Landholders and Fire Insurance Policy

Land is and has been an important commodity in every nation, Landholders ability to manage and protect their use and enjoyment of land contributes in no small measure to land development and Nation buildings. Several risks are associated with landholding in Nigeria, but the menace and fury of fire seem greater and must be given proper attention through the employment of an effective fire insurance system. The said fury of fire is a risk that landholders should not ignore or underestimate as the possibility of the hazard to cause severe emotional, financial and other losses is great. By taking out an insurance policy, a landholder attempts to protect himself from risks opined that the purpose of insurance is to compensate or indemnify the victim or insured for the financial loss suffered as a result of the risk covered by the particular insurance policy. The insurance company therefore becomes the risk bearer and in the event of loss, pays the insured certain monies aimed at cushioning the effect of the loss or acting as an outright indemnity.

Read also: The Menace of Fire Surge in Nigeria

Insurance is a contract whereby a person called the insurer or assurer, agrees in consideration of money paid to him, called the insured or assured, to indemnify the later against loss resulting to him on the happening of certain events. The policy is the document that contains the terms of the contract.

The exact origin of insurance is shrouded in deep controversy and some historians are of the opinion that insurance have existed for over one thousand year but that there is abundant evidence to show that although insurance has been in existence in Europe for over 700 years, in its modern sense, it is unknown to most Black Africa until it was introduced by the early British Merchants Patterned along British lines. The above notwithstanding, the case of Nigeria is slightly different as the practice of insurance had always been informally and crudely known by the indigenous society dating back to time immemorial. For instance, in the Eastern part of the country, the Age-grade, Umuada, Umunna and the extended family systems respectively function as a social insurance system. It is however sad to note that in spite of this informed social insurance scheme and the fact of Nigerian’s independence since 1960, insurance law as it is known today in practice is still barely at a tutelage stage. The citizenry are yet to embrace insurance as a risk mitigating factor. Most still ignorantly hold tenaciously to the aforementioned social insurance scheme as practiced by their forefathers. Unfortunately, as they ignore the opportunity and privilege of modern insurance practices, they suffer untold hardship in the event of disasters as the archaic social scheme is not designed to cater for the ever evolving and complex risks associated with daily living.

As an institution, insurance companies actively contribute to the development of the economy by providing stability for the individuals and groups who take out insurance policies while the accumulated funds are pumped back into the economy. The above notwithstanding, where the insurance industry is redundant and their services not solicited, the economy will be worse off for it.

Being the first capital of Nigeria, Lagos state can be said to be fully developed in terms of infrastructure, business and real estate. Due to structural and other forms of development, landholders are especially open and prone to be adversely affected by insurable risks. It is therefore surprising and a paradox that, the citizenry and indeed most landholders are yet to embrace insurance generally and more importantly fire insurance. A handful of landholders were observed to have taken out very minimal forms of insurance policies.

This phenomenon is not limited to Lagos State but the fury of fire across Lagos State this year alone leaves much to be desired. It is germane to note that there has been fire incidents within and outside Lagos State in the recent past which had left devastating consequences and ought to have served as a wake-up call for all to embrace insurance as a risk cushioning instrument. Unfortunately, most landholders have not taken out insurance policies for their land and some of those that had taken out fire insurance have not been up to date with the payment of premium.

Furthermore, Government and non-governmental agencies participation in the field has been very minimal. Their impact is yet to be felt constant phenomenon. This year alone Balogun market in Lagos Island has twice been gutted by fire while there has also been a market fire at Oshodi which leaves one wondering if there is an insurance cover for the unfortunate victims of the two incidences.

Unarguably, it is apparent from the foregoing that the practice of taking out fire insurance among the landholders is
almost non-existent. Many landholders do not trust the insurance industry to make good their promise of indemnity and a few trust in the traditional forms of social insurance schemes which had been proven to be inadequate to cater for the present risks to which landholders are exposed.

Furthermore, the minimal actual practice by the insurance industry in Lagos and other States are not without serious problems. In fact, most of their methods and practices stand on a Section 14 (1) of the Insurance Act(2004) provided that “Subject to subsection (4) of this section, no insurance policy or certificate of insurance shall be issued and no contract of insurance shall be entered into by any insurer without the prior approval; of the Director and no rider, clause, warranty or any endorsement whatsoever shall be attached to, printed or stamped upon any document containing any such policy, certificate of contract or deleted there from, unless the form of such rider, clause, warranty or endorsement or the matter to be deleted has the prior approval of the Director”.

It is observed that insurers enter into contracts of insurance and that insurance policy and certificates are freely issued without first obtaining the requisite consent of the Director. The said consent was usually sought afterwards. Section 14(3) provides that:

“any insurer that issues any policy or certificate or enters into any contract otherwise, than in compliance with subsection
(1) of this section shall be guilty of an offence and liable on conviction to a fine of N2,000.00 only”.

The proposed punishment against an offender of this section is too unrealistic in view of the seriousness of the offence. A term of imprisonment ought to have been prescribed and the fine upgraded to reflect the economic realities of our time.

Same also goes for section 26 (3) which prescribed some fines against insurance agents who do not pay premiums
collected by them to the insurer within 15 days after receipt thereof.

For any insurance scheme to be successful, the principles upon which the whole transaction is based ought to be fully functional and energized to achieve the desired result.

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