Industry experts are calling for strict enforcement of the compulsory building insurance law introduced by the National Insurance Commission (NAICOM) under sections 64 and 65 of the Insurance Act 2003. The law mandates insurance coverage for buildings under construction that exceed two floors, with penalties of N250,000 or up to three years imprisonment for defaulters. Despite the legal framework, compliance remains low among construction companies, building owners, and occupiers, leading to an increase in unprotected property losses.
The insurance policy covers damages caused by incidents such as fire, flood, vandalism, theft, and building collapses. However, statistics show that the property insurance scheme has a penetration rate of only 0.15 percent, despite the availability of over 57 insurance companies in the country. Experts attribute this low adoption to poor enforcement and a lack of awareness.
In response to frequent building collapses, the Lagos State government is taking steps to compel property owners and developers to comply with the compulsory insurance law. The aim is to ensure that victims and their dependents are compensated in the event of building failures. Estate surveyor and valuer Biodun Olapade highlighted the need for professional involvement in preparing valuation reports for properties under construction, noting that enforcement of the insurance law remains weak due to corruption and low awareness.
“Enforcement is weak, and corruption encourages ineffective compliance,” Olapade stated. He called for more involvement of professional estate surveyors and valuers in the process to ensure proper valuation and transparency in insurance claims.
Femi Oyedele, another estate surveyor, emphasized the importance of valuing workers, plants, and equipment during construction to ensure appropriate insurance coverage. He urged the government to establish a task force dedicated to enforcing compliance with the insurance law and recommended that agencies like the Lagos State Building Control Agency (LABSCA) ensure that building sites display their insurance policies.
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The President of the Nigerian Council of Registered Insurance Brokers (NCRIB), Babatunde Oguntade, called for increased collaboration between the government and insurance companies to make building insurance more accessible and affordable. He also stressed the need for public awareness campaigns to educate property owners on the importance of insurance and the risks of non-compliance.
Experts recommend that NAICOM, alongside industry bodies, launch educational campaigns through media outreach, digital platforms, and community engagement. Oguntade further suggested that government buildings set an example by ensuring they are fully insured, encouraging private property owners to follow suit.
With these efforts, stakeholders hope to see a significant increase in compliance with the compulsory building insurance law, ultimately reducing the frequency of property losses and ensuring better protection for Nigerians.
