Budget 2022 – Govt Appropriates N24bn for Group Life Insurance

*Remits 50% of 2021 premium

The Federal Government, FG, has appropriated N24.7 billion in the proposed Budget 2022 as premium for group life insurance of its workers.

The amount appropriated represents 64.7 per cent increase when compared with the N15 billion appropriated in 2021.

However, Vanguard investigations reveal that the FG has only remitted 50 per cent of the N15 billion premium for the group life insurance for its workers for the 2021 fiscal year.

This is in spite of the N9.2 billion approved by the Federal Executive Council, FEC, in June this year to be disbursed as premium for insurance companies who will manage insurance coverage for federal civil servants for the year 2021-2022.

According to the Appropriation bill 2022 released by the Budget Office of the Federation, under the item "Group Life Assurance for all MDAs including DSS/insurance of sensitive assets/corpers plus administration/monitoring," shows that N24.7 billion was appropriated as premium for 2022.

According to Vanguard findings, the delay in remitting the premium is not unconnected to the dwindling revenue of the FG. This challenge prompted the government to enter into dialogue with the insurers on the possibility of reduced premium that is commensurate with its revenue.

It will be recalled that Section 4 (5), of the Pension Reform Act, 2014 states that "Every employer shall maintain a group life insurance policy in favour of each employee for a minimum of three times the yearly total emolument of the employee and premium shall be paid not later than the date of commencement of the cover."

Speaking on the development, Managing Director of Universal Insurance Plc, Mr. Ben Ujoatuonu said that the FG is willing to pay premium but its meager revenue has been a hindrance.

Ujoatuonu said: "In one of the Insurers Committee meetings, there was a representative of the FG trying to interact with the insurance industry, indicating that the FG is willing to take insurance and wants to pay premium. However, the representative wanted to have an understanding of the insurance industry to see how it will be done considering the meager revenue of the FG. So when this is worked out, it will interest the FG to pay a premium."

Also speaking, Managing Director of Afriglobal Insurance Brokers, Mr. Casmir Azubuike said that the industry would have performed far better if only the government was responsive to its insurance responsibilities and to the economy as a whole.

He said: "Group life insurance is one of the compulsory insurance policies made compulsory by the Insurance Act of 2003 and that law was made by the government. One would expect that government should be the first to implement before you compel others to follow suit but you have a situation where government parastatals send out bids and insurance companies are enlisted and prequalified and the policy is due for renewal but you don't see premium payment.

"So the commitment on the part of the government is hardly there and when you have a government that is not prioritizing its spending, but rather kind of reckless in spending and borrowing, if you are expecting so much from them you are not likely to get it."