Nigeria has one of the highest housing deficits in the world and in a bid to bridge this gap, new structures, either for offices, shops or housing, are springing up on a daily basis.
Some of these new buildings are structures of more than two floors.
Over the years, there have been reported incidents of incessant building collapse of which the casualties are usually the artisans working on the building or people living within the vicinity. In this instance, state machineries are deployed to compensate the victims, translating to more financial commitment on the already lean budget of the state.
This is a risk that could be covered through Builders Liability Insurance, but builders have refused to purchase this policy, yet, the collapse of buildings under construction continues.
In the last 14 years, precisely between 2007 and 2020, insurance industry has lost an estimated N140 billion to non- insurance of buildings under construction in the country. This is despite the incessant collapse of buildings, above two floors, under construction across the federation.
Investigation shows that on a yearly basis, insurance firms are losing N10 billion to non-insurance of about 2, 000 new buildings, above two floors, under construction across the country, as people continue to flout the Builders Liability law as contained in the 2003 Insurance Act.
Section 64 of the Insurance Act 2003 requires that everyowner or contractor of any building under construction, with more than two floors, must take an insurance policy to cover liability against risks caused by the negligence of the contractor, owner, servants, agents, and consultants which may result in death, bodily injury, or property damage to workers or the public.
The penalty for default is N250,000 or three years’ imprisonment or both.
On Occupiers Liability Insurance or Insurance of Public Buildings, the law provides that every public building must be insured against liability in the case of loss, damage to property, death or bodily injury that may be caused by collapse, fire, earthquake, storm or flood.
The penalty for default is a fine of N100,000 or one-year imprisonment or both.
Public building liability insurance is among the five compulsory insurances expected to be complied with by owners of buildings but despite being compulsory, only few procure this policy.
Speaking on this development at a press briefing in Lagos, the president, Nigerian Council of Registered Insurance Brokers (NCRIB), Dr Bola Onigbogi, believes the reason for non-insurance of building under construction was enforcement, stating that with proper enforcement, the rate of adoption will increase.
She pointed out that government at the federal and state levels must live by example by insuring their properties, thereby setting the pace for the private sector players to key into this initiative.
While urging states to domesticate insurance laws in their respective jurisdictions for easy enforcement, she noted that the premium paid on this policy is quantum when compared to the benefits in the policy. Onigbogi noted that there were legal provisions for mandatory insurance of buildings in Nigeria, but implementation has been a big problem.
She noted that state governments doesn’t have any reason to dip into the purse of the state to compensate victims of building collapse if adequate insurance coverage had earlier been done on such buildings. She however acknowledged that the National Insurance Commission (NAICOM) is working out methods for enforcing the mandatory insurance for buildings.
To enforce this insurance policy, NAICOM and the Federal Fire Service (FFS) recently partnered to commence the enforcement of this compulsory public building liability insurance in the country.
Commissioner for insurance, Mr Sunday Thomas, stated that relevant federal laws have made insurances mandatory.
He said buildings under construction that are more than two floors are to secure builders liability; public buildings including schools, offices, hotels, hospitals, markets are to secure occupiers liability; employees of both public and private sectors are to get group life insurance; medical practitioners are to get professional indemnity; while vehicle owners are to get third party motor vehicle insurance on death, injury or damage to the property of third parties. He believes NAICOM and FFS partnership on building insurance will further deepen insurance penetration in the country.
Meanwhile, to enforce Lagos State Building Law of which insurance is a major component, insurance operators under the auspices of the Nigerian Insurers Association (NIA) are already discussing with the state government to ensure public buildings within the state are duly insured.
Speaking on this, the chairman, NIA, who is also the group managing director/CEO, Cornerstone Insurance Plc, Mr Ganiyu Musa, stated that insurance industry can gain a lot from this engagement, as most of public buildings across the federation are uninsured, which invariably means insurance industry is losing several billions of Naira that ought to accrue to the industry on an annual basis.
Stating that, building collapse have left the owners financially strained as a result of compensation paid to the parties involved, he said, with public building insurance coverage, insurance companies will undertake such compensation.
On a yearly basis, it is estimated that insurance industry is losing about N10 billion from low subscription of building insurance policies. Stakeholders have urged insurance practitioners to increase awareness on the enforcement of these policies by relevant regulatory bodies for increased insurance adoption and penetration across the country.