By Patience Saghana
Insurance companies in the country stand the chance of losing billions of naira from federal government on insurance of public building and building under construction if the malicious protest going on in the sector over government’s insurances continue just as the government explains reason behind March 1, 2010 insurance year for group life.

Efforts of the National Insurance Commission (NAICOM) on public building and building under construction which is anticipated to generate N250bn premium culled from Sections 64 and 65 of Insurance Act 2003 for the industry may just be a mirage.

Section 64 of the Act states 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 while Section 65 states that every public building shall be insured with a registered insurer against the hazards of collapse, fire, earthquake, storm and flood.

And public building in this section includes a tenement house, hostel, a building occupied by a tenant, lodger or licensee and any building to which members of the public have ingress and aggress for the purpose of obtaining educational or medical service, or for the purpose of recreation or transaction of business.

But with the protest and grievances that have beset the industry over the Nigerian National Petroleum Corporation’s Consolidated Insurance Policy (NNPC-CIP) and the federal government group life, the sector may not be able to face the government on insurance of public building and building under construction unless practitioners put a stop to squabble.

Meanwhile, the Head of Service of the Federation, Mr. Steve Osagiede Orosanye, had explained that the federal government, under its coordination of the group life, would not want to do business on credit basis which was why the group life commenced from March 1, 2010 when he was sure of the payment to the industry.

Besides, insurance year is the prerogative of the insured and not the insurer. Insurance year,  sometimes called policy year, begins on the day a policy is taken out and on the same date in subsequent years. It ends on the day before the anniversary of the start date of each subsequent year.
For instance, a policy taken out on march 1, 2010, has an ‘insurance year’ ending on February 28, 2011.
Mr. Fola Daniel, Commissioner for Insurance in a telephone interview with Financial Vanguard, confirmed that insurance year is determined by the policyholder, the insured and not the insurance company.

Some insurance practitioners had kicked against the whole process of the 2010 group life including the insurance year. An operator in an unsigned document argued “This is contrary to the provisions of the guidelines for life policy for employees jointly issued by the National Insurance Commission (NAICOM) and the National Pension Commission (NPC). Section 4 (1) of the Guidelines states that ‘Insurance coverage shall be for twelve (12) months, from January through December and shall be renewable at the end of each coverage year

The insurance commissioner said that there is nothing wrong with the insurance year of the group life which commenced on March 1, 2010, stating that it is the insured who determines when his insurance year should run adding that it is in line with the principle of ‘no premium no cover’ in the industry.

The commission had insisted that all insurance businesses in the country should be done on cash and carry basis in order to avert a situation where promissory notes would be used to settle claims by insurers.

The regulatory held that insurance sector must be liquid at all times otherwise would not be able to meet their claims obligations to customers promptly.

He stated, “Liquidity is very important to an insurance entity and unless a company is liquid,  it will not be able to meet its claims obligation,  and if over 75 per cent of your asset is embedded in debts that may never be realisable  and we will be forced into an era where credit note will now be used for settling claim”.