Chuks Udo Okonta
The insurance industry will lose over
N10 billion on the Federal Government’s group life, for this year which would likely
be paid soon, Inspen, has learnt.
Investigations revealed that the government’s
insurance business stands over N21 billion, but it was underrated by underwriters
to N11billion.
A broker, who spoke on the issue, said
the premium was undervalued by inexperienced underwriters, who quoted what the
Head of Service (HOS) adopted as benchmark for this year’s premium.
An underwriter who also expressed
misgivings on the undervaluation of government insurance business, said his
company was ruled out of last year’s group life business, because he spoke on
the lost to the industry due to improper rating of government’s business.
A report by Punch said the Head of Civil Service of the Federation, Goni
Aji, said the government was ready to pay the outstanding N7billion premium for
2011 and 2012.
He said the government prioritised the welfare of
its employees and that the insurance cover would serve as an encouragement for
families of deceased workers, adding that the government had to manage
available resources in the light of competing demands.
Aji said what caused the six-month delay in the
payment of workers’ insurance policy premium for the current financial year was
because his office could not secure on time the certification from the Due
Process Office, which was required for the payment.
The HOS also explained that the process of payment
of the group life insurance for the federal workers had changed as it was now
being handled by the office of the Accountant-General of the Federation.
He explained that the Federal Executive Council had
approved that the payment of insurance premium should be carried out by the
office of the AGF.
Aji said the OHCSF office had forwarded a letter to
that effect to President Goodluck Jonathan for approval and was asked to revert
back to the earlier approval of FEC for the office of the AGF to pay.
He said: “There will be cover for the workers this
year. What we have in the appropriation bill for 2013 insurance cover is N11billion.
The total outstanding premium for 2011 and 2012 is about N7billion; that is,
N4billion for 2012 and N3bn for N2011.
“The way it
is done now is that the Ministry of Finance gives the instruction to
Director-General of the Budget Office and the DG officially sends it to the
Accountant-General’s office; the Accountant-General releases the funds to the
HOS and the HOS now pays into the respective insurers’ bank accounts and all
that.
“So, it is just a question of electronically
instructing the office of the Accountant-General to pay so that it can now
reduce the time deployed to process it.”
Aji added that whether the full premium for this
year would be paid or not depended on the level of revenue generation and
inflow to the Federal Government.
In 2008, the Federal Government started the group
life insurance scheme for its entire workforce with the first premium of N4billion.
The regulation backing the scheme is contained in
Section 9(3) of the Pension Reform Act, 2004, which states that the employer
shall maintain life insurance policy in favour of the employee for a minimum of
three times the annual total emolument of the employee.
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