As Nigeria enters
the high point of its rainy season, insurers are concerned about the
rising level of exposure to flood risks for individual homes and
businesses without adequate cover.
Though the level of awareness is low as a result of shortage of data to measure exposure, experts believe
that having a national insurance flood policy would spur insurers to
provide appropriate policies, as well as intensify awareness to cover
affected areas and critical investments. Some of the operators who spoke
to BusinessDay last night, stated that the exposure is big but still
unquantifiable due to lack of data.
“Insurers are willing to go full blast on providing cover, particularly for corporate institutions and
farmers in exposed areas, but it could be very catastrophic because
flood claims are borne between government and insurance companies in
most jurisdictions, say’s one of the players.
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| Sunday Thomas, Director-general |
Sunday Thomas, director-general, Nigerian
Insurers Association(NIA) said the governing council of the NIA is
seriously looking at flood insurance and how awareness can be created to
educate consumers.
There is need to have a national policy
on flood insurance where government collaborates with insurers, take a
certain proportion of the risk exposure and insurers take the rest,
Thomas said.
“Its an insurable risk, but we need data
to determine the level of vulnerability of particular areas. And that is
what we do not have now”, Thomas said.
The lack of flood insurance can be
detrimental to many homeowners who may discover only after the damage
has been done that their standard insurance policies do not cover
flooding, another expert said.
“Unfortunately, in flood insurance, the
number of claimants is larger than the available number of persons
interested in protecting their property from the peril, which means that
most private insurers view the probability of generating a profit from
providing flood insurance as being remote.”
Ope Idowu, an insurance broker, said it’s
important that business and exposed areas are adequately insured
against flood, particularly now that deforestation is having a huge
impact on the environment.
“There should be insurance. A situation
where we will have to wait for individuals like Dangote to donate to
victims of flood when insurance companies would have picked up the
claims, is not modern”.
Idowu however observed that government
should give national insurance policy for flood a consideration,
considering the level of loss experienced in parts of the country,
including Lagos, Kogi, and Oyo sates among others, for some time now.
Business mogul, Aliko Dangote, had at the
incident of flood disaster in Kogi State two years ago, donated over
N2.5 billion to the Presidential Committee on Flood Relief and
Rehabilitation (PCFRR), while the Federal Government also intervened
with N17.6 billion to help victims.
A consortium of insurers in 2012 settled
Frieslands Foods West African Milk Company, WAMCO claim amounting to
N3.636 billion arising from the damage to its factory following a flood.
The consortium of insurers made the claim
payment following the flood disaster which damaged major parts of WAMCO
Ikeja factory, with Royal Exchange General Insurance Company (REGIC)
leading the team. The other insurance companies in the consortium are
Custodian and Allied, Cornerstone Insurance, Goldlink, Mutual Benefits,
Law, Union & Rock, Crusader, Leadway, Sterling Assurance, Great
Nigeria Insurance, Equity Assurance, AIICO General and NEM Insurance.
Flooding is defined by the National Flood
Insurance Programme in the US as a general and temporary condition of
partial or complete inundation of two or more acres of normally dry land
area or two or more properties (at least one of which is your property)
from: overflow of inland waters, unusual and rapid accumulation or
runoff of surface waters from any source, and mudflows.
This can be brought on by landslides, a
hurricane, earthquakes, or other natural disasters that influence
flooding, but while a home owner may, for example, have earthquake
coverage, that coverage may not cover floods as a result of earthquakes.
Very few insurers in the US provide flood
insurance coverage due to the hazard of flood typically being confined
to a few areas. As a result, it is an unacceptable risk due to the
inability to spread the risk to a wide enough population
in order to absorb the potential catastrophic nature of the hazard. In
response to this, the US government created the National Flood Insurance
Programme.
Modestus Anaesoronye
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