There have been increasing cases of fire outbreak across the country. No state is spared. Recently, malls, markets, public facilities and even private property have been ravaged by fire, leaving huge economic losses, in some cases running into billions of naira in its wake.
Recent fire devastations include the multi-billion naira NEXT Cash and Carry Mall in Abuja, the Ebano Super Market in Abuja, Kubwa Market, Abuja, a market in Obi Isiedo in Inewi Anambra State and the Minna Transmission Centre of the AEDC which threw several local government areas in Niger State into darkness.
While we have not had access to the most recent data on fire incidences across the country, available data suggest thousands of property have been lost to fire across the country with trillions of naira lost and unmitigated because majority of the property are uninsured.
Data from the Federal Fire Service (FSS) indicate that the service responded to 3,555 fire calls, rescued 353 persons and saved property worth N1.351trn across the country in 2020.
It is, therefore, safe to say that more than 10 times of the above value was lost to fire incidences as the majority of cases are not contained in a reasonable time. Some are not even reported and not responded to.
All of these are huge economic losses to the owners of the property and even the government as the government sometimes pays compensation to victims for some succor which ideally should have been provided by insurance companies.
Data shared to our correspondent by the National Insurance Commission (NAICOM) indicate that just a little over 5,000 public buildings have been insured across the country. That is devastatingly insignificant compared to the number of public buildings in Nigeria.
“As of today, there are a little more than 5,000 public buildings insured under this provision of the Insurance Act 2003 in Nigeria and more than 70 per cent of this figure is from Lagos State. This is one of the reasons NAICOM is engaging the state governments and of course, the fire service and other relevant agencies to implement and enforce the public building liability,” Mr. Rasaq Salami, Commissioner for Insurance at NAICOM, explained.
He, however, indicated that the commission was working to improve the number.
“I can assure you that the commission is making progress in this regard, especially in creating awareness on the benefits inherent in the consumption of these insurance products,” he indicated. Our correspondent further reports that part of the effort are several MoUs and partnerships with agencies and even security agencies, especially on compulsory insurance enforcement and building insurance inclusive. Building insurance which is compulsory under Section 65 of the Insurance Act 2003 is particularly significant because with that the component of fire insurance will be impacted positively as most policyholders will take fire insurance as an extension. While building insurance is compulsory, fire insurance is optional, but most policy takers would naturally buy the fire insurance as part of the package via extensions.
In April, 2021, the Controller General of FFS, Dr Ibrahim Liman, during a courtesy visit to the NAICOM Head Office in Abuja, expressed the need for public buildings to take liability insurance policy seriously.
In April, 2021, the Controller General of FFS, Dr Ibrahim Liman, during a courtesy visit to the NAICOM Head Office in Abuja, expressed the need for public buildings to take liability insurance policy seriously.
The insurance of public buildings with the fire component specifically benefits the FFS. Section 65 of the Insurance Act 2003 also provides that 0.25 per cent of insurance premiums generated from public buildings insured against fire be set aside to assist in the funding of the firefighting equipment for firemen. The fund is to be applied in the procurement of firefighting equipment. But accruals to the fund have largely remained small due to poor subscription to fire insurance products. Nonetheless, the FFS wants a remittance of the funds that have accrued.
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The NAICOM CEO, Mr Sunday Olorundare Thomas, responding to the demand of the FSS boss, acknowledged the fact that the law enabled NAICOM to fund some activities of the fire service. He said, “We have a regulatory responsibility, the law also enables us to fund the activities of the Fire Service but because there has not been enough enforcement, the funds are not coming, but the potential is quite huge, this visit has given an opportunity for a better partnership.”
Mr Rotimi Edu, the President, Nigerian Council for Registered Insurance Brokers (NCRIB), told our correspondent on the phone that there was an ongoing collaboration to enforce building insurance with the Lagos State Government involving the Nigerian Insurers Association (NIA) and NCRIB.
He said the collaboration was aimed at ensuring all buildings under construction above two floors and every public building in the state was insured against damage, and that the initiative had been there since 2017.
“We are looking at deploying the scheme, but we still have IT infrastructure to deal with. Also, some other states are domesticating the compulsory public building law. This initiative isn’t national yet.
“It is worthy to note that individual insurance firms provide some products covering fire and special perils. One of those companies is Universal Insurance Plc which recently introduced fire insurance covering shops and associated third parties. Other companies include Royal Exchange, Leadway Assurance, AIICO insurance, and more. But the products have largely remained undersubscribed,” he explained.
Speaking further on fire insurance and associated benefits, Mr Rasaq Salami said fire insurance was not compulsory, but that what was compulsory by law was public building liability insurance which covered only third parties.
He said, “Insurance remains the best vehicle for mitigation of risks. This is what the insurance sector is there for. This is what the regulator, NAICOM, has been preaching to government at all levels, business owners, either Nano, small, medium or large, and the general public – transfer your risks to an insurance company and go to sleep.”
He said while there was appreciable progress being made in this regard, it was still arithmetical.
He explained that, “The 0.25 per cent fire service maintenance fund exists and it’s intact. It’s a fund deductible from the net premium realised by insurance companies on every public building policy written for the benefit of firefighters across the country in the area of firefighting equipment. It is not to finance the Federal Fire Service.”
He further explained that besides the FFS, each of the 36 states had a firefighting service and was also covered under the provision.
He said, “NAICOM is not meant to remit the fund to the FFS, however part of the commission’s engagement with the fire service is to work out how best the fund can be put to use and the need to enforce the law on insurance of public buildings to also enhance the fund. As it is, what is available in the fund is very insignificant to enable any meaningful support to the firefighting bodies in Nigeria.”
Benefits of fire insurance
Fire insurance reimburses or indemnifies the policyholder on the cost of repair, reconstruction or replacement of the property damaged or destroyed in a fire to the value of the sum insured. However, the full value of the property insured can also be gotten if the policyholder buys the extensions. These extensions can also cover risks hitherto not covered by fire insurance like damages arising from earthquake, flood or other natural disasters.
Fire insurance also covers property loss or damage due to smoke, water, and damages caused by firefighters.
Mr Edu stated that property worth hundreds of thousands of naira might have an annual premium of just N10,000 or N20,000 and that with that, where misfortune happened, victims would get compensation.
He said where there was fire, it was an economic loss to the nation because funds that should be used for other development needs would be deployed in compensations and reconstruction of the affected property, but that with insurance, the burden would be transferred to the insurance company.
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