Lagos May Incur N500m Compensation As Collapsed Ikoyi Building Lacks  Insurance Coverage

Lagos State Governor, Babajide Sanwo-olu


The absence of insurance coverage on the collapsed 21-storey building in Ikoyi may have threatened any planned compensation for victims (dead and injured), as the contractors have little regard for insurance coverage, seeing the cover as a waste of money
The Nigerian Insurers Association (NIA) and NIgerian Council of Registered Insurance Brokers (NCRIB) have, however, said that the collapsed 21-storey building in Ikoyi, Lagos, has no insurance coverage.
BUSINESSinsiderng reports that NIA is a body of 58 insurance and reinsurance companies in the country while NCRIB is a council of about 500 insurance brokers across the federation.
Also, for a building of this magnitude, it was disclosed that the premium for All-Risks Construction Liability Insurance coverage is about one per cent of the entire building project, which invariably means the premium the owner of this building could have paid is about N500 million or less.
And, without insurance, it puts pressure on Lagos State government to cough out about N500million by all means to compensate the families of the victims from the purse of the state, which ordinarily should not have been so had the project been insured.
The premium, if paid, could have covered that cost of rebuilding the collapsed structure, compensation for the third parties involved, including families of the deceased victims as well as the other properties affected by the disaster.
However, the chairman of NIA, Ganiyu Musa, in a chat with newsmen in Lagos yesterday said since no insurer has notified the association of its involvement in the provision of insurance to the building.
He said, “As of today, no insurer has notified the association of its involvement in the provision of insurance to the building.”
Noting that the association had, last week, put in place an enquiry mechanism to ascertain whether members underwrote the building, he added that no member company had come up to state that it provided cover for the building from then till now.
Similarly, the executive secretary of NCRIB, Tope Adaramola, disclosed that no broker had so far notified the council of its involvement in the building project.
He implored Nigerians to cultivate the mindset of embracing insurance which, he said, remains the best tool to mitigate risks.
In another chat, the managing director, Universal Insurance Plc, Ben Ujoatuonu, said beyond the fact that there is a requirement for compulsory insurance,  Contractor All-risks Liability Insurance would have covered all that happened.
The magnitude of the project, he said, requires that there should be Contractors All-risks Insurance in place which the principal ought to have required from the contractor that was erecting the fallen structure.
“Contractors All-Risks would have covered the contract works, which are the building itself and third-party liabilities. You see that lots of people and adjoining properties were affected. All these things are covers that could have been provided by Contractors All-risk Liability Insurance. It is amazing this thing is happening. It also calls for the need for insurance in our daily lives.
Nobody knows when it’s going to happen and how it will happen,” he said.
Stating that accidents such as this could happen, which is why there is the need for insurance, he urged everyone undertaking any venture to buy the necessary and adequate insurance to provide cover against losses.
“This should be an eye opener for Nigerians to procure the needed coverage, not only for themselves, but for third-party liabilities as well. It is going to be humongous, economic and accidental loss of wealth because when government begins to talk about compensation to the families, government is going to divert fund that is meant to be used for other developmental purposes into compensation and that is what insurance would have taken care of,“ he pointed out.
  On pricing for such risk, he said: “Insurance is the cheapest service you can buy. Considering the nature of that construction, I can tell you that if Contractors All-risk had been taken on that project, the contract work cannot be up to one per cent of the entire project value. So, how much is one per cent in terms of premium that will be able to take care of that level of liability or loss?”
In another  interview, the managing director/CEO, Niger Insurance Plc, Edwin Igbiti, said a such huge project ought to have been insured, adding that had it be insured, there will be no need for state government to intervene in the compensation of the families of those affected by the loss.
“If Contractors All-Risks Liability had been subscribed to, insurance companies involved would have compensated the families of the diseased and all third parties involved as well as reconstruction of the collapsed buildings instead of putting this liability on government. This kind of emergency is also a burden on the government because it is not a liability it envisaged and made provision for in the budget,” he pointed out.
He urged all contractors handling building projects to take Contractors All-risk liability as there are lots of risks involved in constructing high-rise buildings.

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