Existing insurance coverage for the employees managed by the Office of the Head of Service of the Federation had elapsed three months back since August 2016 and renewal was yet to be effected according to MetroBusinessnews findings.
Provision of compulsory insurance coverage for employees both at the public and private sector is a provision in the Pension Reform Act 2004 as amended in 2014, which mandate employers of labour to provide insurance for their employees.
Section 4 (5) of the Pension Reform Act 2014 stipulates that every employer, to which the Act applies, shall maintain a group Life Insurance Policy in favour of the employees for a minimum of three times the annual total emolument of the employee.
At the moment, we are not giving the Federal Government employees Coverage because the policy on ‘No Premium No Cover’ is in place, which requires that premium is paid before commencement of a policy. So, they are currently off cover or on self insurance until premium is paid, Eddie Efekoha, chairman, Nigerian Insurers Association (NIA).
Efekoha who is also the managing director, Consolidated Hallmark Insurance Plc said it’s in the interest of the nation and the larger economy that government pays premium and pass the burden of coverage to the insurance industry.
“It does not only take the burden off the government, it strengthens the insurance industry to better support the economy, he observed.
Alphons Okwor, managing director, African Alliance Insurance Plc said “Premium has not been paid and until premium is paid there is no cover”.
Okwor stated that appointment letter for underwriters and brokers that will participate in the business have not been released yet. So, we are all waiting and until payment is made there is no contract, which is the position of the law on ‘No Premium No Cover’ Okwor stated.
Meanwhile, a source in the office of the Head of Service of the Federation, confirmed that approval has actually been received for payment of insurance premium from the Federal Government, having made provision of N5 billion in the budget.
“We are trying to follow due process to ensure that we do not make mistakes, the source hinted but noted that it was taking time to select participating insurance companies.
The source also stated that government is committed to the welfare of its employees and that the insurance cover would serve as motivation and also a bolster that will enable deceased employee’s families cope after the death of their loved one.
“There will be insurance cover for workers soon, because I can assure you that a provision was made in the appropriation bill”.
Since the last four years, group life insurance premium for public sector has been in the neighborhood of N6 billion and N7 billion, resulting to a significant contribution to the growth of life business. In fact, life insurance premium in the last two years(2014 and 2015) grew by over 35 percent amounting to N99.57 billion in 2014.
In line with the guidelines for life insurance policy jointly issued by the National Insurance Commission (NAICOM) and National Pension Commission (PenCom), the Federal Government is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to, and separate from, the contributions to be made by the Federal Government to each employee’s Retirement Savings Account, as required by the Pension Act.
The life insurance policy is to be effected through the purchase of a life policy issued by a Nigerian registered insurance company, licensed and authorised to conduct life insurance business by NAICOM under the Insurance Act 2003.
The insurance coverage is for 12 months and it is expected to be renewed at the end of each coverage year.