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FG to insure civil servants for N6bn

By on January 22, 2015

The Federal Government is set to pay N6bn premium to underwriters covering its civil servants for the current fiscal year, investigation has revealed.

One of the underwriters of the Group Life Insurance Policy said the insurance would cover only the core civil servants with the exception of military and police personnel.

According to the insurer, the underwriters are still expecting the payment of the premium, which ought to have been paid on December 23, 2014 when the policy commenced for the current financial period.

The GLIP emanates from the Pension Reform Act, 2014, which states, “Employers shall maintain life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee.”

The scheme is to provide compensation for all federal civil servants who die in service. In recent years, delay in the payment of premium has been a bottleneck to the smooth implementation of the scheme. But since the National Insurance Commission commenced the enforcement of the ‘no premium, no cover’ regulation in January 2013, the government had been trying to pay up promptly.

Section 50 of Insurance Act, 2003 states, “The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance.”

It added that any insurer, who granted cover without having received premium in advance or premium receipt notification from the relevant insurance brokers, would be liable to a penalty of N500,000 in respect of each cover granted, and in addition, might be a ground for the suspension of the licence of the insurer.

The Director-General, Nigerian Insurers Association, Mr. Sunday Thomas, said the ‘no premium, no cover’ regulation must be adhered to by both the private and government establishments in order to enjoy insurance cover.

“For the group life, the government seems to be adjusting to the regulation, because the cover now commences from the date of premium payment. If the premium has not been paid, if anybody should die after the date the last contract expired, the government will take responsibility for it,” he said.

The Managing Director, Capital Express Assurance Limited, Mrs. Bola Odukale, said the GLIP was beneficial to the workers, because in the event of death, the relatives of deceased workers would get financial compensation to move on with their lives.

She also noted that the Pension Reform Act, 2014 had simplified the claims procedure.

Under the present dispensation, Odukale explained that claims would be paid directly to the beneficiaries rather than the Pension Fund Administrators of the deceased workers through which the claims used to be paid.

“Under the old PRA 2004, we used to pay to the pension operators and a lot of beneficiaries could not access the funds because the PFAs would ask them to produce letters of administration, which some may not be able to get; but now, we pay to the named beneficiaries,” Odukale said.

 

[Punch]