Flood: Changing insurance dynamics on homeowner’s policy

Flood insurance before now was never taken seriously in Nigeria, because the risk of exposure was almost nonexistent. So, insurers could dash flood cover for free to the insured when they buy fire, burglary and homeowner’s insurance cover.

So, flood cover is given as policy extension for fire policy, and so covers damage or loss to a property because of fire. It is a specific form of insurance in addition to homeowner’s or property insurance.
But the dynamics have changed since the recent flood in Lagos and some parts of the country, where houses, properties and businesses worth millions of naira were damaged as a result of flood resulting to claims.
“A lot of people are filling claims now as a result of damages that arose from the Lagos flood, and so flood cover can no longer be taken for granted,” Eddie Efekoha, chairman, Nigerian Insurers Association (NIA), said.
According to Efekoha, flood is often an extension of fire cover, adding that most insurance companies do offer the cover for free, especially in areas not prone to flood.
“I have told my staff that going forward, flood policies will be properly charged and if any one gives it away for free and there is claim, I will take it from the persons salary,” one of the insurance CEOs, said.
The CEO observed that, with recent developments, awareness about the benefits of insurance was growing because people can no longer allow themselves to be exposed dangerously like that, when they could pay small amount of money and pass it to the insurance companies.
Jide Orimolade, managing director, Law Union & Rock Insurance, commenting on the recently flood in Lagos, sympathised with victims and attributed the cause to issues including dumping of refuse indiscriminately, especially in drainage channels, people building on drainage channels, poor urban planning, change in weather pattern, heavy storms, construction on drainage facilities, failure to heed to flood warnings and global climate change.
He however stated that some measures could be taken to avoid future occurrences, and one of such was Householder/House Owner Insurance
“These insurance policies are for landlords and tenants, respectively. They cover the insured’s property against fire, theft, flood and other allied perils,” Orimolade stated.
In 2015, less than 20 insurance claims were filled by insurance consumers and about N150 million was paid as claims by the insurance industry.
According to the 2015 Insurance Digest of the NIA, International Energy Insurance paid the largest claim of N23.109 million, followed by Ensure Insurance, which paid N22.562 million.
Flood insurance denotes the specific insurance coverage against property loss from flooding. To determine risk factors for specific properties, insurers will often refer to topographical maps that denote lowlands, floodplains and floodways that are susceptible to flooding.
In Nigeria, the awareness is low before now. The reasons are obvious, not a lot of people see the need for flood insurance because there has not been much experience of that given our topography. And insurance being a game of large number does not find the market profitable as a business.
Though in 2011, flood caused colossal damage in the city, and only an Ikeja-based firm, FrieslandCampina WAMCO Nigeria made a claim of N3.5 billion, due to its own type of cover.

 

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