Right and Plight of Workers Under Group Life Insurance

ThisDay

Commissioner for insurance Mr. Fola Daniel

The Group Life Insurance policy is the only compulsory insurance scheme that caters to the welfare of employees’ dependents when the breadwinner is no more. Unfortunately, employers of labour hardly comply with the law establishing the policy, writes Ebere Nwoji

The Group Life insurance is one of the compulsory insurances slated for enforcement by the National Insurance Commission (NAICOM) under its Market Development and Restructuring initiative (MDRI).

Among the compulsory insurances, the Group Life insurance seems to hold a lot for Nigerians from all walks of life because it is the last hope for the workers and their families. As such, much hope is placed on this particular policy by both the workers ,the pension industry that established it and the insurers who administer the policy.

To the average Nigerian worker, the group life insurance stands as the last resort for his dependants when he is no longer there as the breadwinner of the family.

To the insurers, premium from the group life insurance is expect to be a major boost to the annual premium income of insurance firms.

This explains why insurers every year race for participation in the group life insurance for the public sector workers.

At times,they  go as far as engaging in unprofessional practices like  price wars and rate cutting to grab their own portion of the business.

Abuse of the policy

But as important as this particular policy is, it has suffered much abuse than even the third party motor insurance. This is so because the workers for whom it is meant are totally ignorant of their rights in the policy while the employers who are  supposed to patronise the policy are unwilling to include it as one of the benefits to be enjoyed by their employees.

The situation is worsened by the fact that the policy falls in between the insurers and the pension fund managers.

Recently,the  chairman of Pension Fund Operators  Association of Nigeria (PenOp) Misbahu Yola lamented that failure of insurers to release proceed from group life policy and unwillingness of some employers to pressurise insurers to release the  group life insurance benefits often constitute problem to payment of benefit to families of deceased employees.

Concerning its enforcement, the Commissioner for insurance Mr. Fola Daniel  once told journalists that the group life insurance is a product of pension industry therefore it is not the duty of insurers to enforce it but that of National Pension Commission.

Though he later said both PenCom and NAICOM would design collaborative effort  for its enforcement, the issue of whose core duty it is to enforce the policy has remained a major set back to  its implementation.

A few years back, PenCom  had set up some recovery agents to monitor and recover funds from employers that are withholding employees’ contributory pension fund but nobody has thought of how to compel employers to institute the group life insurance for their employees.
The result of this is that Nigerian workers have been left at the mercy of their employers especially the private sector employers who obviously do not want to hear about the group life insurance scheme.

Employers' feelings about Group Life

Indeed many see it as extra and unnecessary expenses to their organisation and bogus condition of service .
The result is that right now, only the government and few non governmental organisations obey the group life law , throwing up the question on who should act  on behalf of the helpless workers to secure their right on the policy.

The immediate past administration of Goodluck Jonathan had  stated its resolve to strengthen the Group Life Assurance Scheme in order to make it more effective and achieve the desired objectives.

The  then Head of the Civil Service of the Federation, Alhaji Bukar Goni Aji, said this when he declared open a 3-day seminar for desk officers of the scheme from all the Ministries, Departments and Agencies of the Federal Government in Minna, Niger State.

Although government was silent on the issue of making the group life insurance scheme more effective through the conferment of necessary punitive powers on NAICOM,there is need for government to empower the agency on whose shoulders the responsibility of enforcing and monitoring the implementation of the group life policy rests with the necessary powers to kick off action that will give Nigerian workers the desired hope.

Compliance level

From available records, only the federal government complies with the scheme with some lapses observed in its implementation. These lapses range from delay in payment of premium to the insurance firms undertaking the risks, which in turn delays settlement of claims to deceased families when claims occur to undervalue of premium payable on the scheme by the insurers themselves.

Although in recent years, insurers had rolled out their drums in celeberation of success so far recorded in the collection of group life premium from government in the face of no premium no cover policy, records are there that premium for this year's business has not been paid while on the private sector side,the future of workers regarding the group life policy has remained very bleak.

For instance, as at present, it is not certain if government has fully paid premium for this year's cover and there is no assurance that some of the workers who are beneficiaries of the scheme will not die or permanently injured and since the premium has not been paid by government, such a worker may not get anything .

The problem

Tracing the source of the problem,there are indications that sometimes, money to pay the premium will be released but government officials in charge of insurance will keep such huge funds in their accounts for interest to be accumulated for them before they will pay it. Observers have feared that with the prevailing ‘no premium no cover’  regime, being implemented by the NAICOM, such act may backfire in the event of risk in form of death or disability of  any of  the  employees as insurance firms will not listen to excuses.

Commenting on these unethical practices in the administration of group life insurance, former President of Nigeria council of Registered Insurance Brokers (NCRIB0), Mrs. Laide Osijo, said delay or non payment of the group life insurance premium is unhealthy for the insurance industry.

On the implication , Osijo said: "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.

Origin of the scheme

The Group Life Assurance Scheme is a statutory creation by virtue of Section 9(3) of the Pension Reform Act, 2004, amended in 2014  which requires that all employers of not less than three employees must maintain life assurance policy in favour of each employee for a minimum of three times of the employee’s emolument per annum.  The Scheme provides that in the event of death of any serving officer, his or her next of kin would be given a relief equivalent to three times the annual    total emoluments of the deceased, in addition to the normal entitlement of the deceased officer after service.

But aside federal Government employees and few others working with big corporate organisations, no Nigerian worker can boast of having been assured by his employer of adequate arrangement for group life insurance .

The employers are riding on the ignorance of their employees on their right in this regard to deny them of the group life insurance entitlement. Findings by THISDAY show that because many employees and their dependents are ignorant of their right in group life assurance, where an employee of an organisation dies in active service, the best the organisation does is to deep hand in the pocket and give any small amount of money to the dependents .The amount could be as small as N100,000 or N50,000 after which the dependants will not make any effort to demand for the deceased’s group life insurance right.

For employees with permanent disability, many because of  ignorance do not request for it whereas such workers do not have money to take care of himself or pay his hospital bills for the injury.  In some situations, the best the organisation does is to settle their hospital bill for the injury and leave the employee to his fate for the rest of his life.

Feelings of insurers

This has been affecting not only the employees but the insurance industry negatively.

Managing Director Royal Exchange Assurance Mr.  Chike Moukwunye expressed the regret about the negative effect on insurers said  the insurance industry is losing a lot from non enforcement of the group life insurance scheme.

In his observation, no effort is being made to enforce the scheme as a result the employers are having their way at the expense of the employees and the insurance industry.

He expressed his experience in one of his team's visit to an Ikeja based manufacturing firm in search of group life insurance business.

According to him, the moment he mentioned the need for group life insurance arrangement for the staff of the manufacturing firm, the  countenance of the administrative manager  changed asking him whether he has come to put the organisation into trouble and quickly answered “we don’t do that here please."

According to him, when he pressed further he was told that the company has made arrangement with some insurance companies for their managers.

Arguing that the pension Reform Act 2004 which established the group life insurance scheme for workers did not make it the exclusive of managers Moukwunye called on federal government to ensure proper enforcement of the group life insurance scheme to close leakages currently  being suffered by insurers and give Nigerian workers better hope.

On its part, NAICOM said the decree setting it up did not confer it with necessary enforcement and punitive powers.

According to  Daniel, NAICOM has no power to go around and shut down businesses that failed to put in place adequate group life insurance for its workers.

Daniel however said when the new insurance act is signed into law, such problem would be addressed.