FG fails to pay insurance premium, leaves civil servants without cover

Existing insurance coverage for employees managed by the Office of the Head of Service of the Federation, had elapsed three months back, since August 2016 and renewal is yet to be effected, according to BusinessDay findings.

This means that should there be a major disaster today, involving employees of the Federal Government, victims will not likely get adequate compensation, particularly death benefits, due to lack of insurance coverage.

The Federal Government has 89,226 employees (as at October 2016). It is not unusual for the FG to delay in paying its insurance premium. In 2015, the premium was not paid until August.

“At the moment, we are not giving the Federal Government employees coverage because the policy on ‘No Premium No Cover’ is in place, which requires that premium is paid before commencement of a policy. So, they are currently off cover or on self insurance, until premium is paid”, Eddie Efekoha, chairman, Nigerian Insurers Association (NIA) said.

Efekoha, who is also the managing director, Consolidated Hallmark Insurance Plc, said it is in the interest of the nation and the larger economy that government pays premium and passes the burden of coverage to the insurance industry.

“It does not only take the burden off the government, it strengthens the insurance industry to better support the economy”, he observed.

Also, Alphonsus Okpor, managing director, African Alliance Insurance Plc said, “Premium has not been paid and until premium is paid, there is no cover”.

Okpor stated that appointment letters for underwriters and brokers who will participate in the business have not been released yet. “So, we are all waiting and until payment is made, there is no contract, which is the position of the law on ‘No Premium No Cover”, Okpor stated.

Meanwhile, a source in the office of the Head of  the Civil Service of the Federation, confirmed that approval has actually been received for payment of insurance premium from the Federal Government, having made provision of N5 billion in the budget.

“We are trying to follow due process to ensure that we do not make mistakes, the source said, but observed that it was taking time to select participating insurance companies.

The source also stated that government is committed to the welfare of its employees and that the insurance cover would serve as motivation and also a bolster that will enable deceased employees families cope after the death of their loved ones.

“There will be insurance cover for workers soon, because I can assure you that a provision was made in the Appropriation Bill”.

In last four years, group life insurance premium for the public sector has been in the neighbourhood of N6 billion and N7 billion, resulting in a significant contribution to the growth of life business. Life insurance premium in the last two years (2014 and 2015) grew by over 35 percent amounting to N99.57 billion in 2014.

Compulsory insurance coverage for employees, both in the public and private sectors, is a provision in the Pension Reform Act 2004 as amended in 2014, which mandates employers of labour to provide insurance for their employees.

Section 4 (5) of the Pension Reform Act 2014 stipulates that every employer to which the Act applies, shall maintain a group Life Insurance Policy in favour of the employees, for a minimum of three times the annual total emolument of the employee.

In line with the guidelines for life insurance policy jointly issued by the National Insurance Commission (NAICOM) and National Pension Commission (PenCom), the Federal Government is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to, and separate from, the contributions to be made by the Federal Government to each employee’s Retirement Savings Account, as required by the Pension Act.

The life insurance policy is to be effected through the purchase of a life policy issued by a Nigerian registered insurance company, licensed and authorised to conduct life insurance business by NAICOM under the Insurance Act 2003.

The insurance coverage is for 12 months and it is expected to be renewed at the end of each coverage year.

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