FG Owes Insurance Operators N8.4billion Premium

WAPIC
  • FG Owes Insurance Operators N8.4billion Premium

Despite the ‘no premium no cover’ regime, the federal government is owing the Insurance Industry about N8.4billion, which ought to have been paid for the group life insurance coverage for all federal civil servants.

Group life insurance is insurance cover undertaken by the federal government through the Office of Head of Civil Service of the Federation on behalf of its federal civil servants for their protection against unforeseen circumstances, such as death and disabilities associated with industrial hazards while in active service.

The debt emanated from the outstanding balance of premiums owed to participating underwriters in group life insurance of federal civil servants in 2012 and 2016.

Reliable sources from one of the participating insurance companies hinted that in 2012, each of the underwriters were paid between 40 – 50 percent of their expected premiums for the group life insurance cover of civil servants assigned to them while over 50 percent (about N3 billion) of the total N6 billion premiums still remained unpaid till date, barely four years after.

The Source explained that although, the former President Goodluck Jonathan’s administration claimed that it could only afford 50 percent of the amount, the federal government, through the Office of Head of Civil Service of the Federation (OHCSF), never got back to the underwriters in subsequent years to offset the debts on premiums.

Further, with the exception of 2013- 2015, when the premiums were fully paid, the industry operators said that the federal government, is also yet to pay premiums for the renewal of the Group life Insurance of workers for the year, 2016.

The government merely informed the 20 selected participating underwriting firms without yet any financial commitments by payment of premiums. The expected premiums is N5.4 billion.

The Group Life Insurance of civil servants, which expired since July last year, ought to have been renewed by August 12, 2016 but up till date, the beginning of the second quarter of 2017, it has not been renewed due to lack of funding by the federal government.

Also, the insurance cover of assets of the federal government nationwide expired since August, last year. The processes for its renewal which will gulp several billions are yet to commence.

A Source at the OHCSF said that insurance of government assets, can wait for now, though no reason was given for downplaying the process.

The implication is that in the event of disaster affecting any of the government assets, there will be no compensation since it is no “no premium, no cover” regime.

Industry operators complained that the inability of the federal government to meet its financial obligations to insurance industry has consistently robbed the sector expected capital and thus, hamper its contributions to nation’s Gross Domestic Product (GDP) and economic growth.

Presently, the contribution of insurance sector to nation’s GDP is less than one percent, compared to 9.5 percent contribution by the new pension scheme.

In respect of the amount required and the approved underwriters, the Permanent Secretary (Common Services Office) in the OHSF, Mr. Yemi Adelakun, said: “It is usually N5.4 billion annually for civil servants. That’s the figure and that had been recurring for the last three or four years.

For this current one, I think we shortlisted 21 insurance companies and Bureau of Public Procurement (BPP) gave us certificate of no objection for 20. And we can only work with those approved by the BPP and that approval has been confirmed by Mr. President.”

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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