Real Estate: Less Premium In The Midst Of Rising Investment Business

It is no news that real estate has now become a booming sector. A lot of people have engaged in this area of investment because of the high returns. However, there are different levels in real estate business. While some people are agents to property owners getting their money through commissions, others that have the capital and the wherewithal are engaged in buying up and developing properties for various uses.

Likewise, individuals have also engaged on such projects for personal use. Properties are not just for residential purposes only so real estate business does not revolve around only residential properties rather it equally involves buildings for public use such as hospitals, schools, offices, shopping malls, hotels, recreation centres and other buildings of like purpose that are being set up on a daily basis across the country. These buildings for public use can either be leased, rented or sold outrightly.

Now one would think that since the real estate sector is growing at a fast rate that insurance of such projects under the Compulsory Insurance arrangement would Benin high gear. Unfortunately that is not the case because despite this rapid growth of the sector and the large population of over 180 million, the annual gross premium income has remained at less than N400 billion in the last five years.

It is true that there are now less cases of building collapse and other similar disasters befalling such projects but the truth that can not be disputed is that those affected in the past were not adequately compensated and more often than not they were not compensated at all.
In a bid to guarantee safety and financial security of construction workers and occupiers of public buildings and also to increase the country’s insurance sector’s revenue, the Federal Government created the six Compulsory Insurances and this was instituted a long time ago. Nevertheless, there has continued to be a blatant flaunting and disregard for this compulsory insurance scheme by both professionals and owners of this buildings, putting the occupants of this building at risk and robbing the country of an important source of revenue.

This sad fact being the case, families of victims have had to bury their deceased loved ones and move on without compensation. Others have lost their bread winner and have been struggling to survive all without the adequate compensation that is due to them.

The Occupiers’ Liability Insurance is one that was set up against liability of the public for loss or property damage, death or bodily injury that could be caused by natural disasters such as fire, storm, earthquake, storm, flood or any factor at all which includes building collapse. This cover is meant to be gotten by the owners or occupiers of every public building. The Nigerian Insurance Act 2003, defined a public building as a building that is not used completely that is 100% by the owner for residency purpose. These buildings include hostels, tenanted buildings residential buildings occupied by lodgers, tenants, etc. A public building could also be defined as a building in which people enter and exit for educational, recreational or medical purposes such as schools, hospitals, malls, etc. The penalty for not complying with the provision is a fine of N100,000 or one-year imprisonment or both. Sanctions include Sealing-off or demolition of the affected building as provided under the National Insurance Act 2003 and the Lagos State Building Control Law 2010.

All these are mostly obtainable in Lagos as other states are not that keen on making the law compulsory and this has led the National Insurance Commission (NAICOM) to begin deliberations with governors of various states on the need to enforce the policy and how best to go about it.
The Commissioner for Insurance, Mohammed Kari, paid a visit to some of the states and the governors of these states had given their word to fully incorporate the law.
In order to ensure it’s enforcement across the country, NAICOM, created a technical committee last year. It’s membership constituted from members of the Federal Fire Service (FFS) of all the zones and the Nigeria Insurance Association (NIA).

Mohammed Kari, was represented by the Deputy Commissioner for Insurance, Technical, Mr Thomas Sunday, at the inauguration and he made it known that it was the duty of the committee to enlighten the committee on how public building funds should be effectively and properly put to use in the country. He went on to say that , under the National Insurance Act 2003, NAICOM had the duty of making sure that public buildings and buildings under construction were properly insured. He emphasized that public buildings include schools, hospitals, hotels and offices and that the occupiers of these buildings are the ones that have the duty to show proof of having complied with the provisions of Section 65 of the Insurance Act 2003.

He went further to say that the committee has the responsibility of collecting, monitoring and also putting to proper use the funds gotten for the purpose of improving fire activities in Nigeria. He threw more light on this by explaining that 0.25% of premium collected with respect to public buildings are supposed to be accumulated in the fire funds. All these have not been fully actualized because there is no effective collection process in place.

Lagos state, is the state with the highest number of recorded collapsed building incidents so it came as no surprise when last year they took the major step by making sure that all public buildings in the state are insured starting from the current year.
Despite the fact that we are not yet sure about the level of compliance the Director-General of Lagos State Safety Commission, Mr Hakeem Dickson, said that the state was taking the bold step to safeguard against building collapse in the state.
He also said that the commission took it a step further by making sure that construction sites were safe and that building materials were properly arranged and kept in such a way that injuries and accidents are kept to the barest minimum.

Another crucial part of the policy is the Builders’ Liability Insurance. This insurance provides compensation to workers and the members of the public for loss of property, death and bodily injury. This cover is mostly for owners or contractors of structures/buildings under construction of more than two floors.
It is used in the event of building collapse and other risks related to building construction. The law has it that the punishment for non compliance is a fine of N250,000 and three years’ imprisonment. There could also be sealing and demolition of the affected building.

Stakeholders in the construction industry are thus advised to take the necessary steps to make sure that they are in line the laws aimed at preventing the unnecessary loss of lives and property and the pain caused to families of the victims. It is indeed time to get up and take the right actions. The Lagos State government have done their part by domesticating the law on Insurance of Buildings under construction. It is now left for the law enforcement agents to do their constitutional duties and enforce the law.
This in the long run is better for all the parties involved . Hence all hands should be on deck to ensure that less lives and properties are lost through these building disasters and that even in the event of such happening that the victims are adequately compensated.

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