Only seven states had group life insurance cover for their workers as of the end of March 2022, according to the National Pension Commission.
This means that 29 states did not have insurance covers for their workers within this period.
Figures obtained from PenCom on ‘Summary of the implementation status of states with valid group life and sinking funds’ as of March, 31, 2022, showed that only Lagos, Federal Capital Territory, Osun, Ondo, Edo, Ekiti and Kaduna states had covers for their workers.
The pension industry regulator explained that “Kaduna replaced the group life insurance with a sinking fund, which is domiciled with the CBN and the state has commenced setting aside funds in the account for the settlement of death benefits.”
PenCom and the National Insurance Commission jointly released the ‘Revised guidelines on group life insurance policy for employees’.
Section 4(5) of the Pension Reform Act 2014 provides that “every employer must maintain a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee and premium must be paid not later than the date of commencement of the cover.”
Section 120 of the PRA 2014 defines the annual total emolument to mean the gross emoluments of an employee or deceased person.
Where an employee dies, his entitlements would be paid by an underwriter to the named beneficiary in line with Section 57 of the Insurance Act, according to the section.
Where an employee dies, the employer must immediately notify the insurance company and commence processing of death benefits claim on behalf of the deceased employee, as prescribed in the operational terms of the group life insurance policy and in all cases, not later than 365 days from the date of the incident giving rise to the claim, the section says.
Where the employer fails to notify the insurance company of the employee’s death, it adds, the employer will be liable to pay the death claim from its resources.
“Any employer who fails to maintain a group life insurance policy for the benefits of its employees is in contravention of the PRA 2014,” it states.
The Commissioner for Insurance, National Insurance Commission, Mr Sunday Thomas, said the commission was partnering with states to ensure the enforcement of compulsory insurance policies in the country.
He noted that group life insurance was one of the compulsory insurance policies in the country’s statutory laws.
The Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, assured insurers that the Federal Government would ensure compliance with compulsory policies in the country.
She said, “We have also keyed into the Market Development and Restructuring Initiatives of NAICOM, which was developed to promote compulsory insurance products and increase penetration by ensuring compliance with group life insurance of civil and public servants.
“In addition, the government is also deploying resources and engaging various stakeholders, including state governments, to ensure that it domesticates insurance laws and improves the business of insurance in the states.”