geopolitical zones of the country.

The expectation was that by now, everybody would have embraced this policy and a significant number of buildings in Nigeria covered by the insurance policy.
NAICOM, precisely, in October 2017, had inaugurated a technical committee that would drive the enforcement of public building insurance in Nigeria.

The committee was made up of representatives of NAICOM, the Federal Fire Service (FFS), representatives of states fire service from the six geo-political zones and
the Nigeria Insurers Association (NIA).
Since then nothing has been heard about the work or achievement of the committee.

Attempt by THISDAY to find speak with the Deputy Commissioner for Insurance Technical, NAICOM, Mr Sunday Thomas, immediately the Ita- Faji building collapse occurred and the workings of the technical committee, proved abortive.
But what is certain is that NAICOM itself and the insurers are no longer at ease with the long delay by the lawmakers in amending the insurance Act 2003.

The 2003 insurance Act was enacted a year before the Pension Act 2004, but the Pension Act has been amended since 2014, while the Insurance Act 2003 before the lawmakers is still yet to be attended to.
A former Managing Director of Niger Insurance Mr. Kola Adedeji, had said inadequate and ineffective framework for the insurance industry are challenges that must be tackled.
According to him, insurance law makes provision for NAICOM as the regulator to enforce the insurance laws, but provides no means of enforcement.

In the case of compulsory building insurance, there is no separate enactment for compulsory insurance of public buildings.
He noted that this inadequate legal framework makes it completely difficult to enforce the provisions.

Pointing out its other pitfalls, Adedeji said: “The policy is meant to cover legal liabilities of either owner or occupier at what point in time does the occupier have legal liabilities or insurable interest in the building he or she is occupying?
“Despite these pitfalls, Lagos State government in 2017, took the bull by the horns to enforce the law by ensuring that owners of buildings in the state put in place insurance cover for the third party.”

While some said it is a good development, others said what Lagos residents need is solution to problem of building collapses not compensation.
They also feared that it would increase the cost of building in the state, which would in turn increase the already high cost of house rent in the state.

Insurance industry observers argued that using the insurance operators for enforcement would not yield much result because the insurers had often said they were handicapped in enforcing the policy because they find it difficult going into any standing building or building under construction and to ask for insurance policy paper.

The insurers have always wished the law enforcement agents would be assigned to act on their behalf.
But the NIA Chairman Mr Tope Smart had before now said Nigerians should learn to be safety conscious and to be sincere to themselves especially in things that affect their lives like the building insurance.
According to him, if a Nigerian can have money to erect five story buildings, the person was supposed to think about the safety of the workers.

When THISDAY contacted to comment on the Ita-Faji collapsed building, he declined to comment.
Industry analysts are of the opinion that prompt amendment of 2003 Act is the solution to the problem. They pointed out the N100,000 and N250,000 fine attached to violators of the compulsory building insurance should be reviewed.