Mitigating fire losses through insurance

One major disaster that has the capacity to wreck or slow down economic development of any nation is fire. Nigeria has definitely had its own share of this disaster over the years. Statistics available from the Federal Fire Service indicate that on the average, there are over 100 major fire disasters yearly across the country, with Lagos State coming tops on the list. In 2012 alone, Lagos State command of the Federal Fire Service said it recorded 188 fire incidents. In 2013, fire incidents were recorded notably in Odo-Ogbe Market in Ile-Ife, Osun State; Ilubirin Market in Ebute-Meta and Alade Market in Ikeja, both in Lagos State, as well as Kuje Market in Abuja. In 2014, similar incidents occurred at Mile 1 Market in Port Harcourt, Pako Market, Ipaja, Lagos, etc. Other major fires in the past were the Tejuoso Market fire, the Kano Main Market fires and the Idumota fires, which claimed properties running into billions of naira, and in some instances lives.

Of grave concern in recent times is the rampaging effect of fire on major markets across the country with its attendant impact of inflicting further miseries on the unorganized private sector and entrepreneurs who are worst hit each time the incident occurs. For instance, while Nigerians were making projections and preparing for the New Year, they were jolted by the sad tale of fire outbreaks that ravaged Balogun Market, Oko Baba Sawmill in Ebute-Meta, and four houses in Igando area of Lagos almost simultaneously. What a sad way for Lagos market men and women to be ushered into a new year! As if that was not enough, news filtered in that the Iron Rod Market at Agodi Ibadan had been ravaged by fire.

The initial reactions of concerned citizens and individuals were to empathize in words and sometimes by doling out stipends (in comparison to what had been consumed in inferno). Accepted that government and concerned philanthropic individuals usually rise to give some form of token support to the victims, such assistance is only momentary and most times too small to return the marketers to the position they were prior to the sad incident. In a nutshell, the step may not be the best for the victims and potential victims of fire in the country as they could embrace a new re-orientation on risk mitigation and control through insurance.

insurance industry has generous fire policies to cover loss or damage to shops, wares and stock as well as consequential losses arising thereof through which insurance clients (often called the insured) could benefit.

Read also: Brokers seek strategic policy on compulsory insurance of market

Going by the seeming complexity of insurance, it has often been canvassed that the engagement of registered insurance brokers for the interpretation of fire insurance policies like other policies of insurance will allow the insured to maximize the benefits on their insurances. Insurance brokers who are professional intermediaries in the insurance sector also could give regular personalized services to clients and assist them in getting the best possible rates for their policies from existing insurance companies in addition to following up and collecting claims on their behalf. These and many of such roles are difficult to get by insurance clients who are usually not knowledgeable enough about operations in the industry.

The importance of insurance in mitigating fire is definitely not lost on insurance operators in Nigeria who occasionally make efforts to reach out to the unorganised private sector canvassing that they imbibe insurance as a wealth protection device. They often advocate that whatsoever is worth having and keeping is worth being insured. This translates to the fact that expression of emotional outburst after the occurrence of a loss, like the ones in question, could be tantamount to literarily closing the gate after the horse had bolted off.

This was part of the views of the president of the Nigerian Council of Registered Insurance Brokers (NCRIB), Ayodapo Shoderu, during a recent awareness visit to the Iyaloja General of Nigeria, Mrs Folashade-Ojo, in Lagos. The president used the opportunity of his visit to re-echo the need for market men and women to embrace insurance, stressing that they were prone to diverse risks that daily threaten their existence. The most significant threat, according to him, was fire outbreaks which, he said, had led to loss of lives and billions of naira worth of materials in the past.

“In spite of the fact that the world we live in is daily prone to risks, both to the individual and corporate institutions, it is a matter of regret that only few Nigerians understand the value of insurance, let alone undertaking it. Unlike in advanced countries where insurance has been taken as part of the culture or way of life, serving as their best succour in times of losses, Nigerians have continually shunned insurance to their ultimate disadvantage. Apart from helping to preserve wealth, insurance is the last hope of the common man. Although reasons for poor acceptance of insurance are many, the major ones are poor image and low awareness about the industry as well as wrong notion about what the experience of someone close to one had been in the past,” he said.

Pulling down the banner of knowledge, Shoderu said, “Today, the story of the industry in Nigeria has changed positively, as insuring clients could now bank on responsive and responsible professional bodies and regulatory institutions that could take up their cases in the event of infringement of contracts, usually during claims payment.” He enumerated available insurances like burglary, consequential losses, goods and money in transit, house holders, all risks insurance and motor insurances to the advantage of the clients. Most of these insurances, according to him, go for as low as N2,500 for goods that are worth N1 million per year.

Whilst government and many trade associations strive to come to the aid of their members in the event of fire losses, it is expedient for leadership of traders and market associations to forge closer collaboration with the insurance industry for the benefit of their members. It is only when this is done that the burden of replacement of destroyed goods and properties become responsibility of insurance professionals, refunding the victims to the actual places they were prior to a loss, irrespective of the magnitude.

To corroborate the usual initial response of government to incidences of this magnitude, the Lagos State governor, Babatunde Fashola, on his arrival at the Balogun Market, sympathised with the victims and straightaway promised to rebuild the structures and help the traders get back on their feet. While one must commend Fashola for this gesture, it must be stated, however, that if insurance had been given its rightful place, the government would not need to bother itself with replacement of goods and rebuilding of burnt properties. In other climes, insurance takes responsibility for both the wares and damaged properties, but in Nigeria, only a few who understand the workings of insurance get involved, and in most cases, blue-chip companies.

Nigerian government, in collaboration with the insurance industry, needs not waste further time in creating adequate awareness about insurance and in giving impetus to the implementation of compulsory insurances that majorly impact on the lower class of citizens. This will enable government to use the available resources on national development and leave the risk-bearing business strictly to insurance professionals.