• Tuesday, April 16, 2024
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BusinessDay

Data gap puts FG workers’ insurance benefit at risk

Insurers unveil portal to drive third-party policy in Nigeria

The lack of adequate data needed to execute group life insurance policy in Nigeria’s public service sector puts employees of the Federal Government at risk of not getting the right compensation in the event of death.

BusinessDay checks show that insurance compensations for some deceased government employees are being contested because data were not provided by their respective ministries, parastatals and agencies at the inception of the contract.

Federal Government employee’s group life insurance is domiciled in the office of the head of the service of the federation, from where the contract is signed and executed covering the ministries, parastatals and agencies.

Group life insurance policy is compulsory by the Pension Reform Act 2004.

Section 9 sub-section 3 of the Act requires employers to maintain a life insurance policy or death-in-service benefit scheme in favour of their employees for a minimum of three times the annual total emolument of the employees.

Some insurance CEOs who commented on the development said the issue of inadequate data has been a challenge with group life insurance, where insurance companies are given blanket policy without proper details of the affected employees.

They noted that following continuous engagements with the Federal Government through the office of the head of the service of the federation, a level of improvement has been seen in the last four years.

“We have made some progress, but there is still a gap and most times this is where insurers are given a bad name when we see claims of people we did not have their records and we reject them.”

An insurance broker, who is actively involved in handling group life insurance in the public service sector, said ‘I have had an experience where deaths were reported and when we checked the records, we discover that those names were not in the list.

According to him, such names were not in the data provided by the agencies and ministries; when the insurance contract was being executed, we got across to the lead underwriter, they rejected the claims.

According to the broker, data for group life insurance will include the name of the employee, date of birth, date of employment, and salary level at the point of execution of the contract.

Others are the contact information of the employee, gender, marital status, number of dependants, type of job and risk level, medical history and beneficiaries of the life insurance policy in the event of death.

“All of these will help the insurance company determine the appropriate level of coverage for each employee and ensure that their loved ones are taken care of in the event of death, the broker said.

According to him, how do you know what the total emolument of a deceased employee that you did not have his or her salary level at the first instance, the broker argued.

Industry analysts had recently noted that the increasing quest for the protection of self and dependants against unexpected occurrences as well as future wellbeing was driving the uptake of individual life, and family insurance products, and this, in turn, is stimulating the growth of the sector.

Corroborating this assertion, data recently released by the National Insurance Commission (NAICOM), titled ‘Nigerian Insurance Market at a Glance’, for the third quarter of 2023, showed that gross written premium grew to N792 billion, with individual life and group life contributing the highest amounts.

While individual life insurance contributed 36.4 percent of the total premium, group life contributed 34.5 percent at the end of the third quarter of 2023.

Whereas in the general business category, oil and gas business contributed 28.9 percent, fire and motor business contributed 23.6 percent and 18.1 percent respectively.

Chika Onwunali, partner at Premium Debate, said, “It’s not a surprise that individual life insurance is leading the table because retiree’s annuity and group life insurance offer a lot of opportunity for life insurance growth”.

He said this could get better if life insurance companies could put their house in order, and build capacity for risk management with actuarial experts.

Onwunali said, “Even with increasing economic challenges, the need for life insurance, health, and protection for dependants have become even more important.”