—-Owes N8.4 Billion Group Life Insurance Premium to underwriters
There are indications that the Federal Government is currently indebted to the insurance sector unpaid cumulative premiums estimated at over N8.4 billion, which ought to have been paid for the group life insurance coverage for all federal civil servants.
Group life insurance is insurance cover undertaken by the federal government through the Office of Head of Civil Service of the Federation on behalf of its federal civil servants for their protection against unforeseen circumstances such as death and disabilities associated with industrial hazards while in active service.
Optimum Times learnt that the debt emanated from the outstanding balance of premiums owed to participating underwriters in group life insurance of federal civil servants in 2012 and 2016.
Reliable sources from one of the participating insurance companies told Optimum Times that in 2012, each of the underwriters were paid between 40 – 50 percent of their expected premiums for the group life insurance cover of civil servants assigned to them while over 50 percent (about N3 billion) of the total N6 billion premiums still remain unpaid till date, barely four years after.
The Source explained that although, the then Former President Goodluck Jonathan’s administration claimed that it was only 50 percent of the amount they could afford, but the Source added that the Federal Government through the Office of Head of Civil Service of the Federation never got back to the underwriters in subsequent years to offset the debts on premiums.
Further, with the exception of 2013- 2015, when the premiums were fully paid, the industry operator said that the Federal Government is also yet to pay premiums for the renewal of the Group life Insurance of workers for the year, 2016.
The government had merely informed the 20 selected participating underwriting firms without yet any financial commitments by payment of premiums. The expected premiums is N5. 4 billion.
The Group Life Insurance of civil servants which expired since July last year, ought to have been renewed by August 12, 2016 but up till date,the beginning of the second quarter of 2017, it has not been renewed due to lack of funding by the Federal Government.
Also, the insurance cover of assets of the federal government nationwide expired since August, last year. The processes for its renewal which will gulp several billions are yet to commence.
On inquiry from the Office of Head of Service of the Federation, a Source told Optimum Times that insurance of government assets can wait for now, though no reason was given for down playing the process.
The implication remains that in event of disaster affecting any of the government assets, there will be no compensation since “no premium, no cover.”
Industry operators complained that the inability of the Federal Government to meet its financial obligations to insurance industry has consistently robbed the sector expected capital and thus, hamper its contributions to nation’s Gross Domestic Product (GDP) and economic growth.
Presently, the contribution of insurance sector to nation’s GDP is one percent, compared to 9.5 percent contribution by the new pension scheme.
In respect of the amount required and the approved underwriters, the Permanent Secretary (Common Services Office) in the Office of Head of Service of the Federation, Mr. Yemi Adelakun, said: “It is usually N5.4 billion annually for civil servants. That’s the figure and that had been recurring for the last three or four years. For this current one, I think we shortlisted 21 insurance companies and Bureau of Public Procurement (BPP) gave us certificate of no objection for 20. And we can only work with those approved by the BPP and that approval has been confirmed by Mr. President.”
On the outstanding premium, an industry operator who pleaded anonymity, told Optimum Times: “the 2012 balance was not paid. I don’t know their reason for not paying. They said that it was the only thing they had. There is no other outstanding in 2013 and there is no outstanding in any other year apart from 2012.
“I cannot precisely say what was the outstanding amount in 2012 because it depends from one company to the other.
“But what we received in 2012 on the average was 45 percent while some received between 42 – 46 percent but for the purpose of our discussion, let’s say half, that is 50 percent.
“They have not paid for 2016. The 2016 was to start in August 12, last year precisely. That was supposed to be the renewal period but up till now as I speak, they have not paid. So, it is when they pay that cover will commence.
“But as it is now, 2016 has gone which means that people between August 13, 2016 and now, are not under cover. But for 2015 -2016, they paid even though they didn’t pay that on time as well but we just took it from when they paid.
“It is the people that are not under cover and what they are doing about it, is what we are trying to grapple with. For 2016, we are expecting N5 billion for the insurance of civil servants in Ministries, Departments and Agencies (MDAs), excluding Armed Forces and the Police which are no longer under that scheme because they have their own separate arrangement.”
Optimum Times investigations, further revealed that the federal government intends to pay half of the N5.4 billion required for 2016/2017 group life insurance.
The release of the funds by the Minister of Finance, Mrs Kemi Adeosun is still being awaited even as the business accounting year has entered the second quarter while federal civil servants remain uninsured with associated uncertainties.
Education17 hours ago
LASU Student Receives 2020 Diana Award Roll Of Honour
Human Interest17 hours ago
Ikorodu Boat Mishap: NIWA Says Boat Owner Violated Regulation Regime, Threatens To Shut Down Operations.
News17 hours ago