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Mitigating emerging risks through compulsory insurance

By Rukayat Adeyemi
One of the biggest problems confronting the insurance industry in Nigeria is the lack of trust in operators by many Nigerians who perceive insurance as a scam.

To change that negative perception, experts believe that the federal government, through the National Insurance Commission (NAICOM), should begin enforcement of compulsory insurance to mitigate risks for both individuals and businesses.

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They insist there is a need for the government and the insurance regulator to enforce compulsory insurance, firstly by embarking on awareness campaigns to awaken the interest of Nigerians in insurance.

The compulsory insurance covers builders’ liability insurance or insurance of buildings under construction, aviation, third party insurance, and marine insurance.

These policies protect the third party in the event of death, bodily injury, or property damage.

The rising cases of banditry, civil unrest, building collapse, fire outbreak, and other mishaps across the country have reinforced the need for more Nigerians to embrace insurance, and for the government to enforce compliance.

For instance, the #EndSARS protest of 2020 caused insurers a colossal loss of over N20bn of which over N11bn was paid out as claims to victims as of February.

The question now is, are the victims of the Iponri Bridge fire incident, several buildings collapse, the Abuja-Kaduna train attack, Owo Church massacre, banditry attacks, and the recent Kuye jailbreak in Abuja, and other mishaps covered by insurance?

Experts believe that governments at all levels must show total commitment to insurance by insuring public assets and ensuring enforcement of compulsory insurance by the citizens to preserve national assets.

Director-General, Nigeria Insurance Association (NIA), Yetunde Ilori, said compulsory insurance was for the good of the populace.

Ilori cautioned Nigerians that their negligence could affect many people and their businesses.

“We should all learn our lessons from the unfortunate incidents around us and not wait for the enforcement of compulsory insurance before we know that it is for our good and go ahead to do it.

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“Payment of the #EndSARS claims is a confirmation for people that have the misconception that the insurance companies don’t pay claims to know that we do,” she said.

According to her, insurance companies will continue to pay those affected by one form of disaster or the other, resulting in losses, once they lodged their claims and fulfilled all other obligations.

The director-general stated that NIA had continued to create awareness of the need for Nigerians to embrace insurance.

“If there is a mechanism that you should use to protect your assets, why not? Yes we pray and I believe in the efficacy of prayers but if there is something that you should do humanly, then you should do it.

“We shouldn’t hide under any religious cover, which has not in any way prevented us from protecting ourselves,” she said.

Also, Executive Director, Leadway Assurance Ltd., Adetola Adegbayi, said it was essential to manage the risk of an individual within a community, either in terms of fire, flood, health, sanitation, or accidents, among others.

Adegbayi said the relevance of insurance could not be overemphasised when various risks were considered in terms of protecting national wealth and sustainability.

She noted that managing risk was not about emergency, but about consciously assessing the risk faced by the citizens at the micro level and dealing with it.

“We cannot talk about wealth protection, without looking at the risk that affects the wealth,” she said.

According to her, gainfully employed individuals create assets and also liabilities; hence, the government must put this into consideration and properly manage it.

“Most of the recent hazards happening across the country are clear examples of risks that were not properly managed.

“We have created a market structure that is free for people, especially those at the lower end of the economic scale who are particular about their financial sustainability.

“To this end, the government should find a way to tax the use of public facilities, invest and insure the funds, such that when any unfortunate incident happens either to their goods or the national assets, the insurance fund is recalled to repair it.

“We don’t need the government to be going into its treasury to manage the damage that may occur from the risks of even the cheapest liability,” she said.

According to her, when managing risks and national assets is ingrained into the consciousness of an average Nigerian, their attitude towards insurance and insurance operators will change positively.

Adegbayi said Nigerians must see insurance companies as organisations that helped them to protect their wealth and provided succour when losses occurred, rather than organisations established to exploit them.

The outgoing President, Chartered Insurance Institute of Nigeria (CIIN), Muftau Oyegunle, charged the government to insure all national assets and users of such facilities.

He noted that the level of poverty in Nigeria, viz-a-viz the way Nigerians suffered unnecessarily was an indication of the dire need for the enforcement of compulsory insurance.

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“Unfortunately in Nigeria, people wallow in poverty just because of the lack of knowledge of insurance,” he said.

Perhaps harkening to the calls, NAICOM on June 23 organised a sensitisation workshop for the joint task force on the enforcement of compulsory insurance in the Federal Capital Territory (FCT), Abuja, as a pilot scheme.

The task force comprised officers of the Nigeria Police, the Federal Road Safety Corp, the Federal Fire Service, FCT Fire Service, VIO, the Office of the Attorney General of the Federation, and the Federal Capital Territory Administration.

NAICOM said the workshop was aimed at sensitising members of the task force on the requirements of the law on compulsory insurance as well as the enforcement modalities.

The commission said the enforcement exercise within the FCT was a prelude to a nationwide sensitisation and enforcement of compulsory insurance.

NAICOM will surely have a tough time convincing Nigerians to embrace insurance, and for the government to implement compulsory insurance going on the reactions of some Nigerians.

A trader at Idumota Market, Lagos Island, Joy Ayanwu, said while insurance was beneficial, it was not easy to comply with because of the current economic situation.

Ayanwu explained that considering the rate at which inflation was affecting her business turnover, she could not afford to buy insurance policies from her profit, which was not enough to meet her immediate financial needs.

“The policies are good but the current economic situation is not helping matters. I cannot afford to buy any insurance policy for now but will continue to pray that no calamity befalls my business,” she said.

Anyawu advised the government to add insurance to the tax they are charging business owners at subsidised rates to make it more affordable and accessible.

An IT expert in Lagos, Olamilekan Oladele, said while the insurance policies were laudable and designed for the good of the masses, the insurance operators and regulators needed to fine-tune some grey areas.

Oladele stated that NAICOM must begin enforcement of compliance with the operators because operators needed to be more committed and responsible to claim payment to encourage more Nigerians to buy insurance policies.

He expressed disappointment that the industry was still at the stage of educating the populace on the importance of insurance when insurance was not negotiable for citizens of other countries because of the benefits therein.

“It’s unfortunate that most Nigerians are still paying hospital bills out-of-pocket because they do not even understand or believe in the National Health Insurance Scheme.

“How many of the houses we all built or live in are insured? I have been buying motor insurance policies for over 20 years since I started driving but have never made claims on my third-party motor insurance policy.

“The truth is, I have been buying the policy just to avoid harassment from road traffic officers, not because I intend to make claims in the event of an accident.

“This is the norm for an average driver on the Nigeria road. It is either we are too busy to go through the claim process or the other party in case of an accident is too impatient to wait for the insurance company,” he said.

Like many others, Oladele urged the government to put in place mechanisms to ensure that both the citizens and insurance operators comply with compulsory insurance by playing their roles as expected to achieve risk mitigation. (NAN)

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