Insurance companies will not be paying any compensation to the Independent National Electoral Commission (INEC) or businesses who closed shop following the postponement of last Saturday’s Presidential and National Assembly elections, sources in the risks management industry told BusinessDay.
This is because INEC’s engagement with insurers is limited to certain aspects of the election process and does not include postponement.
The economy may have lost an estimated $1 billion (N360 billion) or 1 percent of Nigeria’s 2018 GDP due to the postponement of the Presidential and National Assembly elections from February 16 to February 23, 2019, according to Bismarck Rewane, CEO of Financial Derivatives Company.
SB Morgen Intelligence, in a recent report, estimated that INEC may have lost N6.23 billion as a result of the election postponement.
But not a kobo of this cost will be borne by insurance companies as their contract with INEC does not cover the cost of postponement of elections.
“Insurance companies have assisted INEC up to the level of providing job guarantees to contractors and vendors, and insurance protections to ad-hoc and main staff, including all risk protection for materials and equipment in warehouses across Nigeria. That is the limit to which INEC wants us to be involved,” says a CEO who is a member of the Nigerian Insurers Association (NIA).
If insurers were to offer a reprieve against events like election postponement, then they must be involved from the beginning through project design and management, said the CEO on condition of anonymity.
Julius Opara, partner at Premium Debate Consulting, said from the explanation of INEC chairman, Mahmood Yakubu, the commission’s major challenge is in the area of logistics and delivery of items.
“As an underwriter and risk manager, we would put this to test and consider options in the logistics before accepting the risk. For instance, we may suggest choppers that have the capacity to land close to designated LGAs. The Air Force C130 Hercules may just be good for major cities in the six geopolitical zones,” he said.
For this type of risk, Opara said, Performance Bond Insurance to a private contractor who will be held accountable and appraise the business pedigree will be the most appropriate kind of cover.
“Election materials are as sensitive as printing of a country’s currency, national examinations materials, supply of arms and ammunition, and most of these are conducted by private firms with government officials supervising. INEC needs to appreciate this and outsource as much as possible,” he said.
Opara said insurance can help in future elections, adding it is for the government to appreciate that insurers have the largest retinue of risk managers.
“We must appreciate that election is majorly about managing risk against various exposures. Availability of money is not a guarantee of hitch-free election. We need experts in project and risk management more,” Opara said.
“It is a trite and illogical argument to say that because elections were postponed in 2011 and 2015, then it follows that this must also be postponed. The circumstances may not be the same and obviously the umpires were not the same but, more importantly, we must be seen to be learning and moving forward,” he said.
Daniel Braie, managing director/CEO, Linkage Assurance plc, said some insurance policies are extended to cover strikes, riots and civil commotions, but insurance for postponement of elections or closure of business as a result of such postponement is not envisaged and so is not covered.
“Maybe in advanced societies, but it is not a cover that an insurance company should dabble into given the monumental or colossal losses that can arise from such exercises in Africa,” Braie said.
Bode Opadokun, managing director/CEO, FBNGeneral Insurance, said as a non-life insurer, his company is more concerned with risks that relate to property damage as a result of fire, property theft and personal accident.
“The degree of exposure to these risks is quite high during such period as elections. It is, therefore, imperative that individuals, associations and corporate bodies consider insurance as a means of managing such exposures,” Opadokun said.
“Definitely, we have concerns about such trends. Incidents related to property, personal accident and theft typically heighten the expenses incurred on claims and exert undue pressure on the bottom-line,” he said.
Modestus Anaesoronye
