Insurance brokers plying their trade across the country have appealed to the Federal Government to pay the outstanding 59 per cent of the premium for the 2012 Group Life Assurance (GPA) for its workers.
Acting under the auspices of the Nigerian Council of Registered Insurance Brokers (NCRIB), the brokers observed that the failure on the part of government to honour this financial obligation was impacting negatively on the insurance industry.
The premium payable for the group life assurance for federal government employees for last was over N3 billion, out of which the government paid only N1 billion.
The federal government introduced pension reforms in the country nine years ago, a package that includes the mandatory group life cover for workers at the instance of their respective employers.
Section 9 (3) of the Pension Reform Act, 2004 states that every employer must “maintain life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee”, observing that it seems that this important aspect of the law is being overlooked by the stakeholders.
Making the call in Lagos recently, the President of NCRIB, Mrs. Laide Osijo, said government paid only 41 per cent of the total group life assurance premium for last year,
“I want to appeal to the Federal Government for the release of outstanding premium on group life for the year 2012. As it stands, only 41 per cent of the premium has been paid remaining 59 per cent to be paid.
“This situation has made many insurance companies to discountenance claims under the year in review of the now existent ‘No Premium No Cover’. This, as we are all aware, is to the displeasure of some beneficiaries especially to those who died in active service. The impression many of them have is that the insurance industry is insensitive to their plights, a situation that creates serious image smear for the industry,” Osijo said.
She observed the initial apprehension over the no premium no cover policy was gradually being replaced by optimism as brokers and underwriters count the gains of the policy.
She, therefore, appealed to the federal government to assist the industry to avoid further accumulation of unpaid premium and claim, a situation that negates the new premium collection system.
Meanwhile, to ensure that the group life assurance business remain attractive to all stakeholders, the National Insurance Commission (NAICOM) pegged the upper limit for commission payable by life insurers to insurance brokers on group life assurance business at 8 per cent.
The regulator noted that in their desperation to attract or retain businesses, life insurers engage one another in a vicious commission war to the advantage of insurance brokers and at the detriment of the whole industry
“In line with section 53(1) of the Insurance Act, 2003, commission payable to an insurance agent, broker or any intermediary on group life assurance business shall not exceed 8 per cent of the premium,” the commissioned directed.
The major advantage of the group life insurance for employees is that it is a guarantee that if a worker was unable to accumulate significant amount in his retirement savings account before he dies, his estate would still get something tangible up to at least 3 times his annual salary.
This amount would go a long way to relieve the pain associated with the loss of a breadwinner even as the employer is relieved of the burden of making additional ex-gratia payment to the estate of the deceased.