The National Insurance Commission (NAICOM) and the Federal Mortgage Bank of Nigeria (FMBN) have agreed to collaborate to insure all mortgages in the country.
The partnership, if implemented, is expected to deepen insurance penetration and provide the much needed funds required by the National Housing Fund (NHF) to enable it bridge the country’s housing deficit.
The achieve this, both regulatory agencies agreed to enforce compliance with Section 5(2) of the NHF Act which “prescribes that every registered insurance company shall invest a minimum of 20 per cent of non-life funds and 40 per cent of life funds in real property development of which not less than 50 per cent shall be paid into the NHF through FMBN.”
Speaking during a meeting between both organisations in Abuja, Commissioner for Insurance, Mr. Mohammed Kari said: “The most important thing is the synergy we are trying to create to ensure that what is due to the mortgage sector goes to the mortgage sector.”
He said FMBN had “promised that all mortgages must be insured which is what the law expects but has not been enforced.”
In addition, “primary mortgage institutions, will ensure that every mortgage is insured properly and every finance in that sector is insured properly; and that is going to be a big boost to the insurance industry as it’s going to increase penetration and provide more funds to the national housing fund to be able to invest in their projects.”
Kari assured that NAICOM would ensure that all operators will comply with the law, whether they like it or not, adding that “that’s what laws are for and we believe it will help also in reducing the deficit in housing.”
FMBN Managing Director, Mr. Gimba Ya’u Kumo said the two organisations have agreed that to some extent, NAICOM would try to talk to the insurance companies to see how much of that is coming to the table, noting that “the additional funds expected to be generated would help to significantly reduce the housing deficit.”
He said the FMBN would soon introduce an innovative product to make housing more affordable to Nigerians known as “rent run”.
Kumo said: “As you are paying your rent, when you finish payment for the cost of the house, the house becomes yours. That has been the practice all over the globe; so we would start to implement some of these international best practices so that Nigerians would have comfort.”