Chiamaka Ajeamo, [email protected]
On the last floor of a three-storey building at the popular Computer Village, Ikeja, Lagos, Amobi Okereafor, who sells phones and other technological gadgets was seen in his office transacting in the shop filled with devices worth over N10 million imported from Asia.
The building plays host to several other businesses such as; restaurant, pharmacy, bookshop, travel and tour agency, as well as other related businesses. As Okereafor shuts down his business at 7pm, his usual retiring time for the day, he meticulously makes the effort to ensure that all his electrical appliances are switched off and his office is securely locked against burglars.
“I do this everyday so that once I am home, I can sleep soundly knowing that there is no possibility of a fire outbreak and thieves breaking into my shop. I have goods worth over N10million in this little flat and it is a warehouse where other people in this market buy from,” he told Daily sun.
“Do you have an insurance cover for your business?” this reporter inquired.
“I do not have, it is not necessary and I cannot spend my money on insurance,” he retorted. He goes on to list a number of reasons why he and his co-tenants oppose the idea of insuring their property, and among the reasons is the agelong notion among Nigerians that insurance fails to indemnify when the need arises.
Just like Okereafor, many Nigerians, especially business men and women still hang on to such unreliable measures to safeguard their properties. Why such unorthodox method way still holds sway among Nigerians, especially given the benefits available in insuring their properties remain a concern to stakeholders.
With increasing rate of insecurity in the country, the need for business owners to embrace insurance cannot be overlooked. Almost on daily basis, the media are replete with news of properties being vandalised, burgled, looted, burnt with the owners losing their life savings, assets, goods and investment without any hope of security.
Daily Sun investigation revealed that the acceptance of property and business insurance policies particularly, among the small and medium enterprises is abysmally low as most of them do not see the need to obtain any form of insurance cover to protect their ventures against risks.
The reason at the forefront of this low uptake of insurance policies for properties and businesses, is the lack of importance Nigerians attach to insurance as most business owners stated that, insurance do not benefit them in a short term, they get compensated only when eventualities occur and the settlements do not happen immediately it is needed and since they cannot be refunded when no danger occurs within the estimated period, they prefer to invest such funds into their business to garner profits while taking personal security measures to safeguard their business.
Others rely on religious grounds and are optimistic due to their belief that disasters will not befall them. This perception of Nigerians towards insurance mostly due to the ignorance of the advantages inherent, has become a culture, sometimes exported abroad by Nigerians to host countries with strict regulations governing insurance of property and goods.
A good instance is the recent case of the xenophobic attacks of Nigerians in South Africa where majority lost their properties and businesses thereby returning home empty and frustrated.
As hard as the Nigerian government is trying to get compensation for its citizens in South Africa, the effort is been rebuffed by the South Africa government with the reference to the existence of a statutory law that mandates businesses to be insured and get indemnity in crisis periods.
Why take property insurance?
Property insurance according to the Unit Manager, Retail Division, Regency Alliance Insurance Plc, Omolola Adefuye, basically refers to insurance policies that offers security to buildings and the assets or contents in that building. Property insurance covers majorly natural disasters such as flood and fire for the physical building while for the assets in the building it protects it against theft or burglary for both residential and businesses purposes.
Adefuye further explained that property insurance encompasses business insurance policies which are mostly determinative of the nature of businesses. For instance, some business insurance policies entail fire insurance, marine insurance, goods in transit among others.
Speaking on the need for Nigerians to get property and business insurance policies she said, “it is wise for Nigerians especially business owners to obtain such policies because in Nigeria, it takes a lot to set up ventures, 80 per cent of Nigerians go through uncountable challenges, struggles to establish themselves so you can imagine after such stress and not having any form of security in check in case of any mishap.
“Going back to square one when a danger occurs can be really frustrating. We all want things to go right but it this is usually not the reality in most cases thus, the need to be protected with insurance.
“The amount to acquire these policies are affordable, with a little amount as low as N5,000 one can secure the present and the future of his or her business and properties,” she said.
For the sales team of AIICO insurance plc, the merits of property insurance are numerous. The Fire and Special Perils (FSP) insurance policy for businesses which falls under the property insurance, protects the insured and/or their business from damages or loss from fire incidents, losses caused by natural disasters such as, explosions, floods, storm and lightings, as well as loss to the insured following a civil commotion or riot just like the case of the xenophobic attack.
According to AIICO, Nigerians need to insure their businesses because risks can crystallise at any point in time and the premium to get these policies is practically small.
“The price of insurance policies is usually a function of the value of the insured’s property however, we have designed our solution to fit policyholders pocket whether for a start-up, a small or medium enterprise or a multinational companies,” the insurance firm said.
Also speaking, an insurance agent, Malachy Maduako, observed that the acceptance level of property and business insurance policies especially, among the informal sector is still very low when compared to individual insurance covers because Nigerians are ignorant of the benefits embedded in such covers.
Commenting on what can be done to improve the level of uptake, he said “the regulator, the National Insurance Commission (NAICOM) and insurance firms still have much work to do. Insurance companies are not living up to expectation in the delivery of specific insurance products that will suit the various needs of the populace as well as effective management of claims settlement.
NAICOM need to ensure that insurance firms keep to their words as regards the settlement of benefits and claims as this is the major reason Nigerians shun insurance policies. If it requires that just 10 companies are in operation but can deliver on prompt claims settlement then, NAICOM should allow just the 10 firms to be in existence. The regulator should also be strict in the implementation and enforcement of the insurance laws,” he stated.