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Insurance companies pay N23.5billion to flood, fire victims

By on May 5, 2013

Insurance companies have paid a total sum of N23.5bn as claims in four major flood and fire disasters recorded in some parts of the country in the last four years.

SUNDAY PUNCH learnt on Friday that the payment was N3.5bn.

Last year, some insurers were asked to pay N7bn to Dangote Sugar Refinery Company Plc after the firm was razed by fire. The fund was to mitigate the heavy loss the company suffered in the disaster.

Also, the total claims emanating from the Dana plane crash of June 3, 2012 have been estimated at N5bn.

Prestige Assurance Plc led a consortium of insurance firms to insure the Dana aircraft that crash landed at Iju-Ishaga area of Lagos State last year. The victims included 153 passengers aboard the ill-fated plane and 10 residents of the area.

Over N418.94m has so far been paid by the insurance company to the relations of the deceased while others are still trying to process the necessary documents to facilitate the payment.

Although the floods, which ravaged most parts of Lagos in 2011, caused colossal damage in the city, only an Ikeja-based firm, FrieslandCampina WAMCO Nigeria made a claim of N3.5bn.

In 2009, seven insurance companies settled an interim claim totalling N8bn to the Nigerian Bottling Company for the damage done to its plant at Eyaen near Benin City, Edo State due to a fire incidence.

Insurance analysts note that while losses of such huge magnitude are rarely experienced, when they occur, they disturb the pool of funds from the contributions of other policyholders.

According to the President, Chartered Insurance Institute of Nigeria, Dr. Wole Adetimehin, in a particular year, if there are huge losses, they can destabilise the insurance pool.

He said, ideally, after a major disaster, the insurance companies were expected to do an upward review of the premiums in the highly risky policies, attracting heavy claims.

Claims experienced over some years would help in determining if a particular class of insurance was good or not; and if the rate should be reviewed upward or downward, Adetimehin added.

Section 65(1) of the 2003 Insurance Act states that: “Every public building shall be insured with a registered insurer against the hazards of collapse, fire, earthquake, storm and flood.”

Public building, in this section comprises 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.

The Managing Director, Sovereign Trust Insurance Plc, Mr. Wale Inaolapo, said customers were getting better informed by the day on insurance.

He said, losses which ordinarily would have been borne by them were now being transferred to insurance companies.

Inaolapo also noted that insurance played a prominent role in the economy of any nation.

With insurance, he stressed that individuals and corporate bodies would have the opportunity to transfer the risks associated with their businesses risk bearing firms.

He said “This guarantees the continuity of business activities and gives confidence to the players in the business sector, knowing full well that if any loss should occur, the company will be compensated by the insurance companies.”