Heirs Insurance chairman,Elumelu advocates insuring builldings to mitigate financial risks

Cynthia Ezekwe 

Tony Elumelu, Chairman of Heirs Insurance Group, has urged the general public to take out building insurance policies in order to mitigate the financial risks associated with building collapses in Nigeria.

Elumelu’s remarks were made during his keynote address at the 2023 National Insurance Conference organized by the National Insurance Commission (NAICOM), which was held in Abuja. Elumelu stressed the need for insurance to be considered a public good and a foundation for infrastructure, saying, “Insurance should be a national good, a roof for the people, and a foundation for every infrastructure.”

Elumelu addressed the conference on the topic “Redefining Safety: Insurance Solutions for Public Buildings and Buildings under Construction.” He noted that a vibrant insurance industry plays a crucial role in protecting lives and livelihoods, and that the insurance industry in Nigeria needs to be transformed significantly in order to realize its full potential. He highlighted the need for insurance solutions tailored to the unique needs of public buildings and buildings under construction, in order to ensure that people are protected in the event of any incident.

Elumelu pointed out that building collapses in Nigeria is a  problem that requires a multi sectoral approach to holistically deal with the root cause, adding  that there is  a role for insurance to play, alongside other  professional associations such as the Council for the Regulation of Engineering in Nigeria (COREN); the Nigerian Institute of Estate Surveyors and Valuers (NIESV); and  the Nigerian Society of Engineers (NSE).

“Like many of the people in this room, I woke up one morning last year to the news of the unfortunate incident that happened in Ikoyi, Lagos, where a building still under construction collapsed, killing many people, including the promoter of that project. That is just one of the many tragedies of building collapses that occur in Nigeria,’’ Elumelu said.

“Citing a report by the Building Collapse Prevention Guild (BCPG), he pointed out that over the past 49 years, Nigeria has recorded 533 building collapses. This,he explained, is an average of 11 such tragedies per year.

Referencing the Insurance Act, he said, “Sections 64 and 65 of the Insurance Act 2003 specify that no person shall construct any building of more than two floors without insuring with a registered insurer. This Act further states that the duty to insure shall arise when a building is under construction.’’

Elumelu stressed that insurance should be as fundamental to the construction industry as the concrete that binds buildings together. He noted that Nigeria needs to build ports, roads, power stations, schools, hospitals, and houses, and that this cannot happen if building codes and legislation are not adhered to. He emphasised the importance of ensuring that all buildings, public or private, are insured, and that the insurance industry must play a role in driving adherence to building regulations and safety standards

While discussing the low level of insurance coverage for public buildings in Nigeria, Elumelu pointed out that this issue is symptomatic of broader challenges facing the insurance industry. He identified some of the key issues that the industry needs to address, including low levels of trust, lack of understanding of the benefits of insurance, and a perception that insurance is only for the wealthy. He also emphasized the need to improve insurance penetration, strengthen regulation, and create more favorable conditions for insurers to operate in the country.

“We need stronger punitive enforcement measures for people that avoid contractors’ insurance in construction to ensure that due process is followed and in the event of any unforeseen incidents, insurance is there to act as a risk mitigant,’’ he said.

Elumelu called on NAICOM to work with other government bodies to ensure that the provisions of the laws governing insurance are complied with and enforced. He stated that this would help to address the issue of underinsurance, and would also encourage more people to take out insurance policies. He also stressed the need for insurers to improve their claims processes, in order to make it easier for people to make claims and receive compensation when needed.