The recent collapse of 21-storey building in Ikoyi, Lagos further reignited the need to insure public building under construction across the country.
LEADERSHIP investigation had revealed that the collapsed building had no insurance coverage.
Yet, about 45 lives were lost, the building totally gone, while some assets within the vicinity were destroyed as well.
This is a huge loss of which insurance companies could have carried had the building had the Contractor All-risks Liability Insurance.
This is just one out of several public buildings currently under construction but without adequate insurance coverage despite the law stipulates that builders should insure these assets.
Although, building insurance is part of the requirement for documentation and approval to construct, most contractors have little regard for insurance coverage, seeing the cover as a waste of money.
For a building of 21-floors, industry source disclosed that the premium for All-Risks Construction Liability Insurance coverage is about one per cent of the entire building project, which invariably means the premium the owner of this building could have paid was about N500 million or less.
The premium, if paid, could have covered the cost of rebuilding the collapsed structure, compensation for the third parties involved, which are; families of the deceased victims as well as the other properties affected by the disaster.
However, without insurance, it puts pressure on Lagos State government to cough out fund by all means to compensate the families of the victims from the purse of the state, which ordinarily, could not have been so, if the project was insured.
Understanding Building Insurance
According to the country’s statutory laws, Section 65 of the Insurance Act 2003 stipulates that all public buildings shall be adequately insured, while Section 64 of the Act provides that all buildings under construction above two floors shall be adequately insured with a registered insurance company.
The law explains further that every public building should be insured against the hazards of collapse, fire, earthquake, storm and flood.
Public building include; a tenement house, hostel, a building occupied by a tenant, lodger or licensee and any building to which members of the public have ingress and aggress for the purpose of obtaining educational or medical service, or for the purpose of recreation or transaction of business.
In an exclusive interview with LEADERSHIP, the managing director/CEO, Universal Insurance Plc, Mr. Ben Ujoatuonu, said, beyond the fact that there is a requirement for compulsory insurance, Contractor All-risks Liability Insurance would have covered all that happened.
The magnitude of the project, he said, required that there should be Contractors All-risks Insurance in place which the principal ought to have required from the contractor that is erecting that structure.
According to him, “Contractors All-Risks would have covered the contract works, which is the building itself; and third party liabilities. You see that lots of people and adjoining properties were affected. All these things are covers that could have been provided by Contractors All-risk Liability Insurance. It is amazing this thing is happening. It also calls for the need for insurance in our daily lives. Nobody knows when it’s going to happen and how it will happen. “
Stating that accident such as this could happen, which is why there is the need for insurance, he urged everyone undertaking any venture to buy necessary and adequate insurance to provide cover.
“This should be an eye opener for Nigerians to procure the needed coverage, not only for themselves, but for third party liabilities as well. It is going to be humongous, economic and accidental loss of wealth because when government begin to talk about compensation to the families, government is going to divert fund that is meant to be used for other developmental things into compensation and that is what insurance would have taken care of, “ he pointed out.
On pricing for such risk, he said: “insurance is the cheapest service you can buy. Considering the nature of that construction, I can tell you that if Contractors All-risk has been taken on that project, the contract work cannot be up to one per cent of the entire project value. So, how much is one per cent in terms of premium that will be able to take care of that level of liability or loss?”
Similarly, in an interview with LEADERSHIP yesterday, the managing director/CEO, Niger Insurance Plc, Mr, Edwin Igbiti, said, such huge project ought to have been insured and had it be insured, there will be no need for state government to interfere in the compensation of the families of those affected by the loss.
“If Contractors All-Risks Liability has been subscribed to, insurance companies involved would have compensated the families of the diseased and all third parties involved as well as reconstruction of the collapse buildings. instead of passing this liabilities on government. This kind of emergency is also a burden on the government because it is not a liability it envisaged and make provision for, in the budget,” he pointed out.
He charged all Contractors handling building projects to take Contractors All-risk liability as there are lots of risks involved in constructing high-rise building of this magnitude.
The Nigerian Insurers Association(NIA) while earlier commiserating with the families of deceased victims, warned owners of public buildings to desist from the act of constructing high-rise buildings without the regulatory building insurance coverage.
Building without building insurance coverage, according to NIA, means violation of the insurance law.
While observing the worrisome reoccurrence of building collapse in the country, the director general, NIA, Mrs Yetunde Ilori, emphasised the need for the general public to comply with all building rules and adopt insurance in the protection of lives and property to curb further incidence of building collapse.
Ilori called on stakeholders in the built environment to arrest the rising incidents of building collapse by ensuring strict adherence to standards, adding that, the nation has lost so much to the carelessness of a few unpatriotic builders.
The NIA DG assures the insuring public of the industry’s capacity and readiness to respond to the needs of Nigerians through the provision of insurance protection to the citizens.