Benefits of Employer’s Liability Insurance to You

The Pension Reform Act, 2014 mandates employers of three and above to have in place employer’s liability, (group life) insurance for employees. Unfortunately, a lot of employers are yet to comply with this law.

What is Employer’s Liability (Group Life) insurance?

This is a type of insurance that all employers of labour with more than three employees are required to have under the Pension Reform Act. The law requires the employers to have insurance that will provide for compensation in the event of death, disappearance, disability, or critical illness suffered by staff while in service and to subsidise pension provision in the event of mental or physical disability.

This law applies to both public and private sector employees. This means that employees (and their families) have the right to demand compensation and payment from their employers in the event of injury or death. The penalty for non-compliance with this law is N250,000, record of conviction, and in addition the place of business may be sealed up.

Benefit of the group life insurance

The compulsory group life is for the benefit of workers and if an employer refuses to implement it, such employer is short-changing the workers. Sadly, not much has been achieved in the implementation or enforcement of the law on compulsory insurances despite all efforts by the National Insurance Commission, NAICOM, so far. Some efforts by NAICOM to boost implementation of the compulsory insurances include engagement with stakeholder partners such as law enforcement agents, pensioners, health professionals, construction workers, among others, for better enforcement.

However, experts are of the opinion that NAICOM should partner the federal government and urge the government to put its seal on the compulsory products. Group Managing Director of Custodian & Allied Insurance Plc, Mr. Wole Oshin, said that the industry can work hand in hand with the federal government to put the seal of the federal government on compulsory insurance products just like what the National Pension Commission, PenCom, did with the Contributory Pension Scheme, CPS.

Recall that PenCom partnered with the federal government to ensure that individuals or bodies seeking to do business or looking for contract with the federal government must show proof of compliance with the CPS. In essence, PenCom has been issuing Compliance Certificates to organisations bidding or soliciting for contracts with Federal Government Ministries, Department and Agencies in line with the provision of Section 16 (6) (d) of the Public Procurement Act, 2007. The Certificate has replaced the erstwhile Letters of Compliance that were issued for the same purpose.

Oshin said, “If the seal of the federal government is on the compulsory insurance products, all the people that are not taking part will do so. We should work to see what can be done in that regard.” He said, “The potential of the market for growth is huge. The enforcement of the different insurances would kick-start a new phase of opportunities for growth and expansion of the insurance sector.”