By Maduka Nweke
Jide Orimolade is the Managing Director and Chief Executive Officer, Law Union and Rock Insurance Plc. An insurance professional with valuable experience that has spanned over two decades, both within and outside the country. Orimolade holds a Bachelor of Science (Honours) degree in Insurance from the University of Lagos, Akoka, and a Masters degree in Marketing from the same university. He started his insurance career in 1989 with the former Financial Assurance Company Limited as an underwriting executive.
Before joining Law Union & Rock Insurance Plc, as the Managing Director and Chief Executive in November 2014, Orimolade worked with AIICO Insurance Plc. as an Executive Director from December 2009 to October 2014 when he voluntarily resigned. His immense leadership skills and contribution impacted marketing, technical, claims, re-insurance and strategy, generating enormous yearly increase in gross premium written for the company. He has at some other times given valuable information to builders on why they should insure the buildings above two floors in compliance with the National Insurance Commission (NAICOM) guidelines on insuring of buildings. In this interview with Daily Sun, Orimolade fielded questions on why people do not insure their high-rise buildings, government sanctions and financing properties through mortgages.
Excerpts:
Compliance of builders with insuring buildings
Well, for us, we are creating the awareness but like I mentioned, the total industry must be involved in the direction of creating this awareness. We know it is compulsory because the regulators have made it compulsory. It comes under the market and development restructuring initiative. What the regulator has promised us is that there will be a road show that would move round the states. Lagos State is already aware of it but I believe that other states too should be in the know. But we at the Law Union & Rock Insurance have the opportunity to create this awareness and that is why we are doing it.
The level of compliance among builders above two floors
For that, the regulator needs to help us. I mean, if you look at what is happening in the pension industry, you will see that people who are not complying know that they need to apply for a particular contract or they look for business and they can’t do it. So our appeal is that for this to be enforceable, we can go places because once it is enforced, it becomes part and parcel of what these builders or people that have these public buildings can’t shy away from. So it is all about enforcement, once the enforcement is put in place, I believe that people will key in; they have no choice. But you see, for us at Law Union & Rock, it is for us to continue to create that awareness so that people can know that it is compulsory for them to obey the Section 64 and 65 of the the insurance law.
Insurance of high rise building
Of course, I have and what I tell them is; number one, you have to look at it in terms of fire. Assuming fire happens at the building and there are tenants, there are liabilities involved, then how will they come out of such liabilities? People at times think that may be the rate of the premium they are going to pay is going to be on the high side so we educate them on that; look, this is the rate you are going to apply and this is the premium you are going to pay in respect of this building. So we educate them on that. But I believe that with more awareness in the market, people will key in, they will know the right thing to do.
Commensurate enforcement
Enforcement in the sense that if you have a public building and it is not insured and you want to bid for business, let it be part of the conditions they have to meet for government to allow them bid for that business. If it comes into operation, you will find out that all owners of public buildings and high rise buildings will have no choice but to insurance them.
Wither the former punishment
That is what I am saying. It is not enough. I don’t think it is enough. If you look at developed countries, you can hardly take your car on the road without insurance. You know that if you do it and the police get you, you face a jail term and apart from that, when you come out, you can’t drive on the road again. So that is what we call enforcement. When those things are in operation, people will have no choice but to key in.
Why people borrow
It is good to borrow. Individuals, organisations and governments borrow money from various sources, ranging from the informal to formal lending institutions. They borrow to meet their needs, to run their business operations, to acquire assets or for personal consumption. Loans can be rewarding when used for the purpose for which they were taken and when paid back as at when due. However, loans, when misused, abused or not paid, can become a burden and a source of financial embarrassment. Lenders and borrowers both have duties, obligations and rights that should be fulfilled in a mortgage contract. The rights of both parties must be respected and upheld to ensure that mortgage contract is hitch free.
Suitability of mortgage for borrowers
The lender must ensure that the mortgage the borrower intends to take is suitable for his needs. Too often, borrowers face predatory selling practices with lenders pushing expensive, complex products borrowers do not understand and cannot afford. This should not be. Lenders should discourage prospective homeowners from borrowing more than what they need or what they can afford. For example, encouraging a borrower to buy a luxury apartment in a high brow area when the borrower does not have the capacity to finance the loan, or take new loans when the borrower has other subsisting loans or borrowing simply because the lender is giving a preferential interest rate, is wrong.
Borrowers’ loan affordability
Borrowers must be able to afford the loan they are requesting. Lenders need to know borrowers’ current financial standing. They should ascertain borrowers’ ability to afford the loans by carrying out a due diligence check. This requires a careful assessment of the income and existing financial commitments of prospective borrowers to ensure that the value of the loan taken is within the range of what the borrower can effectively repay without becoming over-indebted.
In conducting this assessment, lenders should also take into consideration the borrower’s anticipated income or in the case of a couple, a joint income stream with a spouse as this may enhance the potential value of a mortgage the borrower can take.