Bankers, others take insurance cover against job losses

The frequent loss of jobs by otherwise gainfully employed people is making many workers to take insurance cover that guarantees them full salaries for specified periods if they get sacked, NIKE POPOOLA writes

Bank workers and other employees in different sectors of the economy are now taking up insurance cover in order to ensure that they continue to earn regular salaries if they are sacked by their employers, investigation has revealed.

Experts in the insurance sector, who disclosed this new trend to our correspondent, observed that many firms were grappling with harsh economic challenges, which had made them to lay off many workers.

According to them, insecurity and the effects of sudden job losses on workers and their dependants are making the workers to approach insurance firms for the new cover.

A major feature of this cover is that immediately a worker gets sacked, his insurance company will enrol him on full salary of exactly the last amount he earned from his employer.

Though the policy is still relatively new in the country, it was gathered that the National Insurance Commission had given approval for its operations and put in place measures to ensure that policyholders were adequately protected.

The Chairman, Supreme Adequate Insurance Broker, Mr. Taiwo Akintunde, said the cover was recently introduced in the country due to the prevalence of job losses and hardships that victims of such usually encountered.

Though still new, he said many workers, mostly in the banking sector, had already subscribed to the job loss cover.

“Hundreds of workers have already subscribed to it. For now, we are selling to employees in four sectors, which are banking, telecommunications, oil and gas, and manufacturing,” Akintunde said.

According to him, underwriters plan to introduce the cover to other sectors after conducting proper rating, underwriting and assessment of employees and the companies.

According to Akintunde, a policyholder must have been paying premium for at least one year before he can be entitled to draw salary from the policy if he loses his job.

However, he added that if the worker decides to opt out of the job loss scheme in less than a year, he would get refund for the premium he had contributed.

“He will get full premium return for the first three months, while a little percentage will be deducted as management expenses for the remaining months,” Akintunde explained.

The Managing Director, Anchor Insurance Company Limited, Mr. Ademayowa Adeduro, told our correspondent that the firm had obtained NAICOM’s approval for the product and had already provided cover for many workers under it.

According to him, the Loss of Employment Insurance Scheme exempts contract workers but covers permanent employees who meet underwriting conditions.

“This product provides benefits for a worker who loses his employment through no fault of his,” Adeduro said.

If a worker is sacked, he explained that the insurance firm would pay the last salary earned in employment for a period of time.

Adeduro also explained that the total number of months that the insurance company would be paying the insured if he did not get another job was a maximum of 24 months.

“The insured will get 100 per cent of the monthly salary for the first six months, followed by 75 per cent in the next six months if he remains unemployed; 50 per cent will continue for the following six months, while 25 per cent will be paid in the last six months,” Adeduro said.

He explained that termination of job was a risk that could happen to any worker, just like any other risk like accidental death or plane crash.

“We have started selling the cover; people are picking it up on a daily basis. Risk is part of existence of human beings and it is the duty of insurance to fashion out how to cover those risks by appropriate pricing and actuarial computation,” he said.

The Anchor boss said the risk of job loss was more prevalent in the banking sector, adding that the firm conducted intensive study on the banks and other sectors before it came out with the appropriate rates to charge and premiums to be paid.

“The premium is affordable and based on the law of large number, we are conversant with the risk and will not default in paying any customer,” he said.

The Director-General, Nigerian Insurers Association, Mr. Sunday Thomas, said there were evolving challenges in the economy and that insurers were providing cover for such risks.

According to him, the underwriting firms are putting in place research departments to enable them to roll out new products to meet the challenges.

“Developing products is not a thing that you just come up with, because it must be born out of the need of the consumers and rigorous research must be conducted,” Thomas said.

In recent years, several thousands of workers have been laid off in the banking sector and other sectors of the economy. Just last week, The La Casera Company sacked about 700 workers reportedly without prior notice or any financial compensation.

The Commissioner for Insurance, Alhaji Mohammed Kari, said all new products were approved by NAICOM in line with the requirements of the Insurance Act, 2003.

NAICOM had stated in the recent guidelines on market conduct and business for insurance institutions that application for new products must be accompanied by specimen copies of proposal and policy forms; specimen copies of any endorsement and claims forms; risk analysis of the product and five-year business plan among others.