Implications of Xenophobic attacks on insurance

The South African Foreign Affairs Minister, Naledi Pandor, last Thursday said South Africa had no provisions in its laws to compensate nationals of other countries, whose shops and businesses were looted, burnt and destroyed in the recent xenophobic attacks. Pandor was responding to a demand by the Nigerian government that Nigerians, who suffered losses during the last xenophobic attacks by South Africans, should be compensated to the full sums of their losses.

We have probably not seen the last of the diplomatic standoff, but if ultimately South Africa does not budge, what happens to these unfortunate Nigerians? The Nigerian government is not likely to offer them any economic shoulders to lean on; its hands are full back home. The implication is that those who suffered losses are likely going to be on their own, economically speaking. They would have to come up with personal efforts to get back on their feet.

In order to avoid finding themselves in such economic quagmire, I had advised in a Facebook post that Nigerians in South Africa should take advantage of the robust insurance market there and take up insurances to protect themselves and their businesses against such losses and losses arising from such attacks in the future. Such insurances include life insurance for themselves and their spouses, fire, burglary and special perils insurance with SRCC (strike, riot and civil commotion) extension for their businesses and also business interruption insurance, also known as consequential loss insurance for their businesses. For them, motor insurance should be comprehensive, not third party only.

For any Nigerian businessman, who took these insurances, whatever the outcome of the diplomatic engagement between Nigeria and South Africa is, it will be inconsequential. His insurance company in South Africa will indemnify him to the tune of his losses or the limit of his policy for the fire and burglary policies. And if he went the extra mile to do business interruption insurance, his insurers will also pay for financial losses arising from the closure of his business until he re-opens, of course, subject to the terms of his policy.

But one young man was miffed at my Facebook post. He wondered how people like me reason. He went on a tirade. I wanted to respond, but when I checked his profile, he is probably in his 20s, so I refrained with a prayer: “Lord, forgive him for he does not understand. Let him grow up so that he can understand where I am coming from. His own solution is reprisal attacks on South African interests in Nigeria. Some misguided people like him have done just that: Shoprite and PEP outlets were looted, an MTN outlet and some masts were burnt. In the process, many Nigerian interests were affected. Shops belonging to Nigerians, which shared premises with Shoprite, were also looted. My guess is that the masts also belong to Nigerians.

Now, South Africa has the highest rate of insurance penetration in Africa, about 15 per cent. Their insurance awareness is much higher than ours, so these South African-owned assets are likely to be insured. When they stage even a day’s event in Nigeria, South Africans insure the event, not to talk of ongoing businesses.

The Nigerian insurance industry is bracing up for a barrage of claims which will hit us when the dust settles down. There is no escape route. Those shops that were burnt will be indemnified under their fire policies, the shops that were looted will be compensated under their burglary policies; for the period their businesses are going to be closed to enable them renovate or re-stock, their consequential loss insurance policies will compensate them for the financial losses they will suffer as a result of the closure.

The profit of the concerned insurance companies will be affected by the rash actions of a few Nigerians. The only relief these affected insurance companies are going to have is their reinsurance arrangements. Upon assuming these policies, they would have determined how much of the risk to be retained and ceded the balance to their reinsurers. Since insurance is a global business, the implication is that some South African-owned reinsurance companies might be participating in the payment of the claims of the incidents that happened in Nigeria. This will be good news to some Nigerians.

This incident also brings to fore the mind set of many Nigerians.  We must learn to face reality and stop chasing shadows. No Nigerian can be happy about the treatment meted out to Nigerians in South Africa. Nigerians have been understandably angry at their ingratitude and barbarism. But South Africa is far away from us and our people there are badly outnumbered. The South African government is obviously and deliberately not doing enough. There are a number of things which are outside the control of Nigerians there. But insurance is well within their control and they should take advantage of insurance to protect themselves and their assets. They have no control over the unforeseen, but they have some control over the outcome of the unforeseen and that is partly insurance. That is an immediate, sensible and legal option. That was what I inferred in my Facebook post, but youthful exuberance would not allow the young man to see things that way.

On the long run, the Nigerian government should make the South African government adopt a deliberate policy to protect the lives and properties of Nigerians. Nigerians did not introduce drug abuse, prostitution and street gangs to South Africa. These maladies existed before South Africa became a choice destination to many Nigerians. Many Nigerian doctors, academics, engineers, bankers and other professionals are in South Africa doing legitimate jobs, just as some Nigerians are into crime. South Africa is a democracy where the rule of law should prevail. These xenophobic attacks are at variance with the ethos of democracy and it is very annoying when constituted authorities encourage these attacks or look the other way when they occur. Nigerians and the rest of the world say no to xenophobia. If a Nigerian commits a crime, charge him to court and if found guilty, convict him. Deportation is also an option, but there is no place for xenophobia in a civilised world. South Africans conduct their businesses without let or hindrance in Nigeria, it must also be so for Nigerians who do legitimate businesses in South Africa, while those who run foul of the law should legally be dealt with.