FG workers remain uninsured as group life policy runs into storm

Chuks Udo Okonta

Unless something drastic happens, Federal Government’s workers may be out of insurance coverage this year, as the group life policy meant to insure them has sailed into troubled waters.

 Although, the government has appropriated N11 billion, this year, for the insurance of its workers, underwriters have vowed not to take the business unless grey areas observed in the business are resolved.

Our investigations revealed that insurers are worried over the risks that might have occurred from the beginning of the year, which they may be asked to carter for if they accept the business now – barely two months to the end of the year.

They have resolved to stick to the No premium No cover rule, which states that insurance takes effect immediately the premium is paid.

It was also learnt that the operators are not happy with the premium rate, which they believed was undervalued.    

They have also resolved to meet the Federal Head of Service (HoS) to sort out last year’s outstanding group life premium and other matters that surround group life business.

The operators in a meeting held under their umbrella body, Nigerian Insurers Association (NIA) agreed to make their feelings known as the issues pose great threat to their business.

 Director-General, NIA, Sunday Thomas, said the decision to meet the government has become necessary, because operators cannot continue to sell services on credit and when claims come they pay. He added that nonpayment and delays are not good for business, as operators need to invest the money they realised as premium to able them pay claims.

He said: “For the first time the industry is taking the decision to face the reality.

“We have decided to take the bull by the horns by letting government know that the industry is under threat and that unless the government begins to show support for the sector, other corporate clients will continue to take the industry for granted.”

The Head of Civil Service of the Federation, Goni Aji, some months back, said the government was ready to pay the outstanding N7 billion premium meant 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 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.

“There will be cover for the workers this year. What we have in the appropriation bill for 2013 insurance cover is N11 billion. The total outstanding premium for 2011 and 2012 is about N7 billion; that is, N4 billion for 2012 and N3 billion 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,” he said:

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 N4 billion.

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.