As businesses whose assets were affected during the #EndSARS protest across Nigeria begin to file claims, insurers have confirmed that the economic loss arising from the violent aftermath of the protest outweighs the insurable losses.
Insurable loss is a sudden and unexpected event that results in damage to an asset and the resultant damage from failure of the asset that can be claimed under an insurance policy.
Industry operators say the shortfall from expected claims is as a result of under-insurance or non-insurance of most of the affected assets.
What this means is that most of the #EndSARS victims who lost their assets in the riot without adequate insurance will bear the loss themselves.
For instance, some of the businesses like shops that were burnt or vandalised without adequate insurance would not be able get compensation from insurers, so they face the risks of closure and their employees may also go out of job.
This again underscores the need to deepen insurance penetration in Nigeria, as a lot of the population are not covered by any form of insurance policy.
Insurance penetration, according to the Nigerian Insurers Association, is about 0.4 percent of the GDP in a country of about 200 million.
Femi Oyetunji, outgoing group managing director/CEO, Continental Reinsurance, said he was not sure yet what the total industry losses would be, but he was certain that insurable loss was lower than economic loss.
“I am not too sure yet what the figures will be, but from what has been filed with us, the insurable loss is far lower than economic loss,” Oyetunji said.
The reasons are clear: a lot of people did not insure and where they did, it was under-insurance, Oyetunji said.
“Claims reported to us so far is only a small proportion of the total, so we cannot conclude with what we have. But what I know too well is that there are issues of non-insurance and insurance of most of the assets,” he said.
#EndSARS protest, the first of its kind in Africa’s most populous nation, was a protest over the now-disbanded police unit – the Special Anti-Robbery Squad (SARS), but extended to be protest against all that was not good in governance and public service, with two weeks of demonstration using the social media hashtag #EndSARS to rally crowd.
At the end of the exercise, the country witnessed damage of assets and properties belonging to businesses and institutions running into billions of naira, cutting across banks, shopping malls, markets, police stations and public transportation system.
In a normal society where insurance is given a priority, the insurance industry was going to be hit heavily as most policy holders who suffered losses would have filed claims to recoup part of their investments that got lost in the protest.
But the situation unfortunately is different, as many of the victims of the protest did not have insurance for their assets and businesses, and where they had, it was under insurance or not adequately insured.
Though insurers have expressed their readiness to pay all genuine claims that will arise from the EndSARS damages, but feelers are that most victims did not insure and where they insured, they were not adequately insured.
What this means is that most of the insurances were not with policy extensions for riot and civil unrest, which would have covered the EndSARS kind of losses.
Muhammad Hussaini, managing director, NICON Insurance Limited, had made case for the insurance industry that the federal, state and local governments should reimburse insurance companies for claims paid as a result of the recent EndSARS protests across the country.
He had noted that there was currently a social contract between the government and the people as captured in Section 14 (2b) of the 1999 Constitution, which mandates the government to provide security and welfare to the people.
Hussaini however encouraged insurance companies, which may have paid claims under the circumstances, to mobilise under the Nigerian Insurers’ Association (NIA) – the umbrella trade body – to approach the government to make recoveries where applicable.
“To me, this presupposes that the government is ultimately responsible for any fundamental breach of the peace as happened with the #EndSARS protest,” he said.
