Group Life: The Sour Side Of A Relief Package

Nigerian workers have been known to withstand the poorest working conditions in their workplaces. Based on the need to to sustain themselves and family members, some have had to go through very gruesome experience to remain in their jobs amid meagre payment. Amid these agonies, poor implementation of the group life insurance cover further puts the family in more pains in the event of death SUNDAY OJEME reports

In the last 13 years of the country’s democratic government, not much has changed for Nigerian workers in terms of welfare.

Except for some private sectors like oil and gas and some revenue generating agencies of government, the average Nigerian worker has, over the years, remained the first and major casualty of government’s economic and policy changes and failure.

Workers’ struggles
The struggle to earn reasonable pay and get a boost in welfare has always been met with stiff resistance from employers, especially the public sector.

For the employer, more value is placed on profit and business sustainability than the welfare of the employee. Apart from the poor implementation of the Group Life policy for employees, the fate of Nigerians has also been at the mercy of employers, including the Federal Government.

Despite these shortcomings, it is ironic that the Federal Government would further default in its own legal policy when it comes to ‘rewarding’ deceased workers by ensuring payment of their claims under the Group Life Insurance Policy. More pathetic is also the attitude displayed by insurance companies and brokers towards the families and next of kin of the dead workers.

According to findings, no fewer than 5,535 families of federal workers who died between April 2018 and July 2019 were denied insurance compensation as the Federal Government failed to pay the necessary premium, which operators put at N15 billion annually.

Figures obtained from the National Pension Commission on approval of death benefits showed that relatives of the deceased federal workers filed for death benefits claims between April 2018 and July 2019.

Government’s failure
Operators in the industry have often lamented that the Federal Government, the biggest customer of the insurance industry, had failed to provide cover for its workers. To further complicate the situation, even some states that used to have the Group Life Insurance Policy for workers had also stopped paying premium.

The Group Life Insurance Policy is part of the Pension Reform Act 2014, which states that “Employers shall maintain life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee.”

Under the Insurance Act 2003, Statutory Group Life Insurance requires that in addition to the statutory pension contributions that employers and employees must remit, the employer is also to make group life premium payment in favour of the employee for a minimum of three times his annual emolument.

In this scenario, employees who are outside the Group Life cover are tactically denied actual benefits but only compensated based on the personal consideration of their employers.

In this case, what should have gone to their families in the case of death is held back due to their failure to identify with the policy.

Findings by our correspondent over time revealed that government at all levels as well as some insurance companies have failed hugely in this regard as families and breadwinners have been denied the supposed benefits, thus, by extension, further robbing the dead employees.

Victim’s agony
Specifically, an investigation by New Telegraph revealed the sad tale of an employee of Federal Government, whose benefits under the Group Life Policy is yet to be paid to the children seven years after her demise.

Findings revealed that the children of the former senior official of Federal Ministry of Health, the late Mrs. Bilhatu, who died in 2014, have been going through difficulties in getting their mother’s claims in the last seven years.

While the broker claimed that it had long processed the documents and forwarded to the insurance company for payment, investigation revealed a different thing entirely as it only forwarded a copy of the death notification to the insurance firm in October 2020, after receiving the notification from the ministry about five years earlier.

Speaking with our correspondent, one of the woman’s daughters said the insurance broker commissioned by the Federal Ministry of Health to pursue the claims had been playing hide and seek with the children of the deceased.

According to her, “the Federal Ministry of Health, in 2015, gave the broker, Utib, the notification to start processing the death benefits. That was when we started communicating. We went to their office here in Abuja and met a lady, one Mrs Obike, who gave us her number. She said she was their regional manager, but that she was always in Lagos.

“But as of 2017, that was when she said they were done processing and that they were sending it to the insurance company. She said something like the underwriter raising a voucher that they would bring to her office for them to sign and take it back to them to process the money for payment.

Hide and seek
“From the end of 2017, I would call her and at some point she stopped picking my calls. At first we didn’t really know much about insurance and how it works, but later I got a job with Lasaco Assurance and it was even then that I knew how it worked. It was even my boss then that called them to know what was happening to my mum’s claims.

From the call, which was 2018 December/2019, that was when she started picking my calls again, after my boss called and even threatened that he was going to take the matter to the National Assembly.

“This time around, she said something happened, and that we should just resend all the documents again. This is after she told us she had finished working on the documents and sent them to the insurance company, so how come she was asking us to send the documents again.

“That was how we resent it. Up until 2020, the whole year was COVID- 19. With that, she had an excuse, up until this 2021 now, she is still like she has everything, and she has taken everything to the insurer. She keeps mentioning one Kenny.

“That she had submitted the documents to him and that he is going to work on it. “Now she is mentioning another thing again, which is another excuse, that insurance claims’ cases that were not reported from 2001 would not be responded to. I told her that we reported our own, so the issue is not with us because we reported since 2015 officially, and we keep getting excuses from her and she told me she had worked on it and sent it to the insurer, then she started saying even the company was in debt.

“So as of the last time we spoke, she said she was going to speak with the Kenny. After that, we have not spoken again. If I call her she would say her battery is two per cent, that she is in a busy place, she is in a bus and things like that.”

When contacted, an official of the insurance firm, Niger Insurance, precisely, said she searched through but could not find any document pertaining to the said policyholder. The broker, however, sent a copy of the October 2020 notification letter, which was acknowledged by the underwriter.

This is the lot of dependents of most deceased workers across the country. While some are still struggling to get their compensation paid, some others have simply forgotten about it, and, in most cases, they are eventually processed with forged documents by insiders, who end up keeping the money to themselves.

Group Life under the law
The Pension Reform Act (the PRA or the Act) was first enacted in 2004 and reviewed in 2014. Among many other provisions, the PRA makes Group Life Insurance compulsory for all employees. Group Life Insurance is a scheme that may be likened to a death-in-service policy and is designed to pay a benefit called “the sum assured” to the next of kin or dependents of an employee who dies in active service.

The rationale behind Group Life Insurance is to cushion the effect of the death of a deceased worker on his family and dependents.

The Act applies to all employers in the public and private sector who have more than five employees. Specifically, Section 4(5) of the Pension Reform Act 2014 provides: “In addition to the rates specified in subsection (1) of this section, every employer shall 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 the premium shall be paid not later than the date of the commencement of the cover.”

In other words, every employer, to which the Act applies, must maintain Life Insurance Policy in favour of every employee for a minimum of three times the annual total emolument of the employee.

Under this policy, the total annual emolument is defined as the basic salary, transport and housing allowances and shall not include bonuses, overtime, directors’ fees or other fluctuating emoluments.

According to the guidelines for life insurance policy for employees jointly issued by the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom), the employer is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to the contributions to be made by the employer to each employee’s Retirement Savings Account.

Regrettably, the provision for Group Life Insurance in the Pension Reform Act is often ignored, even deliberately avoided by employers in the public and private sector, leaving dependents of deceased employees stranded without support. Many employers are often ignorant of the legal consequence of contravening Section 4(5) of the PRA 2014, which is civil and criminal.

Section 4(6) of the PRA provides that “Where the employer failed, refused or omitted to make the payment as and when due, the employer shall make arrangement to effect the payment of claims arising from the death of any of the staff in its employment during such period.”

Section 99 (1) of the Act goes further to state that “Any person who contravenes any of the provisions of this Act commits an offence and where no penalty is prescribed, shall be liable on conviction to a fine of not less than N250,000 or a term of not less than one year imprisonment or to both fine and imprisonment.”

The GLIP is not peculiar to Nigeria. In South Africa, for instance, majority of formal sector employees have access to risk benefits either through a retirement fund or through a group insurance policy bought directly by their employer.

On average, this system provides its five to six million members with lump sum death benefits of two to three times annual salary at an average cost of approximately two per cent of salary. Disability benefits consist either of a similar lump sum, or more expensive income benefits of 75 per cent of salary, which on average cost about 1.5 per cent of salary.

Group risk provision is a seven billion rand industry in South Africa, excluding uninsured provision of risk benefits.

Partial compliance
Figures obtained from PenCom had revealed that only workers in Kaduna State and the Federal Capital Territory had valid group life insurance cover.

According to the list, Kaduna is the only compliant state in terms of pension and insurance obligation to workers.

Experts’ views
Speaking on the development, a former President, Trade Union Congress, Peter Esele, said employers should not see insurance laws as a burden but as an incentive to motivate workers.

According to him, insurance will help to provide succour for relatives of deceased workers. He, however, said it was the duty of the workers’ unions to mount pressure on the government to ensure that it paid its premium to ensure compensation for relatives of deceased workers.

An insurer, who also reacted, said: “Any worker who died while premium has not been paid cannot be covered. Letters were given to the insurance companies in December and early January to insure the workers, but premium has not been paid. “Again, sometimes, some departments don’t file for workers’ claims for two to five years after their death. And when they do, the insurers tell them the yearly policy elapsed many years ago.

“We ask the insurance companies to pay claims even after two or three years for a person who died, but you cannot be filling for claims after five years. “We need to do training for the ministries, departments and agencies on their roles because they don’t file the claims on time.”

To ensure responsibility on its part, the Federal Government, though played a major role in the failure, recently reaffirmed that it would no longer tolerate non-payment of claims to deceased workers’ families by insurance firms the moment premiums are paid in this regard.

Speaking with New Telegraph on the current step to flush the culpable insurance firms out of Federal Government’s Group Life account, a top broker, Mr. Tunde Oguntade, with knowledge of the development, said that the Office of the Head of Service had constituted a technical committee to exclude insolvent underwriters.

According to him, “the Office of Head of Service has a technical team that is working on that. They are trying to be sure that underwriters, who have issues, do not get on, but you know as long as anybody carries the licence of NAICOM, he is still a valid underwriter.” He said the HoS was working between the lines along with NAICOM to ensure only underwriters without blemish on their claims record receive premium from the Federal Government.

Last line
From all indications, it is obvious that the system appears to have collapsed, first on the part of government that put the law in place but failed to pay premium, and the insurance firms that should take measured steps to ensure benefits are paid whenever premium is collected.

With more workers losing their jobs unexpectedly and not having much savings to fall back on, it is disheartening to be alive and know for sure that nothing will accrue to one’s family as the breadwinner in the event of death while in active service.

To encourage the workforce and guard against corruption, it is expedient for the Federal Government to reinforce commitment towards Group Life policy implementation by paying premium regularly just as the industry regulators also make it a matter of urgency for the insurance operators to pay the necessary claims in order to spur a healthy workforce and give value to the family and, by extension, the country.

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