Insurance Chieftains: Ikoyi Building Collapse, Big Lessons for Govt, Property Owners

Insurance

The ensuing sobriety in honour of the departed souls in the collapsed 21-storey building in Ikoyi two weeks ago, was shattered last week by the outcry of Nigerians, including insurance chieftains, in their reactions to the report that the property owner defied the existing law that mandates owners of property of that proportion to insure the building beginning from the construction level to the final stage, reports Festus Akanbi

As families of victims of the collapsed 21-storey building on Gerard Road Ikoyi Lagos make preparations for the burial of their loved ones, Nigerians, including top insurance practitioners have continued to express indignation over the reported refusal of the owner of the collapsed building to comply with a directive by the Lagos State Physical Planning Permit Authority, (LAPPPA) to insure the structure.

Property and insurance sectors’ operators said they are compelled to believe the claim that the property was not insured because two weeks after the unfortunate incident, where 45 people have been confirmed dead with over 15 wounded, no underwriting firm, insurance brokers, and agents have come out to lay claims to the property.

What the Law Says

Section 65 of the Insurance Act 2003 requires the owner or occupier of every public building to be insured against liability for loss or damage to property or death or bodily injury caused by collapse, fire, earthquake, storm, or flood. Also, Section 64 of the same Act, stipulates that for insurance of buildings under construction, every owner or contractor of any building under construction with more than two floors must take an insurance policy to cover liability against construction risks caused by his negligence or that of his servants, agents or consultants which may result in death, bodily injury or property damage to workers on-site or members of the public.

In Lagos State for specifically, Part G of the development permit issue to every developer by the state Physical Planning Permit Authority always reads: “A developer of any building above two floors shall insure his/her liability in respect of construction risks and submit a Certified True Copy (CTC), of such insurance policy certification with his/her development permit to Lagos State Building Control Agency (LASBCA).”

Similarly, Part E reads: “Non-compliance with the approved planning permit as designed will void the permit, and the development will be regarded as illegal.”

Paying for Regulatory’s Negligence

Analysts said the Gerrard Road building tragedy exposes the impunity usually perpetrated by developers, and the level of avoidable risks which many property owners take, explaining that much of the blame should be heaped on regulators who curiously find it difficult to halt such illegal construction work.

Captains of the insurance industry, who spoke with THISDAY believe that the Ikoyi building disaster would serve as a great lesson to property owners and the government on the need to ensure total compliance with all regulations guiding building construction in Nigeria. Those who spoke with THISDAY include Chairman, Mutual Benefits Assurance Plc, Dr. Akin Ogunbiyi, Managing Director, Tangerine General Insurance Limited (formerly Law Union and Rock Insurance Plc), Mr. Mayowa Adeduro, Managing Director, Stanbic IBTC Insurance Limited, Mr. Akinjide Orimolade, and Managing Director, Universal Insurance Plc, Dr. Benedict Ujoatuonu.

The consensus among these insurance practitioners was that the Lagos State Government and its agencies should take the blame for the tragedy for the failure to take drastic actions against the property owner, Mr. Femi Osibona, who incidentally lost his life in the collapse.

The Chairman of Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, who described the building collapse as an unfortunate development, said the sad incident was a direct indictment on regulators and the government of Lagos State.

Ogunbiyi who said most people usually leave their responsibility to God, said “The law is here in Lagos State in particular. It says any building under construction that is about two floors must be insured. It should also be insured when the building is completed and occupied. The question now is where lies the law of Lagos for a gigantic project like that?

“Who approved the construction? You might be surprised they might have used a fake paper to meet the insurance requirements.”

The insurance chief argued that it was either the government was negligent or the agency involved was compromised.

“Maybe they compromised because I want to believe that insurance will be a major requirement for that kind of building. So, it’s either they were compromised or they didn’t do it at all. But everybody keeps saying, God is my protector, which is the greatest mistake. You can see they were going there to pray. But God is not fooled. God cannot be mocked by anybody. When you don’t do what you are supposed to do, if anything happens, you will carry the loss. Unfortunately, I learnt the owner is dead, but even at that, if you have insurance, the investors, (people who put money there) will have something to fall back to,” he submitted.

Where is Enforcement?

On his part, Managing Director, Tangerine General Insurance Limited (formerly Law Union and Rock Insurance Plc), Mr. Mayowa Adeduro, who lives close to the site of the collapsed building said the incident was a big trauma for him realising that Nigeria is still a country where somebody will construct a building of that nature without evidence of insurance, without anybody knowing about insurance being put in place.

He said, “People are not insuring their property because I think it’s just the manner we are configured in this country. You can’t drive five people in the UK without insurance. You can’t move your vehicle out without insurance. That is the way they operate in that environment. I think it’s a matter of enforcement of our laws, recognising the rights of other people. You can imagine the number of young people, graduates that went there for service and the kind of agony their families will be right now,”

Like Ogunbiyi, the Tangerine Insurance boss said the government should be blamed for the tragedy.

“I will blame the doorsteps of the government because the technology is available now to know that somebody insures or he is not insuring and at the worst-case scenario, if somebody claims he has done his insurance with Tangerine Insurance, for instance, the government can write to authenticate the claims. That is the rudiment. You can use technology to know that this person has insurance. We have the technology to do so, it is not rocket science. I think it is the government that is liable for this and they need to explain to the populace why this thing should happen,” he said.

Adeduro, however, boasted that Nigerian insurance firms can rebuild the property. He said, “We can compensate everyone that has suffered a loss as a result of that incident. We even can identify the profits the owner would have made if the building didn’t collapse and pay the profit and that is called consequential loss or loss of business.

“By now you would have seen insurance companies sending loss adjusters to that place, identifying what caused the collapse, and then taking stocks of anything that still have economic value and taking stock of the loss suffered by the owner of the property including his liabilities to all the workers in that premises, including surrounding property in case of damage to any property.”

Unfortunately, that is not the case now reported that the owner did not insure the property.

Managing Director, Stanbic IBTC Insurance Limited, Mr. Akinjide Orimolade said it’s too bad that the collapsed building in Lagos does not have insurance in place and at the same time, pointing out that it doesn’t speak well in terms of governance that the building was approved without an insurance cover.

Insurance is Not Expensive

“I think it is a lesson that stakeholders should be able to learn from. Insurance, as they say, is not too expensive but it is when the accident happens that whatever the owner goes through becomes very expensive. You can imagine, people have lost their lives and at the same time, the question is what becomes of the loss of the people that invested in the building?” he wondered.

According to him, “Many people are not patronizing insurance because of lack of awareness and secondly, some think doing insurance is a waste of money but as I said, it’s only when the thing happens when they know that buying insurance is not a waste of resources.

“We just need to continue to create awareness. Let people understand the importance of taking up insurance. I think the level of enforcement can be better. For building in the course of construction, there is going to be compulsory insurance in place. So, the question that will come to mind is that those that are meant to inspect, or those that approved, didn’t request insurance in the first place? And in the course of the construction of the building, just to make sure it’s a building that is built to specifications because I’m sure if insurance was in place, the insurers themselves, with their risk management expertise, would have been there to monitor that they were using the right materials for the construction. However, as I said, it’s a lesson and I think it is important the populace take insurance very seriously and in terms of all these enforcements, government agencies that are meant to enforce these things will take it seriously.”

Managing Director, Universal Insurance Plc, Dr. Benedict Ujoatuonu, believes that ordinarily, the principal (property owner) ought to be engaged to have compelled the contractors handling the project to take contractors risk insurance considering the nature of that building.

“It is disheartening to know that the contractor, who was supposed to be a very highly experienced one did not take insurance to protect his liability in the course of the contract,” the insurance chief lamented.

Nobody is Enforcing the Law

On why people are not complying, Ujoatuonu was emphatic: “Nobody is enforcing the law. “Nobody is asking where is your insurance certificate. The people that approved the plan for this building should be asking for an insurance plan at the point of approval, nobody is asking for it. So where there is no enforcement, it becomes very easy for people to avoid the law, knowing there is no consequence,” he stated.

He, however, added that if the collapsed building had been properly insured, the insurance companies that covered it would by now be consulting themselves and consulting their reinsurance firm. He said loss adjusters would have been on the ground to look at the situation and nature and the scope of what is covered under the policies to begin making provisions to take care of the loss.

As it is now, all these opportunities are lost. One hopes that appropriate lessons have been learnt and that the state government would swing into action to forestall another episode of building collapse.