As more organisations cut the number of their employees in response to the challenges in the Nigerian economy, some retrenched workers who bought insurance covers against job losses have started getting salaries from their insurance companies, NIKE POPOOLA writes
The spate of job losses in the country as a result of the current recession is making a lot of workers to insure their jobs against unexpected retrenched.
Some workers, who had taken insurance cover before losing their jobs, are already getting claims settlement from their underwriters through monthly payment of salaries, which will continue till the insurance contracts expire.
The main feature of the job loss cover is that the insurance company starts paying the sacked worker the salary earned from the last employer, and this can last for up to two years.
A worker can only enjoy the benefit of the policy if he pays the premium regularly.
The National Insurance Commission first granted approval for the policy last year but many workers were initially slow in embracing it.
However, as recession takes its toll on corporate organisations, thereby forcing many of them to downsize the workforce, many employees who are terrified of living without salaries are now subscribing to the job loss cover, according to findings by our correspondent.
The Minister of Finance, Mrs. Kemi Adeosun, had in July while appearing before the Senate disclosed that the country was officially in recession.
The report of the National Bureau of Statistics, which showed a fall in the Gross Domestic Product from-0.36 per cent in the first quarter, to -2.06 per cent in the second quarter further confirmed that Nigeria had slipped into recession.
A major indicator of recession is two consecutive quarters of negative economic growth, which the country achieved in the first two quarters of this year.
Anchor Insurance Company Limited was the first underwriting firm to get approval for the job loss insurance cover from NAICOM.
The Managing Director, Anchor Insurance, Mr. Mayowa Adeduro, said that many workers had been subscribing to it, adding that the firm had commenced claims payment to those who had lost their jobs.
“More people are taking the cover and we have already commenced claims payment by putting the workers who lost their jobs on regular monthly salaries. A former employee of Skye Bank is already earning salaries from the job loss cover she had with us,” Adeduro said.
According to him, more workers are notifying the firm that they have been sacked by their employers and will be placed on monthly salaries by Anchor Insurance.
The Anchor boss stated that while there had been an increase in demand for the cover, some workers who had stopped remitting their premiums had indicated interest in stopping the contracts.
Adeduro explained that premium for the cover was being calculated using some complex parameters supplied by the employee, including previous employment history or previous loss of job, age, marital status and educational qualifications.
Other parameters, according to him, include industry and company of the employee, job profile (grade/position and department), gender, monthly gross salary, and monthly insured salary (provided the employee is not willing to insure the entire salary).
Adeduro said the scheme did not encourage insuring any amount above an employee’s gross monthly salary but there was opportunity to underinsure.
He explained that loss of employment income insurance was a policy with a promise to indemnify an insured for accidental loss of his/her insured income within the terms and conditions specified in the policy.
“We know that in a recession, job losses will increase and we look at situations and proffer solutions to them in times like this,” he said.
An ex-employee of Skye Bank Plc, who gave her name simply as Ms Juliet, said she worked with the bank for eight years, adding that she was sacked 13 months after subscribing to the job loss insurance cover.
She said, “I decided to lodge my claim just to see if they were true to their word; interestingly and amazingly, my claim was approved and the following month, I started earning the salary I insured with the scheme, which is N200,000.
“I have earned this pay consistently for the last five months. The only regret I have is that I didn’t insure my full salary because I just wanted to test the scheme.”
Supreme Adequate Insurance Brokers is the first brokerage company to introduce this cover in partnership with underwriters.
The Chairman, Supreme Adequate Insurance Brokers, Mr. Taiwo Akintunde, said that in the event of termination of appointment, benefit would be paid for the next 24 months on a reducing scale method to stimulate job hunt and desire to return to work.
“One hundred per cent of the monthly salary will be paid for the first six months; 75 per cent for the following six months; 50 per cent for another six months; and 25 per cent for the last six months,” he explained.
Akintunde also said that in the event of the death of the insured, a death benefit of an agreed sum stated in the schedule would be paid to the beneficiary of the record.
The Director, Authorisation and Policy, NAICOM, Mr. Pius Agboola, urged underwriting firms to provide cover for losses emanating from economic recession.
The director noted that insurance plays a relevant role in a challenged economy.
He said that products such as consequential loss cover during recession; unemployment/under employment cover; directors’ liability cover; terrorism cover; and reformed social benefit cover should be the focus of insurance managers.
While stating that economic recession might not be a disadvantage at all times, Agboola said it could be a blessing in disguise because it should provide an opportunity to develop a proactive mind.
Some brokers have been working with insurance companies to roll out new products that can help the country to weather the current economic storm.
The President, Nigerian Council of Registered Insurance Brokers, Mr. Kayode Okunoren, said that the sharp drop in the price of oil globally had put Nigeria in a precarious situation.
He challenged the insurance brokers to be more innovative in terms of product development during this period of recession.
The Governor of Osun State, Rauf Aregbesola, also urged insurance operators to deploy resources at their disposal to facilitate quick recovery of the economy.
The governor, who lamented the state of the economy, advised insurance brokers to work out modalities for rescuing the government out of the present situation.
Aregbesola suggested that one of the ways to save the nation from the present economic quagmire was for professional bodies, such as those in the insurance sector, to institutionalise strategies and map out realistic economic policies to mitigate the situation, stressing that all hands must be on deck to find possible solutions to the nation’s economic problems.
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