• Advise business interruption insurance
• Insurers respond with innovative solutions
• Specialised civil unrest, riot coverage

CYNTHIA EZEKWE IN LAGOS, NIGERIA 

With protests around the world becoming increasingly volatile and destructive, causing significant property damage, disruptions to business operations, and personal injuries, experts are emphasising the need for individuals and businesses to carefully review their insurance coverage.

While protests are often a powerful vehicle for driving positive societal changes, they carry the risk of resulting in significant financial losses for individuals, businesses, and communities. This also results in property damage, interruptions to business operations, and personal injuries, as evidenced by the #EndBadGovernance protests across Nigeria.

In recent years, the insurance industry has proven to be a vital resource for individuals and businesses grappling with the aftermath of social unrest, offering much-needed protection and support during times of turmoil. During the 2020 #EndSARS protests in Nigeria, for instance, insurance companies stepped up to the plate, providing coverage for damaged properties and businesses, offering much-needed assistance to entrepreneurs seeking to rebuild and recover.

In the wake of the 2020 #EndSARS protests in Nigeria, the country’s economy was dealt a heavy blow, with the Financial Derivatives Company Limited (FDC) estimating the total cost of the disruption at N1.5 trillion, representing 1.03 percent of Nigeria’s GDP and 11.47 percent of the country’s 2021 budget.

According to the Nigerian Insurers Association (NIA), insurance companies in the country have paid over N11 billion in claims related to the economic losses incurred during the 2020 #EndSARS protests.

As protests demanding economic reforms and good governance continue to gain traction in Nigeria, both online and offline, the government’s fears of a potential repeat of the tumultuous events of the October 2020 #EndSARS protests are mounting.  This is as the history of previous protests has shown that they can rapidly devolve into violence, resulting in widespread destruction of property and economic losses.

The ongoing protests sweeping across Nigeria are a sobering reflection of the country’s economic woes, with rising inflation, unemployment, and hunger driving individuals to the streets in a call for change. With unrest spreading to at least 24 of the 36 states, looting and violence have been reported in the north, prompting some governors to impose curfews, and the president has taken to the airwaves in an attempt to quell the protests through negotiations.

In response to the growing complexity and unpredictability of protest-related risks, the insurance industry is forging ahead with innovative solutions to safeguard policyholders. In addition to the traditional property insurance coverage, some insurers have introduced specialised civil unrest or riot coverage, offering an extra layer of protection against damage caused by protests. Furthermore, insurers are leveraging advanced technology to monitor real-time developments and assess evolving risks, providing policyholders with timely alerts and enabling them to take proactive steps in safeguarding their assets against potential losses in times of unrest.

In the aftermath of a protest, insurance serves as a vital lifeline for businesses and individuals seeking to rebuild and recover. By offering financial support to those affected by the protest, insurance plays a crucial role in fostering economic growth and resilience.

As the aftermath of protests can be highly disruptive to businesses, leading to interruptions in operations and lost revenue, experts have identified the importance of business interruption insurance for companies seeking to safeguard against the potentially devastating financial consequences of civil unrest. This, they explained, is because without adequate insurance coverage, businesses may struggle to bounce back from the impacts of a protest, highlighting the vital role of insurance in supporting economic stability and prosperity.

While insurance can provide a vital safety net for individuals and businesses affected by civil unrest, industry experts caution that not all affected parties will necessarily receive compensation through insurance claims. The inadequate or inappropriate nature of some insurance coverage, coupled with the specialised and diverse roles of insurance professionals, can sometimes lead to situations where affected parties are left without the financial support they need.

In their capacity as intermediaries between policyholders and insurance companies, registered insurance brokers play a vital role in the insurance industry, offering their expert knowledge and guidance to the insuring public. Their expertise extends beyond simply facilitating insurance purchases, as they are also equipped to provide invaluable advice and assistance to insured parties. Moreover, the valuable services of these brokers are rendered without any additional cost to the insured public, underscoring their commitment to helping individuals and businesses navigate the sometimes complex world of insurance and ensure that they are adequately protected against potential risks.

According to Augustine Ebose, managing director/CEO of Anchor Insurance plc, inadequate insurance coverage is a recurring issue faced by policyholders. He noted that while some policyholders have acquired standard insurance coverage, many have failed to consider critical extensions that can provide protection against events like civil unrest and riots.

In light of the inadequate insurance coverage prevalent among some policyholders, Ebose explained that compensation for damages resulting from civil unrest or riot, outside of the specified provisions of their policy, could only be granted through an ex-gratia payment. 

However, this compensation would be conditional upon the policyholder’s continued patronage of the insurer’s services and a history of loyalty to the insurance company.

“So, potential policyholders should not just sit down on their own and decide to purchase insurance. They should seek the assistance of a registered insurance broker,” he added.

The Anchor Insurance CEO urged insurers to highlight the potential benefits and necessity of policy extensions. By doing so, insurers can help ensure that their customers are fully aware of their options, empowering them to make informed decisions about their coverage and secure adequate protection against the risks associated with civil unrest and other unforeseen events.

Sunday Thomas, former commissioner for insurance and chief executive of the National Insurance Commission (NAICOM), expressed grave concern over the widespread practice among insurers of offering free coverage for strike, riot, and civil commotion.

According to Thomas, this practice is unsustainable and could potentially undermine the long-term stability of the insurance industry. As such, he urged insurers to re-evaluate their approach to coverage and pricing for these types of events, stressing the importance of developing robust and financially sound strategies that can withstand the unpredictable nature of civil unrest and other societal upheavals.

Before leaving office, Thomas had promised that the NAICOM would be issuing directives to ensure that underwriting is strengthened to appropriately rate and charge requisite premiums so that profitability can be guaranteed and claims are settled promptly without financial strain on the companies.

Ganiyu Musa, immediate past chairman of the Nigerian Insurers Association (NIA), emphasised the industry’s commitment to providing timely and appropriate compensation to policyholders with valid, paid policies affected by civil unrest or other events covered by their coverage.

According to Musa: “Policyholders with valid claims have nothing to fear. This is why you took insurance, for times as these. For those that have not taken or do not have any form of insurance policy, this is the best time to do so because this is the essence of insurance.”