Employers’ Liability Insurance and Group Life Insurance
IN MANY RESPECTS, INSURANCE and family are inextricably intertwined. Money is an essential part of family life and insurance is about providing financial compensation when an insured event occurs. This includes death of family members. According to a report in The Guardian Newspaper some time ago, a street sweeper, Mrs. Folasade Ogunniyi, was knocked over the bridge into the lagoon by a hit-and-run driver on August 20, 2019. It took three days before her corpse was recovered. The report further said that her employers, Highway Manager, an environmental sanitation firm working in collaboration with the Lagos State Government, offered her family a paltry N45,000 compensation, being her salary for three months. But at the time of writing, that is over seven weeks after, they are yet to pay the family the compensation.
But that is not the issue I am focusing on today. So many questions beg for answers, but I will restrict myself to today’s topic. There are six compulsory insurances in Nigeria. They are: Builders Liability Insurance, Employers Liability Insurance (Employee Compensation Act), Motor (Third Party) Insurance, Group Life Insurance (Employers Liability), Occupiers Liability Insurance and Healthcare Professional Indemnity Insurance. These compulsory insurances have one thing in common. They are taken by the policyholders for the benefit of others (third parties). Two of these insurances are specifically for the benefit of employees. In other words, the employer is bound by law to take these insurances for the benefit of its employees. They are: Group Life Insurance (under the Pension Act) and Employers Liability Insurance (hitherto referred to as Workmen Compensation). In practice, employers take group life for all staff, while the latter is taken for factory workers and field workers, among others, like the late Mrs. Ogunniyi.
Briefly, the Pension Reform Act of 2004, as amended in 2014, requires every employer of labour with a minimum of three (3) employees to take out a life insurance policy for a minimum of three times the annual total emolument of the employee. This law is applicable to both private and public sector employees. So Highway Manager, where Mrs. Ogunniyi worked, is obliged to have a group life insurance for its employees. If it had, what the late Ogunniyi’s family would have been entitled to, even with her belowpar salary, is a minimum of N540,000 (N15,000 monthly salary X 36 months). Either Highway Manager does not have a group life insurance or the late Ogunniyi was not included in the policy.
Recently, a low income worker in a company lost his life in an accident in the course of employment. His company had a group life insurance policy and his beneficiary (his wife) was paid almost N2m. With this money she was able to invest additional N200,000 into her small business, pay the children’s school fees and move out of their subhuman accommodation to a comparatively better accommodation. She also invested N1m in the money market, based on professional guidance. While they continue to mourn their husbandfather, his death has not brought any financial doom to his family because the company where he worked had a group life insurance policy.
In addition, if highway Manager was part of the pension scheme as required by law, Mrs. Ogunniyi’s family would have been entitled to her pension contributions. That is not all. The Employers Liability Insurance, as required by the Employee Compensation Act of 2010 (which repealed the Workmen Compensation Act of 1987), makes provision for every employer, within the first two years of the commencement of the 2010 Act, to make a minimum monthly contribution of one (1) percent of the total monthly payroll of employees to the Employee Compensation Fund. The Fund, which is managed by the Nigeria Social Insurance Trust Fund (NSITF), is used to pay compensation to employees or their dependants for any death, injury, disease or disability arising out of or in the course of their employment. Mrs. Ogunniyi’s death happened in the course of employment, so her family would have been entitled to compensation from NSITF.
If all these compensations were in place, the family of the mother of three would have been better off financially. Now they have suffered double jeopardy. They have lost their mother and a source of livelihood without adequate compensation. It is this kind of situation government anticipated and wanted to avoid that necessitated the enactment of laws making these insurances compulsory. Unfortunately, enforcement has been poor and among defaulters are governments and government agencies.
Even with the low premiums insurance companies charge compared to the risks they bear, many employers still do not have any of these insurances. Sometimes employees are ignorant of their rights and even when they are aware, they are helpless. For instance, a university graduate has been jobless for the past five years after completing his youth service. Then he gets a job in a company that neither has a group life insurance nor subscribes to NSITF. Do you expect him to confront management about compulsory insurances for staff? Selfpreservation will deter him.
I have always believed that the difference between the advanced countries and us is that they place premium value on life – just any life including plants and animals – while human life here is very cheap, not to talk of other lives. That is why we do not take people’s welfare serious. If not, the Highway Manager official would have been too embarrassed to publicly mention that the late Ogunniyi’s salary is N15,000 (N3000 and N15,000 less than the old and new minimum wages, respectively). He would also have refrained from telling the world that Ogunniyi’s compensation is N45,000 only!
Non-compliance with these compulsory insurances goes with penalties. For instance, the penalty for non-compliance with Group Life Insurance (Employers Liability) is N250,000 fine on conviction and sealing off of the business premises. But my interest here is not in conviction or penalties. Highway Manager has done a great injustice to the late Mrs. Ogunniyi, who worked there for 24 months, and her family. It is not too late to make amends. In addition, they and other companies where staff are exposed to grave dangers in the course of their work should take more safety measures to protect their workers, and also have adequate compensation and welfare benefits for their employees.