August 21, 2017

Insurers jerk up premium rates for flood risks by 50%

By Rosemary Onuoha

INSURANCE companies have jerked up premium rates for flood insurance by 50 per cent, in response to increased flooding incidences across the country.

Financial Vanguard findings reveal that the increase is coming on the heels of massive claims that besieged insurance operators especially after the floods in Lekki area of Lagos.

An insurance operator who spoke to Financial Vanguard on condition of anonymity said that with the level of claims paid out to insured victims of the flood, especially in the Lekki area, premium rate for that area will definitely edge higher during renewals.

“Having paid so much as claims for Lekki flood, it will not make business sense to charge the same rate during renewals,” the operator said.

Recall that at least 20 people were killed and houses submerged with property worth billions destroyed after intense storms hit Lagos recently, causing massive flooding of residential and commercial areas.

While government blamed the incident partly on indiscriminate dumping of refuse in drainage channels, the Environmental Rights Action/Friends of the Earth Nigeria blamed the “environmentally-unfriendly projects” by the state government along Lagos coastlines.

The federal government on its part, warned that about 30 states and over 100 local government areas, which had been categorized as high flood risk areas, could experience more flooding this year.

Chairman of Nigerian Insurers Association (NIA), Mr. Eddie Efekoha, said that flood is often an extension of fire cover, adding that most insurance companies do offer the cover for free, especially in areas not prone to flood.

However, in reaction to the federal government’s warning, some insurance companies are making flood policies stand alone and no longer part of fire policy for flood-prone areas even as premium rates are bound to go up.