Concerned about the difficulty in the implementation and enforcement of compulsory public building insurance as provided in the Insurance Act 2003, the Kola Adedeji, managing director/CEO, Niger Insurance plc, has faulted the legal framework as a major impediment to success of the scheme.
Adedeji believes that coming up with separate enactments that would give different authorities affected by building regulations the powers to arrest and prosecute offenders would make the different compulsory building insurances work and contribute significantly to industry premium.
“Rather than have new compulsory insurances such as buildings under construction, occupier’s liability and insurances of public buildings lumped under the Insurance Act, it would have been more pragmatic to have a separate Act of parliament for each and everyone of them. Each of these Acts would then provide relevant enforcement agencies the empowerment to enforce the provisions of the Act.”
Section 65 of the said Act provides that “every public building shall be insured with a registered insurer against the hazards of collapse, fire, earthquake, storm and flood”, defining public buildings to include: tenement, house, hostel, building occupied by a tenant, lodger or licensee, building where the public have ingress and aggress for the purpose of obtaining educational or medical services or recreation or transaction of business. This insurance is meant to provide an avenue for compensation to third parties and users of damaged properties.
Punishment for non-compliance with this provision is stated as either a fine of N100,000 and/or imprisonment of one year. Adedeji, speaking at the Nigerian Council of Registered Insurance Brokers (NCRIB) Members’ Evening hosted by the underwriters in Lagos, said “Often times you find the law making unenforceable provisions which though good on paper but almost impracticable without strong enforcement provisions.”
According to him, Motor Vehicle (Third Party Insurance) Act 1945 and the Workmen’s Compensation Act of 1990 came as separate enactments and has succeeded to large extent. In the Third Party Insurance Act, police officers are empowered to ask anyone driving a motor vehicle to produce his/her certificate of insurance.
Similarly, Section 40 of the Workmen’s Compensation Act gave the minister of labour power to enforce the compulsory insurance provisions of the Act. This position was reinforced in the Insurance Act of 2003, and so the police force and the ministry of labour ensured compliance with these provisions respectively.
“Unlike the two, there is no separate enactment for compulsory insurance of public buildings. This inadequate legal framework makes it completely difficult to enforce the provision considering the fact that legal provisions on compulsory insurances have never been enforced against the public by NAICOM or any regulatory body at their inception.
“In the case of the insurance of public buildings, physical planning authorities of all states of the federation should be empowered to enforce the provisions of the Act.”
Beyond these, Adedeji also pointed out that the provisions for insurance of public buildings as they are in the Insurance Act are quite confusing, as they did not specify insurable interest for easy implementation.
“The Act came up with good intention and introduced penalties for non-compliance but created a gap as regards enforcement. The implication is that in an environment where insurance is not too popular, coupled with low level of disposable income, it becomes very difficult to realise the objectives of the Act,” Adedeji noted.
By: Modestus Anaesoronye