By ROSEMARY ONUOHA
The recent Dana plane crash has raised a lot of dust and the need why government should be ready for quick intervention in times of disasters.
In 2011, the Federal Government allegedly failed to release the sum of N3.6 billion provided for the Compulsory Group Life scheme for its civil servants to the Head of Service for onward payment to insurance companies. Consequently, the 2011 scheme was extended to March 2012. The government was still trying to sort itself out when the Dana plane crash occurred, killing many federal government workers in the process. Unfortunately, consideration for the 2012 scheme is still in the closet.
It will be recalled that the Pension Reform Act, 2004 mandates that “Every employer with not less than five employees must insure the lives of the employees to a minimum of three times their total annual emolument and that in the event of death of any of such employees, the next kin is paid 300 percent of officer’s annual emolument.”
The Federal Government since 2008 has commenced the group life cover for its workers; however as is typical of the Nigerian government, payment of premium has not been regular.
And this was the situation when the Dana Airplane crashed on June 3rd, 2012 in Iju-Ishaga area of Lagos.
Unlike other climes, insurance business has really never managed to enjoy government led national prominence in Nigeria. Although the government remains the highest consumer of insurance products and services in the nation, it remains the worst defaulter on prompt payment for these services.
Premiums, which form the bulk of insurers’ income, are used to indemnify losses incurred by policyholders, drive administrative costs, generate business opportunities, and explore investment pursuits, among others. This is why operators consistently lament the fact that outstanding premiums constitute a threat to the solvency margin of many insurance firms in the local market.
Several surveys have shown that premium debts affect the claims settlement machinery of insurance operators. “When premiums are promptly and accurately paid by every client, the insurer is able to settle claims promptly as well as engage in other businesses that will promote profitability,” argues Oluseyi Ifaturoti, managing director of Crystalife Assurance Plc.
According to the President of the Chartered Insurance Institute of Nigeria, CIIN, Mr. Wole Adetimehin, Governments at all levels should take insurance serious and pay premiums as at when due so as not to be caught unawares when disaster strikes.
For Adetimehin, it is sad that the Dana plane crash claimed many federal government workers lives even when underwriters are yet to be appointed for the compulsory group life insurance policy for such workers for year 2012.
Despite the fact that the Group Life Policy has been in existence for government workers for sometime now, Adetimehin regretted that bureaucracy in governance made it impossible for underwriters to be appointed for the current year. Because such negative actions will tend leave a gap in the entire process, settlement of claims could be unnecessarily prolonged, adding to more sorrow for the families off the victims.
The way forward
According to Fola Daniel,Commissioner for insurance (CFI) the truth remains that insurance has been instrumental to the growth and development of the world’s leading economies, adding that there is nothing as important as having a fallback mechanism that ensures people are restored to the original position before they suffered a loss.
The long-term funds generated by insurance business, Daniel maintained, can really have a huge impact on continuing economic development processes in the nation and operators and consumers alike need to have the right attitude to insurance as a million enforceable policies could never change this fact.
For Ifaturoti, the industry can benefit after having so much in capital to be able to accumulate such risks, urging on the government to fulfill its part of all insurance contract saying “if the government makes a law then it should not be found wanting in the implementation of the law and the government has given the industry the assurance that it does not have the intention to go against its own laws.”
For Adetimehin, governments should endeavour to do the right thing at the right time at all times, stressing that such lackadaisical attitude is not peculiar to the insurance sector alone but cuts across every sectors of the economy.
“Virtually all policy decision of governments in this part of the world do not agree with what obtains in other settings, and that is the challenge for all of us to impose on government and people in governance and people in policy making institutions to ensure that they set good leadership in all their roles.”
He said “When we had the bomb blast at Ikeja cantonment, you will recall what the industry suffered, however, that could not be likened or compared to 9:11 in USA. Till tomorrow, insurance operators in the USA are still taking relief from government because the loss was colossal and it was bound to affect the basis of providing cover for years.”
While stressing that Nigerians need to do quite a lot by ensuring that the right people are voted for into power, Adetimehin said “And when they get to office, we pray that God gives them the courage or what it takes to function effectively in such positions. The bane of our problem in this environment is that political decisions are made in virtually all areas which do not augur well for business concept and all other projects.”