In the wake of frequent building collapses and incidents in the country, experts have called on the government to implement the compulsory building insurance law to safeguard lives and properties.

The compulsory building insurance law was introduced by the National Insurance Commission (NAICOM) under sections 64 and 65 of the Insurance Act 2003. The policy mandates compulsory insurance cover for buildings under construction over two floors and above, as well as a fine of N250,000 or three years imprisonment or both for defaulters.

It covers losses incurred on building damages such as fire, flood, storm, earthquake, vandalism and malicious damage, theft, collapse, accidental damage, legal liability, loss of rent, explosion, and impact damage.

However, construction companies, owners of buildings and occupiers have refused to comply with the law, hereby resulting in more building damages. Statistics revealed that despite the robust schemes backed up by legal support; Nigerians still suffer from incessant loss of lives and properties.

It also shows that the property insurance scheme has low patronage with a penetration rate of 0.15 per cent despite the multiplication of insurance companies numbering more than 57 in the country.

Currently, the Lagos State government is compelling owners and developers to comply with the law amid frequent building collapses as a measure to ensure the dependants of victims in any occurrence are compensated.

Experts believe that the government has a role in ensuring strict compliance. An estate surveyor and valuer, Biodun Olapade, told The Guardian that lack of awareness or ignorance may be the reason for absence or difficulty in ensuring an insurance policy on properties under construction.

“Enforcement is weak according to Section 64(3) of the Insurance Act of 2004. Corruption aids or encourages ineffective enforcement, and premium or yearly payment for a valid policy is low or small in comparison to the beneficial advantages or volumes of claims in case of any collapse,” he said.

He advised that professional estate surveyors and valuers be engaged in the process to prepare valuation reports on a staged basis as they’re the only professionals licensed by law according to Decree No 24 of 1975 to value and to which loss adjuster cannot play down on their expressed opinion of value.

“Valuation report is a legal document and is tenable in court in case of dispute arising from the payment of claim,” Olapade added. Femi Oyedele, another estate surveyor and valuer, further stated the relevance of valuation in ensuring a transparent process. “It is necessary to carry out valuation of the builder’s liability like the workers, plants and equipment in case of unexpected events in construction site like building collapse or accidental damage or accidental fall of workers from height causing injury.

“Without placing appropriate or near exact values on the people, plants and equipment to be insured, premium determination will be a guesswork,” Oyedele said.
According to him, the lack of government enforcement made it difficult for property owners to insure their buildings while they were under construction and against the occurrence of fire and burglars.

He urged ⁠the government to set up a task force that ensures property owners insure their buildings under construction and after construction, adding, “Government must be serious to carry out the penalties for non-compliance.”

He also called on the government to mandate agencies like the Lagos State Building Control Agency (LABSCA) to ensure that buildings under construction have copies of their insurance policy pasted on a board conspicuously at the site, while the National Insurance Commission (NAICOM) should ensure compliance in all construction sites.

The President, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr Babatunde Oguntade, said government buildings and properties are insured through public sector insurance programmes, setting a precedent and encouraging private property owners to follow suit, in collaboration with insurance companies, hereby making insurance more accessible and affordable.

Oguntade stressed that the difficulties in obtaining building coverage for property owners were due to lack of capacity to pay premiums, complexity of insurance policies, presumption of minimal risk, underinsurance or gaps in coverage, poor building conditions, regulatory and legal challenges, as well as climate change and evolving risk.

He told The Guardian that the government has a role in ensuring that property owners adhere to insurance policies. “Government agencies and industry bodies should conduct awareness campaigns to educate property owners about the benefits of insurance and the risks of not being insured.

The Chairman of the governing board further affirmed that the insurance companies actively partake in creating awareness and promoting the compulsory insurance policy based on evidence.

Oguntade called for media outreach and advertisement via television and radio, as well as newspaper publications, educational campaigns detailing the need for compulsory insurance, digital and online campaigns through various social media outlets, regulatory and industry collaboration, community engagement and outreach, training and support for intermediaries.