The federal and state governments have neglected their responsibilities by failing to purchase group life insurance coverage for civil servants across the country, thereby, shortchanging the workers in the process. ZAKA ABD-KHALIQ writes.
Despite the fact that the Pension Reforms Act(PRA 2014) mandates companies both in public and private sphere to provide group life insurance for their workers, federal and State governments have been flouting this directive.
In Nigeria, Group life cover is a joint regulation of the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom). Section 9 (3) of the Pension Reform Act 2004 (now PRA 2014) requires every employer, to which the Act applies, to maintain Life Insurance Policy in favour of the employee for a minimum of three times the annual total emolument of the employee. The policy provides cover to the insured against Death.
However, with PRA 2014 failing to prescribe sanctions for defaulters, Federal and state governments as well as some companies in the private sector have cashed on this loophole by evading life insurance of their workers, especially, with some of them struggling to pay salaries of their respective employees.
Group life insurance is a type of life insurance in which a single contract covers an entire group of people. Typically, the policy-owner is an employer or an entity such as a labour organisation, and the policy covers the employees or members of the group. Group life insurance is often provided as part of a complete employee benefit package. In most cases, the cost of group coverage is far less than what the employees or members would pay for a similar amount of individual protection.
FG, States Fail To Subscribe To Group Life
The federal government is defaulting in group life insurance of its 89,000 workers, with private sector boasting about 90 per cent of the group life coverage in the country.
To this end, federal workers are currently without group life insurance coverage, as the insurance cover they have had expired since 2016, LEADERSHIP can authoritatively reveal.
Investigation revealed that the 2018 group life cover of its MDAs is expected to gulp about N15 billion, which has been taken care of in the 2018 national budget
However, a source disclosed that no appropriation has been made in this regard.
Group life insurance is a cover undertaken by the federal government through the Office of Head of Civil Service of the Federation on behalf of its federal civil servants for their protection against unforeseen circumstances, such as death and disabilities associated with industrial hazards while in active service.
An anonymous operator who spoke with LEADERSHIP said, in this instance, federal government might resort to self-insurance, which would mean that government would be the one to compensate the family of deceased civil servant. However, a source revealed that no family of deceased federal government workers has been compensated so far.
Moreover, 32 States across the country have failed to insure their workers, as they have no concrete group life insurance cover for over two million civil servants in the affected states.
To this end, the families of the deceased civil servants in the 32 states are left to their own fate, as they are not entitled to death benefits claims, meant to sustain the bereaved after the death of their loved ones.
A document released by the National Pension Commission(PenCom) listed the affected states to include: Jigawa, Ogun, Kaduna, Delta, Zamfara, Kano, Imo, Kebbi, Sokoto, Ekiti, Kogi, Bayelsa, Nasarawa, Oyo, Kaduna, Akwa Ibom and Edo States.
Others are; Ondo, Benue, Kwara, Plateau, Cross Rivers, Anambra, Enugu, Abia, Ebonyi, Taraba, Bauchi, Borno, Gombe, Yobe and Adamawa States.
Market observers said non-adherence to this provision is exposing the families of their workers to imminent danger should anything happens to workers in the concerned states.
To this end, Lagos, Niger, Osun and Rivers States are the only four states that have implemented the group life insurance scheme.
Responding to this development, the Director General, Nigerian Insurers Association(NIA), Mrs. Yetunde Ilori said, unfortunately, what the PRA 2014 prescribes is that any employer who fails to insure his employees under group life cover, should be a carrier of his own risk, hence, there is no compulsion.
This, she said, makes enforcement difficult, calling for a review of this section to make it compulsory on all employers of labour to put in place, group life cover for their workers.
While applauding PenCom for trying to enforce this provision through issuance of compliant certificates to complying employers as well as persuading federal government to make it one of the requirements to bid for FG’s contracts, she said, different states have been approached by life insurance firms, but nothing much came out of this engagement.
According to her, “Yes, different states have been approached by life insurers, but the enforcement is not like that of the Contributory Pension Scheme(CPS), because it just says that where there is no group life put in place, should there be any death, such employer should take up the responsibilities. I think that is an aspect that should be reviewed.”
Speaking in an interview with LEADERSHIP, the Director, Centre for Pension Right Advocacy(CPRA), Mr. Ivor Takor, charged the unions in public and private sectors to rise up to the plight of workers by compelling employers to insure the lives of their workers. While the labour unions are fighting for salary increment, he said, the pension and insurance packages of workers should also be utmost.
“it is now obvious to everybody that the state governors, among others, cannot do anything for the welfare of the workers unless they are compelled to do it. So, if the public sector unions don’t get up and ensure they implement these things, those states will not do anything,”
On his part, the President, Nigerian Council of Registered Insurance Brokers(NCRIB), Mr. Shola Tinubu, said, employers must take up the responsibility of insuring their workers as this may also motivate employees to be dedicated to work.
The managing director Custodian Life Insurance, Mr. Larry Ademeso, said: “Employers in Nigeria today are required by law to provide group life insurance cover for their employees, that is as far as the story goes , benefits will be paid to your beneficiaries when you would have passed away so what happens if you do not die but become incapacitated by some of the debilitating illnesses ravaging the populace. This is why we developed the critical illness cover to meet the yearnings of Nigerians.”
As it stands, there are numerous complaints of dependent relatives who are unable to receive benefits because federal government is yet to pay the needed premiums. Hundreds have died and underwriters are declining to settle claims under the principle of no premium no cover. Current claims, it was learnt, are running into billions of Naira.
With the year running to an end, insurance operators have yet to receive renewal premium on Group Life Insurance Policy cover from the Federal Government for workers.
According to the operations of the GLIP, premium should be renewed on a yearly basis.
When the cover lapses and it is not renewed on time, relatives of workers who died during such periods are usually not paid by the underwriting companies.
Some insurers are worried that the delays and inconsistencies in the payment of the annual premium by the government had continued to leave many dependants without any form of compensation.
Death claims worth over N15bn, according to insurance operators, cannot be paid to relatives of deceased workers during periods when insurance premiums were not paid.
“However, the implication is that the dependants of workers, who died when premium had not been paid, will not have anything to claim from the insurance companies, except the Federal Government decides to make a separate package for them,” an operator said.
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