• Friday, May 24, 2024
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BusinessDay

Need for flood insurance heightens as homes, farmlands wiped away

Flood

The need for flood insurance cover that will enable farmers and communities prone to flooding recoup their investments and also get indemnified in the event of losses has been re-echoed.

This is coming on the heels of recent flood incidents in parts of Nigeria including Bauchi, Jigawa and Kebbi, where over 500,000 hectares of farm produce estimated at over N5 billion were lost, with a lot of people rendered homeless.

The Nigeria Hydrological Services Agency (NHISA) had in February this year through its director-general, Clement Nze, warned and advised all stakeholders to start preparing for the 2020 flooding season in order to avoid the ‘Fire Brigade Approach’.

Nze urged the various levels of government in Nigeria to begin to prepare for possible flooding for 2020, open up the drainage system, or create drainage paths where there were none.
“Remove the structures that are within the flood plains, and let there be adequate drainage paths,” he had advised.

Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance plc, had stated in an interview with BusinessDay that flood insurance before now was never taken seriously in Nigeria because the risk exposure was almost non-existent. So, insurers could dash flood cover for free to the insured when they buy fire, burglary and home owner’s insurance cover.

“So, flood cover is given as policy extension for fire policy, and so covers damage or loss to a property because of fire. It is a specific form of insurance in addition to homeowner’s or property insurance,” Efekoha said.

But the dynamics have changed since the recent incidents that resulted to huge claims for insurance companies, he said.

“A lot of people are filling claims now as a result of damages caused by flood, and so flood cover can no longer be taken for granted, he stated.

Nimi Akinkugbe, financial adviser and expert on money matters, said, “We live in uncertain times. Violent floods and storms, volcanic eruptions, earthquakes, tsunamis, hurricanes; the list goes on. Such disasters have one thing in common; they are ‘catastrophic risks’ that are not likely to affect you in your lifetime, but if and when they do happen, the consequences can be devastating. Because such risks are so rare and unpredictable, often striking without warning, they can be badly underestimated. Yet, just being prepared can save you from untold distress. “

According to Akinkugbe, insurance is a crucial instrument that sadly most Nigerians still ignore; that is, until they need it most.

“Are you one of thousands of Nigerians who suffered terrible damage to your property from the recent deluge of rains? There is no better time to revisit the issue of insurance than when we have a live and practical situation that brings home this critical issue. How well are you protected against flooding and, indeed, other disasters? You will find that the insurance premium is a small price to pay for the peace of mind of having your belongings insured,” she said.

Some of the operators, who spoke with BusinessDay Monday, stated that the exposure was big but still unquantifiable due to lack of data.

“Insurers are willing to go full blast on providing cover, particularly for corporate institutions and farmers in exposed areas, but it could be very catastrophic because flood claims are borne between government and insurance companies in most jurisdictions, according to one of the players.

Sunday Thomas, commissioner for Insurance/CEO, National Insurance Commission (NAICOM), believes that there is need to have a national policy on flood insurance where government collaborates with insurers, take a certain proportion of the risk exposure and insurers take the rest.

“It is an insurable risk, but we need data to determine the level of vulnerability of particular areas. And that is what we do not have now, Thomas stated while serving as director-general at the Nigerian Insurers Association.

Demola Ilesami, an insurance broker, said it was important that business and exposed areas were adequately insured against flood, particularly now that deforestation was having huge impacts on environment.

Ilesami however noted that government should give national insurance policy for flood a consideration, given the level of loss experienced in parts of the country, particularly by farmers.