• Friday, March 29, 2024
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Despite rise in collapsing houses, building insurance yet to find market

FBNInsurance

In the last three years more than 15 incidents of collapsed buildings have been reported across the country with high human casualties. In Abuja, Cross River, Kwara, Lagos and Osun States, the story is the same: sudden collapse of buildings either under construction or renovation. In certain cases, more floors were being added to the existing floors (possibly without appropriate approvals) and without consideration for the structural strength or quality of the initial foundation, say’s Funmi Babington-Ashaye, managing director/CEO, Risk Analysts Insurance Brokers Ltd, in a recent article on ‘Spate of building collapse and what insurance can do’.

Babington-Ashaye stated that the regularity, huge loss of human lives and property, as well as the adverse impact of these incidents call for serious introspection and greater care by landlords, property developers, professionals and regulatory agencies in the building industry.

She said it is time for more regulatory activism in this sector. “The weight of the law should be brought to bear on culprits of non-compliance to laws, regulations and standards. It is time for greater premium to be attached to the lives of Nigerians.”

Babington-Ashaye stated that despite these precautionary measures, risks are still there, underscoring the need for adequate insurance for public buildings, as well as contractor risks for building under construction.

Unfortunately, the insurance industry is sitting on billions of naira that is yet to be exploited. The ‘sleeping fortune’ is on taking advantage of building insurance made effective in the Insurance Act 2003, as a compulsory policy to take care of occupiers liability in the event of accidents. Its impact, analysts have said, is capable of generating several billion naira premiums annually if implemented.

Section 64 of the Insurance Act 2003 provides that “No person shall cause to be constructed any building of more than two floors without insuring with a registered insurer, his liability, in respect of construction risks caused by his negligence or the negligence of his servants, agents or consultants, which may result in bodily injury or loss of life to, or damage to property of any workman on the site or of any member of the public.

A person who contravenes the provision of this law commits an offence and on conviction shall be liable to a fine of N250,000 or imprisonment for three years, or both.

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While section 65 of the Insurance Act stipulates that “Every public building shall be insured with a registered insurer against the hazards of collapse, fire, earthquake, storm and flood. The penalty for non-compliance with this occupier’s liability insurance is N100,000 or one year imprisonment, or both.

The National Insurance Commission (NAICOM) through its Market Development and Restructuring Initiative (MDRI) to enforcing these compulsory insurances in Nigeria, which occupier’s liability insurance of public buildings and building under construction above two floors fall into.

The MDRI project is a medium term plan (2009-2012) of installing the first phase of the necessary reforms in the areas of industry capacity, market efficiency and consumer protection in the Nigerian Insurance market.

However, like many other areas of insurance which remained crawling as a result of reasons including low awareness, apathy and most importantly,  operators’ inability to take proactive steps on implementation, this goldmine has largely remained a dream.

While the operators themselves have unanimously agreed that the regulator is conceivably doing what it is supposed to do in terms of creating awareness, having launched in the six geopolitical zones of the country, it is left for the operators to step up action and sell the product.

 

Modestus  Anaesoronye