THERE is apprehension among insurance practitioners over the reluctance of the Lagos State government to renew its insurance coverage for the 2017/2018 business year.
Financial Vanguard investigation revealed that though the state collected N50,000 each from over 40 insurance brokers as application fee for the period in view, it still refused to renew its insurance coverage few weeks to the end of the financial year.
According to stakeholders, the possibility of the state government renewing the policy for the 2018/2019 business year is slim as a result of next year’s elections.
Some of the stakeholders, who spoke to Financial Vanguard on the development, noted that despite regular dialogue with Lagos State government on the issue, nothing concrete has happened.
Speaking on the development, an operator who spoke on the condition of anonymity said that the action is retrogressive on the part of Lagos State government given its antecedents of meeting all insurance obligations in times past.
He said, “Under the former regime, things were moving smoothly every year. This development is not a good step at all for the state.”
A managing director of an insurance broking firm who also craved anonymity said that the state is always magnanimous in giving brokers the opportunity to participate in its insurance portfolio, however, brokers were disappointed after the state collected application fee but refused to renew the insurance for last year.
He said, “Lagos State has a way of giving many brokers opportunity to participate in its insurance portfolio. Last year, brokers were invited to apply. We paid the normal application fee, at the end of the year nothing came out of it and the payment by brokers was not refunded.
“The state insurance is usually renewed by April/May every year. So last year, each broker paid application fee of N50,000. Throughout last year nothing came out of it. This year will soon come to an end; they still haven’t said anything at all.
“The state operates a package insurance policy and brokers are usually merged in groups of ten or 12 with a lead broker for each group. The lead broker will assign each broker an area to cover, maybe a local government, schools or any other asset. The broker will be in charge of monitoring their assigned area of coverage in case of any claim or whatever.”
On the effect of the action by the state government, an operator said, “If anything happens to the assets, the government might not be able to replace them and put them back to their original position. The state has massive assets which are now exposed to unforeseen danger.”
Meanwhile, the stakeholders said that they hope the state government will have a rethink regarding the current situation because the state used to be commended as one of the insurance friendly states in the country and also cited as example to other states.
A chief executive of an insurance company who also spoke on condition of anonymity stated: “Lagos is a state that has good knowledge of insurance. We have been worried that we have not heard from the state in terms of covering their assets. They have massive assets that are exposed to risks. And our job is to provide protection for those assets. Over the years we have been doing that and when there are claims, those claims have been settled promptly.”
Another operator said, “Those at the helm of affairs don’t care about insurance. It is as if they are being forced to insure. They don’t see government property and asset as their own and they believe that if anything happens to the assets, government will replace them. It is not their father’s property, so they just don’t care. That has been a problem in this country.
“The challenge is no longer about non-payment of claims because in the last three years, insurance companies have paid out humungous claims. Insurance companies are living up to their expectation now; it is the government that is failing.”