Compulsory fire insurance for markets
No state or geopolitical zones are spared these fire outbreaks in markets. According to the Controller-General of Federal Fire Service, Mr. Joseph Anebi, fire outbreaks in markets between January 2015 and March 2016 alone claimed 600 lives and properties worth N5.30tn..After each fire, the refrain from the traders is the same: the state government should please come to our aid. And I often ask which state government? The one owing civil servants one year’s salary or the one paying workers half salary for the past 18 months? Is the one that could not provide the market with basic infrastructure like access road and pipe-borne water in the first place or the one struggling to meet other statutory financial commitments? I shake my head when I see traders looking for succour from the government. As we have witnessed most times, the succour never comes. Even governments with the best of intentions do not have the resources to meet all the needs of their people, especially when there are more appropriate avenues to meet these needs.
The traders partly have themselves to blame. They have no need going to government for succor in the first instance because it is within their power to provide the succour themselves. The traders look to me like couples who disturb God to give them male or female children when God has already given them the powers via SS Chromosomes, XY Chromosomes and ovulation. All the couples need to do is the right timing to get the baby boy or girl they desire. Meanwhile, some of them want God to come down from heaven to tell them when to copulate.
Enter fire insurance, a risk transfer mechanism that takes the burden of loss from fire outbreaks off the traders. The solution for traders all over Nigeria for fire incidents lies in fire insurance, not government hand-outs. Insurance will provide indemnity to the traders in the event of a fire leading to a claim. Good enough all the markets have associations with well-organised and identifiable leadership structures. All the leaders need to do is work with insurance brokers who will act as their agents and provide them professional advice free of charge. The brokers will help them structure a policy or policies for all their members from an insurance company or a consortium of insurance companies. There is strength in numbers and a big market like Balogun in Lagos, for instance, can get a very good fire insurance rate, far better than a single trader can get if s/he insures individually, especially with insurance brokers working them.
Beyond insuring them, the broker/underwriter will provide them free professional advice on good housekeeping to minimize the incidents of fire outbreaks. Some of the reasons for fire outbreaks in markets are power surge, use of inferior electrical materials and faulty wiring, lack of vigilance, storing of inflammable materials, lack of access to the point of origin of the fire and absence of fire extinguishers, among others. These are issues insurance professionals can easily help traders deal with to reduce the probability of fire outbreak.
What is uppermost in the minds of insurance professionals is reducing the probability of occurrence. Providing financial succour in the event of an incident is the last bus stop. This is because if a fire occurs in a market that is insured, the insurance company will only pay claims after proper documentation and due process. This takes a little while; however, the business of the traders is disrupted during this period. Meanwhile, they have no insurance to cover the ensuing loss of income. Ideally, the fire insurance policy should be extended to cover business interruption or a separate business interruption insurance policy is put in place. But I am wary to go there. Acceptance of insurance in Nigeria is still at the Kindergarten stage. Trying to sell business interruption insurance to traders, who are yet to embrace the basic fire insurance, is like moving a child from Kindergarten to secondary school. But that is the way forward if we want to grow the traders’ micro economies which will ultimately impact on our macro economy.
In the interim, there comes a time in life when people need to be saved from themselves. It is time to save traders from themselves. That is why I advocate that each state of the federation makes insurance of their markets against fire compulsory. Markets fall within the purview of state and local governments, anyway, and it is easier to run such a bill through the unicameral state legislatures than the bicameral federal legislature. When passed, the law will have multiple benefits. It will ensure traders get automatic financial succour in the event of fire.
Two, revenue coming to the governments from these markets would not be disrupted for long if there is fire. Three, it will help to pool billions of Naira in premium income for the growth of the economy. Four, it will generate employment in the insurance sector, which will result in more revenue for state governments via PAYE. It will also generate more revenue for the federal government via VAT.
In addition, it will bring more revenue into the Pencom funds via remittances for new employees. Compulsory fire insurance for markets will deepen insurance penetration. Nothing sells insurance like a client whose claim has been paid to his satisfaction. It is like magic to some: to be paid a N1m claim just because they paid a small premium of N30,000.
Various state governments must to act now to put in place a law making insurance of markets against fire compulsory. The umbrella bodies of insurance professionals – the Nigerian Insurers Association and the Nigerian Council of Registered Insurance Brokers – and the regulatory body, the National Insurance Commission, need to come together to lobby the various statement governments and state legislatures to fast track the process of making fire insurance of markets compulsory in their states. It is long overdue.
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