By Jude Njoku

Amidst fears that property prices may hit the roof tops following last month’s commencement of the implementation of the Lagos building control law which made it mandatory for a developer of a three-storey building and above to provide insurance certificate as a pre-requisite for government approval, the insurance methodology to be adopted by the insurance companies, may pitch estate surveyors and valuers against their quantity surveying counterparts. While estate surveyors and valuers claim to be the only professionals recognised by the Nigerian law to undertake valuation for whatever purpose, the quantity surveyors want the insurance companies to adopt their own methodology – replacement cost valuation. Vanguard Homes & Property checks show that neither the National Insurance Commission nor the individual insurance companies, has approached the two professions for assistance in this regard. The new building control law which insurance operatives see as a reinforcement of an existing federal law, as contained in section 64 and 65 of the Insurance Act 2003, makes it mandatory for property owners or contractors to insure buildings with more than two floors.

Those convicted under the law shall be liable to a fine of N250,000 or imprisonment for three years or both.

The law exempts only private abodes that are occupied solely by the owner for residential purpose or a church or mosque from the compulsory insurance scheme.

The President of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr Bode Bode Adediji who lauded the legislation, however regretted that the Institution is yet to be approached by the National Insurance Commission and insurance companies on how to determine the value of properties to be insured.

Mr Adediji who restated the role of estate surveyors and valuers as the only profession recognised by law to carry out valuation for whatever purpose, told Vanguard Homes & Property and NAN in his Victoria Island office that till date “there is no collaboration or cooperation between the insurance practitioners and the institution vis-à-vis the valuation of buildings for insurance purposes”.

Calling for the inclusion of his members in the valuation of these properties, Mr Adediji declared:

“No two buildings are ever the same like it is with cars and other assets. That is why NAICOM and the insurance companies must involve professionals who are members of NIESV. Otherwise, we foresee a situation whereby the insurance companies will have problems when paying indemnity.”

Also reacting to the new insurance law which enforcement commenced on March 1, 2011, the President of the Association of Professional Bodies of Nigeria (APBN), Mr Segun Ajanlekoko stated that the success of the law largely depends on the insurance companies. Ajanlekoko who is a past president of the Nigerian Institute of Quantity Surveyors, (NIQS), made a case for the adoption of Replacement Cost Valuation. “It is like going to a bank to seek for loan, they put down the conditions to be met. If the insurance companies want to ensure that the risk they are taking on is properly covered, then they will look at the professional approach of assessing property insurance. There are various methods of assessing the worth of a property but Replacement Cost is the easiest one to do. It is internationally accepted. If you build a house today, if tomorrow you need to rebuild it, what will be the cost? That, to me, is the easiest to manage but if you want to base it on value, it is subjective sometimes because value is subjective. It depends on the economic capability or the economic well-being of the country. If you say today that this house is worth N10 million and you are projecting that in the next five to 10 years, it will be worth N20 million, it is subjective but you can do cost of replacement or cost of constructing a new building based on empirical data that has been tested over time. That’s why those options are open; it stands without reason that there is an easier approach or method to base how to approach of property,” he said.

Ajanlekoko however described the law as a good piece of legislation “ because for obvious reasons, you need to have a cover incase you lose. You don’t pray to lose your property or have it damaged by fire but it helps you to know that in case of the unforseen, you have a backup to help you replace it”