Less than 10% of Nigerians insure their buildings
Despite the huge benefits in home and property insurance, investigations have showed that less than 10per cent of estimated 198 million Nigeria’s population insure their buildings.
Findings show that lack of trust, cultural beliefs, delays in payment of claims and failure of the operators to tell the people their success stories, contribute to lukewarm attitude to buy into insurance.
Also, the high premium charged on high-risk businesses by some operators is a disincentive to subscription.
Building insurance in Nigeria like anywhere else in the world, is designed to protect property and personal belongings against un-foretold damages or theft.
Experts in the built industry say it is a smart investment to safeguard homes against unexpected forces like floods, fire, and building collapse.
In recent times, many buildings have collapsed in Nigeria while others perished in inferno with victims having difficult time getting back on their feet all because insurance was not thought as a worthwhile investment.
According to a report by the Federal Ministry of Power, Works and Housing in 2017, a total of 54 buildings collapsed across the country within a period of four years with Lagos state accounting for the highest incidence.
Of course, this could be traced to the fact the state has the largest number of ongoing construction works followed by Abuja, Port Harcourt, Kaduna among others.
Under the Insurance Act Sections 64 and 65 of 2013, it provides for the compulsory insurance of buildings under construction and public buildings respectively.
While section 64 requires that every building under construction that is above two floors must be insured against construction risks, section 65 requires the owner and occupier of every public building to be insured against liability for loss or damage to property or death or bodily injury caused by collapse, fire, earthquake, storm or flood.
Managing Director of Leadway Assurance Plc, Oye Hassan-Odukale said, insurance of public buildings is one of the seven compulsory policies in Nigeria.
In spite of this, he noted that a significant percentage of public buildings are uninsured in the country and a high percentage of buildings under construction are also uninsured.
“ By nature of public buildings, they are prone to several risks and liabilities, hence, it is in the best interest of the public to ensure they are insured against risks and liability.
“The low level of enforcement of these compulsory insurance policies has negatively affected the uptake of the cover, leaving millions of Nigerians prone to risks.
“Insurance penetration rate in Nigeria is still below 1per cent of the entire population. What this portends for the industry is that an abysmally low percentage of Nigerians insure their buildings”, he added.
For the Group Managing Director/Chief Executive Officer, Cornerstone Insurance Plc, Mr. Ganiyu Musa, property insurance could either be commercial property insurance which protects a company’s physical assets from risks caused by fire, explosions, burst pipes, storms, theft or vandalism.
He explained that it could also be householders/home owners’ property insurance, which would protect properties in a home.
“By property insurance, we also mean the types of insurances that can be purchased to protect any assets/properties either at home or in a business”.
Musa who also has over 19-years of experience in the field said, some of the reasons why Nigerians don’t insure their property include; some religious beliefs, ignorance and low-income earnings and non-compliance with regulations set out by the government.
Musa who spoke through the Head of Underwriting of the firm; Mr. Kolawole Adekoya, bemoaned the fact that less than 10per cent of Nigerians insure their property in-spite of the benefits which include; peace of mind and protection from financial loss and guarantee for business continuity.
“Insurance policy protects the policyholder against any financial consequences that is associated with the property or day to day activities of the insured.
Peace of mind comes in, in the sense that the insured will feel relief and believe that someone is there for them.
Insurers do play a major role in loss control measures such: as funding /provision of fire brigades, employment or engagement of the services of surveyor that advice on loss control matters. An uncommon benefit of insurance is complying with legal requirements”, he stated.
He further said the components of building that property insurance protects include; the physical structure, landlords fixtures and fittings, the fence, contents and the gate.
On the issue of delays in payment of claims, he said; “Settlement of claims to the insured is within 24 hours after the discharge voucher has been duly executed while it may vary from one firm to another”.
He however, stated that the process between claim notification by the insured and when the the discharge voucher is issued by the insurer is determined by a number of factors which also include that the insured is expected to immediately notify the insurance company once a loss has occurred and not admit any form of liability to a third party without first informing the insurer.
According to him, on notifying the insurer of the loss, the insurer immediately appoints an independent adjuster to assess the extent of loss as well as expect the insured to submit all relevant documents to substantiate the loss.
He disclosed that the entire process might typically take an average of Five to Ten days depending on how promptly the insured is able to substantiate the claim and provide all the required documents.
“Subscription for property insurance is made by payment of premium which is the consideration to be furnished as it applies to any typical contract.
The premium to be paid depends on the type of assets/property to be insured.
To insure a building for example, the following factors will be considered; the nature of construction of the building, what the building is used for that is; whether residential or commercial, the value of the building and its location”, he stated.
On his part, an official of Royal Exchange Plc who pleaded anonymity said apathy to insurance is mostly common among private building owners as statistics have shown that out of every 10 of such buildings, hardly would one subscribed to building insurance whereas in public buildings, out of every ten, six would have an insurance cover.
The official said; “Insurance is a pull of risk, if the risk involved in the business is high, the premium could be much higher, if it’s a low risk business, the premium would be low and as low as point three
Nigerians don’t subscribe to building insurance because peoples’ past bad experience, ignorance on its benefit and the fact that Nigerians see it as a waste of money in case nothing bad happens to their property.