Insurance operators and traders are split over the lack of insurance cover to mitigate losses suffered by traders during fire incidents.
Market fire disasters have become a recurring menace in Nigeria and it is estimated that the country loses over N50 billion from these fires every year. Recently some traders in the Balogun market, Lagos Island, suffered losses running into billion of naira when a fire incident engulfed the market on January 11th.
Mr. Ogbonna, was one of the traders affected by the fire incident. He said the fire destroyed N35 million worth of shoes, which was delivered the previous day. Wailing uncontrollably, he screamed that part of the money was borrowed.
Another woman, Mrs. Gbadamosi, an attendant in one of the shops, said that her employer had goods worth N27 billion in his containers to be offloaded on Monday, by the time they got to the market, nothing was remaining. Some of the affected traders only just returned from their respective home towns, where they spent the Christmas and New Year break, only to be faced with the disaster.
The impact of the fire incidents is being aggravated by lack of insurance cover for the goods. This, according to traders was because insurance companies in the country were unwilling to provide insurance cover for traders.
The traders, for instance, accused insurers of inserting frivolous clauses into insurance contracts which have made it entirely impossible for them to insure their businesses, whereas, insurers on their part insisted that the traders have consistently refused to embrace insurance as a reliable risk transfer mechanism.
According to the Coalition of Markets and Traders Association in Lagos (CMTAL), the unwillingness of insurance firms to remove such clauses that prevent them from insuring is a major factor why losses incurred from fire disasters are always massive.
Chairman of the Association of Igbo in Commerce (AIC), a part of CMTAL, Mr. Nnamdi Nwigwe said that the major reason why it appears as if traders refuse insurance as a risk transfer mechanism is due to the fact that such clauses have not been favourable to traders.
Nwigwe said, “Some things which insurance companies demand that we put in place are beyond us, rather these are things which the government should provide for the people. For instance, some insurance companies require a fire service station to be located in the market before they can insure our businesses, but such things are things that only the government can provide. The fact that traders are not insuring is partly the fault of insurers and the government because some facilities that should have been provided by government so that insurance can come in, cannot come because these facilities are not there. So where such facilities are lacking, insurers have abandoned us to our fate rather than designing products that will suit our peculiar needs.”
Reacting to the position of the traders, Managing Director of Linkage Assurance Plc and Chairman of Nigerian Insurers Association, NIA, Mr. Godwin Wiggle, said that market traders jettisoned insurance by refusing to pay premium because they see the premium as too expensive.
Wiggle said, “The market traders have refused to pay premium because they say that the premium is too expensive. But if you compare what they lost to the Balogun inferno, it is no way near what they would have paid as premium if they had insured their businesses. The traders should know that what they lost as a result of the inferno is also a huge loss to the economy. So it will be better for them to embrace insurance going forward.”
Reacting to allegations that insurers refuse to insure market traders, Wiggle said, “The industry has been trying to create awareness for these traders on the importance of insurance on regular basis. Moreover, do you wait for the doctor to come to you when you need one? You are the one that will go to the doctor. So the economy is the ultimate loser for the consistent refusal of our market traders to insure their businesses.”
Market fire outbreaks in the country
Statistics from the Lagos State Fire and Safety Services show that in 2013, a total of 1,774 fire outbreaks occurred. The fire service acknowledged there were massive losses to fire in the year, claiming the losses were difficult to quantify.
In 2014, the value of goods lost to fire in the state was put at N14.99 billion in about 1,499 fire cases recorded between January and November.
Except accurate measures are put in place, there are indications that more losses are likely to occur in 2015 going by the number of fire outbreaks already recorded in the state.
Between January 1 and now, no fewer than 20 fire incidents have occurred in the state with losses estimated at billions of naira including several lives. Among the affected areas are the Balogun Market on Lagos Island, Oko Baba Sawmill in Ebute Meta, another in Igando area where four houses were razed recently, another at Ijaniki area where a building comprising six apartments was completely razed and an eight-month-old baby roasted to death.
The way forward
On the way forward, Managing Director of Riskguard Africa Ltd, Mr. Yemi Soladoye said that the starting point is for insurance operators to begin to develop products along trade lines against the conventional insurance that is readily available.
Soladoye said that if such products are developed, the onus will then be on insurance practitioners to market such products to trade associations. He said that in the history of state governments in Nigeria, it is only Lagos State Governor, Babatunde Fashola, who has shown support for insurance because he has always charged market traders to always insure their businesses whenever there is a market fire.
“The onus is now on insurance practitioners to generate appropriate products and distribution channels that will cater for market traders. It could be difficult for these traders to deal with insurers, so the best thing is to link them with consultants on free of charge basis that will sit down with them and advise them on the right products for their businesses. The consultants will look for landmines in the insurance contracts and advise the traders to insist on having a policy that is peculiar to their needs. Also, through these dealings, the traders can decipher if they can carry on with normal insurance covers or go for covers with extra premium.
“Enlightenment and education is a major thing when dealing with market traders. After that, the right product will be packaged for them under the terms peculiar to them. Also the Insurance Consumers Association of Nigeria can help them to protect their interest,” Soladoye stated.