Driving Compulsory Insurances

Driving Compulsory Insurances

As the National Insurance Commission sensitises Nigerians on the need to embrace compulsory insurances, stakeholders  have called on President Bola Tinubu to complement the effort through use of law enforcement agents, writes Ebere Nwoji

The National Insurance Commission (NAICOM) has in recent times renewed its vigor in sensitising Nigerians on the need to embrace the compulsory insurances as a way of mitigating against losses, especially in the face of high rate of inflation which has caused prices of goods to hit the roof tops, making replacement of damaged properties pretty difficult due to high  prices.

The commission this time seems to be determined  to leave no stone unturned in persuading Nigerians to see the need to patronise the compulsory insurance.

The development has seen the management of the  insurance sector regulatory body paying courtesy visits to leaders of various groups across the country, including state governments and traditional monarchs in different regions of the country.

NAICOM’s courtesy visits 

The latest in the series was the recent visit by a team of NAICOM’s top  officers led by the Commissioner for Insurance, Mr Sunday Olorundare Thomas to both the Governor of Nassarawa state,   Abdullahi Sule  and  the Emir of Kano, Alh. Aminu Ado Bayero, where he  personally made passionate appeal to them to use their good offices to  get their people key into the compulsory insurances.

The Commissioner during the visit made no  pretense in his explanation of relevance of the compulsory insurances to Nigerians especially this time when insecurity and climatic change have combined to afflict Nigerians with huge losses on regular basis.

Thomas in focusing his attention on leaders, including President Bola Ahmed Tinubu  as a messiah that will  save both Nigerians who on daily basis are besieged by risks which the compulsory insurances are meant to mitigate against without any form of compensation duet to lack of policy cover and even the insurers who are denied of patronage they supposed to get from the compulsory insurance policies.

The NAICOM Boss called on President Tinubu to accent to   the insurance bill which has a lot to say about the compulsory insurances.

Indeed, NAICOM as a regulator is relying  on Tinubu’s administration for the implementation of the compulsory insurances because the commission on its own has done all it could to get Nigerians key into the compulsory insurances but lack of enforcement will by security agents who are in position to enforce it has remained a major set back. Lack of enforcement causes damages and risks for which the compulsory insurances are meant to mitigate against in the everyday lives of the people.

The compulsory insurances

The insurance Act 2003 made six  classes of insurances compulsory.This means that these compulsory insurances must be purchased by Nigerians who operate in sectors  the compulsory insurances are made to cover  against losses.

The compulsory insurances are: Group Life Insurance, Motor Third Party Insurance, Insurance of Public buildings and building under construction, Employer’s Liability Insurance,  Aviation Third Party insurance and Healthcare Professional Indemnity Insurance. These were  made compulsory by the Insurance Act 2003 .

It was learnt that Fola Daniel as commissioner for insurance commenced enforcement it 2010. The crusade was flagged off in six geopolitical zones of the country. However the non involvement of law enforcement agents in the implementation stalled the desired success.

For instance,  insurance of building and building under construction is one of the compulsory insurances but which law enforcement agents have remained passive over its enforcement; yet cases of collapsed buildings abound in different parts of the country.

This particular policy is meant to be purchased by builders of more than two storey building to protect their workers at site but there are clear evidence that virtually all the cases of collapsed  buildings under construction  which occurred in different parts of the country have no insurance cover and in most cases the owners of the collapsed buildings often take  to their heels while the affected workers and their dependents are left to their fate.

The policy is also supposed to be purchased by anybody who has public building.This means building used for commercial purposes such as churches, schools, mosques etc.

Collapse of these buildings have  happened severally without government caring about the prevailing laws and how to enforce them. Insurance sector analysts spoke about collapsed buildings in the country and stated that since it has become common occurrence, government ought to do two things. First, strengthen  building construction supervisors to be more realistic and more serious in their work; secondly, empower law enforcement agents to enforce laws on compulsory insurance of buildings under construction so that in the event of any unforeseen at least the victims who are  alive will  be compensated to treat themselves and if dead, their dependants  will have something to keep life going with.

They insisted that continued silence on enforcement of compulsory insurances like the building under construction is the reason Nigerians flout the law and continue  building anyhow with out thinking about right standard.

The analysts argued that government was  the only force that would make enforcement of these compulsory insurances effective.

They, therefore, called on Tinubu’s administration to this time complement NAICOM’s sensitisation efforts on the compulsory insurance through the use of enforcement agents to compel Nigerians to embrace the compulsory insurances. According to them, pension savings is effective under the Contributory Pension Scheme because government was awake to the implementation of the laws.

Insurance experts observation

Analysing the various compulsory insurances, insurance experts said Compulsory Insurance in Nigeria was  important because it secured the benefits of insurance to average citizens that wouldn’t normally benefit. Compulsory insurance according to them, focuses on protecting third-party workers by providing compensation in event of injury, property damage, or death during work. 

According to the insurers, it bridges the gap between the ignorance of the masses and the potential benefits of insurance. In a lump sum, whether they know their right or not, insurance covers them.

According to the insurers, Motor Third Party Insurance is compulsory for vehicle owners and drivers. It includes motorcycles and other types of commercial and private vehicles. The motor third party insurance is mandated by section (53) of the motor vehicle (third party insurance) Act of 1945.

It requires that the motor owner covers against liabilities, including bodily injury, property damage, death, and third party incidences. Also, this should cover the third party against incidents when using the insured vehicle.

The penalty for flouting this particular law is a  fine of N100,000 or six months imprisonment. Offenders can  get both on the first conviction.

Employer’s liability, compensation

This act requires that every employer make a minimum monthly contribution of  one percent of the total monthly payment of employees to the employee compensation fund. This fund is domiciled with the Nigerian Social Insurance Trust Fund (NSITF). It is protected under the employee compensation Act2010. This fund would be used to compensate the employee or beneficiaries in case of injury, disease, disability, or death arising from work.

The penalty is  a fine of N20,000 or one-year imprisonment. The penalty could be both for a first case and changes to N100,000 and one-year imprisonment for or both for subsequent cases.

Group life assurance is powered by section 9 (3) of the pension reform Act 2004. It mandates every employer with more than 5 staff to purchase a life insurance policy for all staff. The value of this insurance must be at least three times the annual total salary of each employee.  It covers both private and public enterprises and requires staff to get paid in the event of death, mental or physical disability while insured.

The penalty for default is  a fine of N250,000 or one-year imprisonment. Depending on the situation, it could be both.

Healthcare professional indemnity insurance 

The law mandates all medical institutions to purchase this insurance.  These institutions must have a professional insurance policy to compensate patients or beneficiaries in case of incidents arising from professional negligence. It is established by section 45 of the National Health Insurance Scheme (NHIS) Act and applies to licensed health care providers. The penalty for default is revocation of medical license

public buildings Occupiers liability insurance

This insurance makes it compulsory for all public buildings to be insured in case of loss. This includes damages to property, bodily injury, or death that may be caused by earthquake, collapse, storm, fire, or flood. The law tags buildings accessible to the public for medical, commercial, educational, or recreational purposes as public buildings. The penalty for default is a  fine of N100,000 or one-year imprisonment.

Builders liability insurance

This is similar to occupiers liability insurance. However, they differ because it applies to contractors and owners of the building. The builder’s liability insurance applies to buildings higher than two storeys and mandated by the Insurance Act 2003. It covers liabilities against construction risks and professional negligence that may result in bodily injuries, property damage, or death to workers and the public. Penalty for default is fine of  N250,000 or three years imprisonment or, in some cases, both.

Aviation third party insurance

It applies to aircraft operators and mandates them to purchase this insurance before operating their fleet. Aviation third party insurance covers three parties; the insurance company, aircraft operators, and third-party individuals. It provides compensation in case of property damages or death caused by the aircraft.

Marine insurance

This insurance is compulsory for individuals and organisations who make use of marine transportation very frequently. They put it in place to cover losses that may result from marine operation and transportation.

But as important as these compulsory insurances are as they  mandate safety structures for all parties and ensures that both employees, employers, and the public are protected from unforeseeable risks and potential lawsuits it has remained the least consideration of an average Nigerian in his scale of preference.

Consequences of non enforcement

The result is that aside cases of building collapses and their associated losses, on major highways cases of hit-and- run vehicles abound and in each case the victim whom these compulsory insurances are meant to protect are left unattended to, thus raising the question whether Nigeria is now a lawless society.

Checks by THISDAY revealed that the important nature of these compulsory insurances has compelled some agencies of government like the Nigeria Civil Aviation Authority (NCAA) to embark on self help effort by taking their fate in their hands .

The NCAA recently announced plans to implement laws on insurance by grounding defaulting airlines on insurance and other service providers.

Insurance sector observers said if all government agencies in charge of sectors within which the various compulsory insurances fall should replicate what the NCAA is doing, and is backed up by law enforcement agents, Nigerians would all embrace the compulsory insurances.They therefore called  on the federal government to  complement NAICOM’s efforts and ensure effective enforcement of the compulsory insurances.

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