Everyone in the industry agreed that the old insurance act was defective in many respects. Therefore, when the National Assembly passed the Insurance Bill in 2003, which the President later signed into law, the joy of insurance practitioners knew no bounds. They were all sure that the Insurance Act 2003 was the tonic needed by the industry to square up with the rest of the world. Two new features of the Act are Sections 64 and 65. Section 64 gives instruction about insurance for buildings above two floors under construction while Section 65 is about insurance for public buildings. Section 64 compels any person constructing any building of more than two floors to insure with a registered insurance company his liabilities in respect of construction risk caused by his negligence or the negligence of his employees which may result in bodily injury or loss of life to or damage to property of any workman on site or of any member of the public.

The section adds that anyone who contravenes this provision commits an offence and if found guilty shall be liable to a fine of N250,000 or imprisonment for three years. On the other hand, Section 65 states that: “Every public building shall be insured with a registered insurer against the hazards of collapse, fire, earthquake, storm and floods.”

As much as insurance practitioners like these provisions of the Act, for three years, they could not do anything about them. Between May 2003, when the Act came into existence and May 2006, no insurance company underwrote any risk in this regard. They were all waiting for the guidelines that the industry regulatory body, the National Insurance Commission (NAICOM), was expected to reel out.

NAICOM eventually came out with the guidelines at a meeting between Insurance Commissioner, Chukwuemeka Chukwulozie, and insurance practitioners in Lagos penultimate Friday. According to Chukwulozie, the objectives of the insurance of buildings under construction are; “to provide compensation for workmen in respect of injury or loss of life or damage on site and to provide compensation for any member of the public in respect of injury or loss of life or damage to property.”

The industry regulator further said that the policy was designed to provide compensation in respect of construction risks caused by insured’s negligence or that of his agents or employees which might result in injury or loss of life to or damage to property of any workman on site. Injury or loss of life to or damage to property of any member of the public, is also covered by the policy.

On the issue of floors, the Insurance Commissioner explained that the ground floor “is interpreted as floor one while any building above two floors, falls within the category.” He also gave a guideline with respect to premium. According to him, “the rate of risks is 0.45 per cent of the contract value. The limit of liability per occurrence shall not exceed 20 per cent of the contract value.”

He also took time to give details of those losses excluded by the policy. These include losses arising from loss of rent or loss of profit and liability arising directly or indirectly through war, invasion or acts of foreign enemies. Other losses not covered by the policy are; damage resulting from fire, explosion, flood, collapse, storm, demolition of building, lifts, elevators, steam boilers etc.

While talking about insurance of public buildings, the Insurance Commissioner said Section 65 “makes it mandatory for every public building to be insured.” Throwing light on what constituted a public building, Chukwulozie said, “Such public buildings are identified as buildings in which members of the public have right of egress and aggress. They include all rented houses or apartments, university hostels, dormitories in institutions of learning, hostels of private organisations, club houses, hotels, guest houses, schools, seminaries, colleges, universities, and other institutions of learning.”

The Commissioner gave examples of other buildings regarded as public buildings such as hospitals, maternity centres, medical centres, pharmacies, dispensaries, amusement parks, fitness centres, zoological gardens, cybercafés, museums, toll plazas, companies, offices, business centres, supermarkets and stores.

Many insurance practitioners are happy that the NAICOM has finally come out with the guidelines for the insurance of public buildings as well as buildings under construction. They are hopeful that these two will positively affect the profile of the nation’s insurance industry, considering the number of public buildings in the country, as well as the quantum of buildings under construction.

But Mr. Ezekiel Chiejina, Director General, Nigerian Insurer Association, does not share this enthusiasm. As far as he is concerned, the insurance of public buildings will not be of much benefit to insurance companies.

In a newspaper interview, Chiejina said, “The economic losses that arise from such incidents (building collapse or fire) impact negatively on the victims and the larger society as a whole. The intention of insurers was to create a situation where providing insurance for such buildings would ensure the loss is not total when incidents occur. But somewhere along the line, people thought it was all about third party, like we have in motor insurance. The premium is next to nothing and that is the major reason why it has not been attractive to insurers.”

Chiejina also said that if the 2003 Act had been about property damage insurance, operators would have gone into it a long time ago. “But as it is now”, he continued, “we will just do much work and get very little or nothing at the end of the day. What we have done is that we are proposing an amendment of this section at the next opportunity. The amendment will stress that it is the property that should be covered.”

Dr. Festus Epetimehin, Managing Director, Worldwide Insurance Company, however, holds a different view. To him, the insurance of public buildings, albeit for third party, is a good omen. According to him, the industry has been on this issue for a long time without any positive result. “That we can now insure public buildings is a good omen. It is a pointer to the fact that great things are still possible in the industry. What I think we should do is to start with what the law has allowed us and push for more.”

Apart from the immediate benefit to the insurance industry, Epetimehin said the insurance of public buildings would create in the members of the public the culture of insurance. “With nearly every building in the country being covered by this policy, the fact is that Nigerians will now become conscious of the need to insure. If you insure your building and the insurance company takes time to explain the benefit that will accrue to you the chances are that you will want to insure your other possessions.

So, I think the policy, by and large, is of great benefit to insurance industry. It has the potentiality to turn around the fortune of the industry if properly handled.” Speaking in a similar vein, Mr. Joe Ameh, Managing Director, Nigeria Reinsurance Corporation, believes that the insurance of public buildings and buildings under construction is a very positive development.

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By SULAIMON OLANREWAJU

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