Ragging Battle over N9.6bn Group Life Insurance  Cash

The N9.6 billion approved by federal government for Group Life Insurance of its workforce  Is causing ripples  among insurance stakeholders, writes Ebere Nwoji.

Last week, the federal government announced that it has approved the sum of N9 .6 billion for the renewal of Group Life Insurance of its workers.

This was disclosed by the Minister of Information and National Orientation, Mohammed Idris, at the end of the first Federal Executive Council (FEC) meeting for the year held in Abuja.

Idris, said the President approved about N9.6 billion for 12 local insurance firms to cover the federal workers in case of unforeseen eventualities in the course of their duties.

He said it was a normal annual cover that insurance companies give to workers. So, in the event of death or severe injury, they can resort to it and so that their families would not have to suffer.

“There are about 12 insurance companies involved. It’s a normal annual cover that insurance companies give workers. So, in the event of death or severe injury, they can resort to it and so that their families would not have to suffer,’’ he said.

However, since this announcement,  there have been reactions from the general public especially insurance stakeholders. Some have remarked that the minister did not clarify whether this is the total amount President Tinubu’s administration has approved for the workers’ Group Life Insurance cover for the entire year or for a short period to serve as part payment for the coverage.

This question arose because of the statement by  the minister on the N9.6billion in which he said: It’s a normal annual cover that insurance companies give workers. So, in the event of death or severe injury, they can resort to”is to be taken the way he said it, it then means  that the amount is  the annual premium for the federal workers’ group life insurance cover, which  to the insurers amounts to a sign of irregularity.

Budget, Insurers’ view

In the original document of the federal government budget proposal, THISDAY checks reveal that a total of N854.81 billion was allocated to pensions, gratuities and retirees benefits under which group life insurance falls, therefore, to approve or allocate mere N9.6 billion as total  premium for group life insurance of the entire workforce of government is  obviously a disorder.

But insurers argued that if the N9.6 billion is not just a part payment for the workers’ group life insurance premium but is taken as the full premium for the policy for the entire year, irrespective of basis of calculation, then something is wrong some where.

Their reasons are not far fetched. In 2020,the insurers received a total of N15 billion as premium for group life insurance of government workers.In 2022/ 2023, government appropriated N24.7 billion  for the policy representing 64.7 percent increase in the N15 billion it appropriated for the policy in 2020 although last report heard on this in the November of that year said insurers received only 50 percent of the total premium despite N9.2 billion approved for the policy by the Federal Executive council in its meeting in June that year. It was gathered that the delay in payment of the total premium was not unconnected with government’s dwindling income during the period, a situation which compelled government to enter into dialogue with the insurers on the possibility of reducing the premium payable on the policy.

With the approval of N9.6 billion for the policy this year, insurers have questioned the rationale behind the over 50 percent reduction on the premium on the policy.

Some insurers said they only assume that this is just but a part payment of the entire premium while others have argued that if this is the full premium for the policy at this time when inflation rate between 2022 and 2023 when N24.7 billion was allocated then government was not fair to the policy.

Speaking, the Managing Director Universal Insurance Plc, Dr Ben Ujoatuonu, said he would have loved to reserve comment on this until government comes out with clear information on its allocation to group life insurance of its workers.

He said he assumed that the N9.6 billion was part payment because irrespective of number of government workers that have retired between last year and this year, the existing workers’ salary and basis of calculation, the total premium for the group life insurance of the entire workforce of government cannot be N9.6 billion as approved by government.

He also said it all depends on their basis of calculation and rate applied.

For the former Chairman Nigeria Insurers Association and Principal Consultant Carefirst Consult, Mr Gus Wiggle,  this is much below expectation if the said figure is the total approved by government for group life Insurance  of its entire workforce.

“It’s unfortunate that we have treated premium on Group Life as if we are buying “nama”(cow) in the open market. What is the parameter for approving or paying N9.6 billion for Group Life? How was the rating done, or who did the rating to determine the premium is N9.6 billion? Honestly,  the N9.6 billion to me without any actuarial valuation is inadequate. Are we saying we have less Civil Servants than we had last year?

Or maybe they have reduced the Sum Assured and have a flat Sum Assured for all categories for employees!” he asked.

He wished the President was well advised on the matter before the approval.”I  hope he has been well advised on this subject”, he concluded.

The Managing Director, Afriglobal Insurance Brokers, Mr Casmir Azubuike, said he was not  sure how much was paid last year or previous year, but that  certainly, there was  more than N9.6 billion  released.

“I don’t know where your statistics of 15 billion premium  for 2020 came from. What I know is that there is no basis for 2024 Group Life premium to be less than 10 billion. The premium rate for the policy has not changed since 2020. The work force has not dropped either.

“ If truly the premium for 2020 was as much as 15 billion, the only thing that could have caused a significant reduction is a drastic reduction in the emoluments. Unfortunately this is also not possible because it is statutorily defined. My conclusion is  this: It is  either the figure you quoted from 2020 to 2024 respectively could be wrong or the N9.6billion  for 2024 could be a part payment,” he added.

THISDAY recalls that shortly after the release of the approved N15 billion premium for the Group Life assurance  of its workforce by the Federal Government for 2020, the Former President, Nigerian Council of Registered Insurance Brokers (NCRIB), Dr. Mrs Bola Onigbogi, commented on this saying: “The 2020 Group Life is off the schedule because full premium has been paid on the account for the current year. There is no lapse in cover at the moment.”

Onigbogi, who was represented by the Vice President of the Council, Tunde Oguntade, at a meeting with the NCRIB’s officials, however urged the Federal Government to always engage the services of the registered insurance brokers to mitigate the risk of contract failures.

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

Abuse of Group Life Policy

Despite this, Like third party motor insurance, group life policy has suffered much abuses by private and public sector employers and their agents, as well as government insurance desk officers and agents.

The Group Life Insurance policy is one policy that supposed to make both public and private sector employees’ career interesting and attractive because of its ability to rekindle hope to families of both deceased workers and workers who suffered permanent disability.

The policy is designed to pay huge claims to dependants of employees who died in active service or those who suffered permanent disabilities.

Unfortunately, this particular policy has so much suffered abuses that for many workers and their employees, it is non-existent.

The result is that for many Nigerian workers, especially low and middle class workers, the moment the family breadwinner dies, the hope and living standard of his or her family automatically crumbles.

This is because findings on industrial accidents and fate of Nigerian workers done by the writer of this analysis recently shows that among private sector workers especially factory workers in manufacturing firms owned by investors from Asian countries doing business in Nigeria there is no arrangement for group life insurance.

What obtains is that the employers connive with heads of workers’ union not to establish group life insurance policy or any other package for welfare of the workers in case of accident that leads to death or permanent disability which the group life cover is meant to cater for.

These workers union leaders collect bribe from their factory owners to deny workers such rights and in the event of accident, they visit the families drop a paltry sum and that will be the end.

In case of government employees, initially government insurance agents were the problem as they will beat the premium rate to the skin taking advantage of insurers’ voraciousness over the business as everybody wants to grab the business by all means especially through premium rate cutting. As such, they were ready to accept anything the agents choose to offer.

The result is that when the unforeseen happens, the insurers will not have enough premium to pay the right claim and where they pay at all they underpay  the victim.

But NAICOM later prevailed on them to do the right thing and most of them complied while some dropped the business.

Insurers admitted that in both 2020 and 2021, government made provisions and released fully the fund budgeted for the group life insurance of its workforce.

This is an improvement from the hitherto situation whereby government will announce the budget for the group life insurance of its workforce as well as funds for insurance of its assets but the release of the stated funds becomes a problem.

In this year’s budget, insurers have lamented that government has gone back to former practice of shortchanging the insurers by underpaying premium for the policy.

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