I read the story and watched the fire at a part of Balogun Market, Lagos, on Sunday. As I watched I saw the familiar sight in over 50 previous market fires: Shop owners with hands on their heads wailing. It has been the same problem over the years. They have no fire and special perils insurance to fall back on. If they had, they wouldn’t be wailing. People who have insurance in place do not wail when the subject matter is destroyed. They notify their insurance broker, if they went through a broker, or inform the insurance company if they placed the business directly and take it from there. There is nothing like no insurance. If your assets are not insured with an insurer, you have unwittingly self-insured yourself. It means you have kept money in place to replace the lost and destroyed items. There are some rich men and women with fleets of cars with the minimum Motor (Third Party) Insurance. If you tell them to do comprehensive motor insurance, they tell you they do not need it because if one car is stolen or damaged, they fall back on cars in the fleet. While that is not strictly self-insurance, because it does not restore them back to the pre-loss position, they will not suffer any inconveniences as a result of the loss of use of the car.
In the case of the Balogun Market fire, self-insurance means having the resources to replace the items that were destroyed by the fire. If you do not have the resources, why did you not insure your assets? Even if you have the resources, why spend N100 million to replace what payment of N150,000 premium per annum could have sorted out. That is what some traders spend on lunch in two months. So how can that be an issue?
Balogun Market is one of the most marketed places by insurance practitioners in Nigeria. But some of the traders are not just interested in taking fire and special perils insurance. I went to buy gift items once in Balogun Market. Beyond the small shop, the traders have a big place where they stock millions of naira worth of goods. I was impressed by the sheer size. I wondered if they had secured their big shop via insurance. I asked her if they had any insurance. Her countenance changed. She just wanted me to conclude the purchase of gift items and leave. I did, and shook my head. The fetish stuff you put in your shop cannot mitigate fire. It would be consumed with your goods in an inferno. Fellowships are good, but not substitutes for insurance. Insurance is simply meant to put you in your pre-loss position before the incident.
Some owners or lessees of buildings take insurance to take care of their financial interest in the buildings. When tenants hear that the building is insured, they think the insurance covers their wares. It does not work that way. Your landlord or lessee has no right to insure your goods because he has no financial interest in your goods to protect. Before you can insure any good you must have insurable interest conferred on you by ownership in this case. The landlord or lessee does not have any financial interest and consequently cannot insure your goods. Only the owner or someone the owner has entrusted with the goods and consequently has an interest in the goods to protect can insure the goods. In insurance it is called insurable interest. It is one of the pillars of insurance.
Insurable interest simply means your legal right to insure, arising from a relationship with the subject matter of insurance (the goods) which is recognised at law. This legal right is validated by the presence of three basic factors. In this case, One, there must be a property. Two, the property must be the subject matter of insurance. Finally, the potential policyholder must be in a legally recognised relationship with the subject matter of insurance, whereby he benefits from its continued safety, wellbeing or absence of liability and he is prejudiced or negatively affected by its destruction, damage or loss.
Finally, I have advocated for fire and special perils insurance to be made compulsory for all markets in Nigeria both in this column and on television. I wrote, “The losses from fires in markets are too much and no serious government should allow such an ugly trend to go on. The federal and state governments should enact the law as soon as possible. When these fires occur, the government has no money to help the traders get back on their feet, but insurance does. The least the government can do for the traders is to ensure they embrace alternative sources for restoration in the event of fires.”
But while we are waiting for the government’s enabling law, traders should help themselves by coming together to insure their wares and markets. Some traders are already doing that. Others should join. Talk to a Registered Insurance Broker (RIB) today.
