Property Prices Set to Increase as New Insurance Law Comes Into Force - News

Property Prices Set to Increase as New Insurance Law Comes Into Force

Posted by Agent /  April 24, 2011 / in News

Property prices are expected to increase following the commencement of an Insurance Act that makes it mandatory for property owners or contractors to insure buildings with more than two floors in respect of construction risks. The enforcement of this law commenced on the 1st of March.

The law makes it compulsory for occupiers and owners of public buildings such as tenement houses, hostels, hotels, hospitals, offices and schools to insure against hazards of collapse, fire, earth quacks, storms and floods.

Coming under the compulsory insurance promoted by the National Insurance Commission (NAICOM), the law only exempts church buildings, mosque buildings and private buildings occupied solely by the owners for residential purposes.

Section 64 of the Insurance Act 2003 states: Builders Liability Insurance Act states that no person shall cause to construct any building of more than two floors without insuring with a registered insurer his liability in respect of construction risks caused by his negligence or the negligence of his servant, agents or consultants which may result in bodily injury, loss of life or damage to property of any workman on the site or of any member of the public.

This has sparked mixed reactions amongst housing experts and practitioners. While real estate and building professionals welcome the move to begin enforcing the law, other stakeholders are worried about the effect this law will have on the price of property in Nigeria; particularly for the average individual. Whilst they consider the law beneficial, they are of the opinion that the resultant increase in construction costs will impact the price of property which will be evident in mortgage and insurance premiums.

The Commissioner for Insurance, Fola Daniel said the Insurance Regulatory Authority has formed a team comprising Nigeria Police, Federal Road Safety Commission (FRSC), Council of Registered Builders of Nigeria (CORBON), Federal and State Town Planning Authorities, State Traffic Management Agencies, insurance practitioners and Insurance Consumers Association of Nigeria (INSCAN) to ensure the law is enforced and implemented.

According to him, “the enforcement team would ensure that individuals and organizations insure their properties in line with the Market Development and Restructuring Initiative (MDRI) of the Commission.”

He also added that the initiative was for the preservation of our income, national wealth,  and human and material resources. Heavy fines and prison terms will be imposed by relevant sections of the laws for non-compliance.

“Any person, who commits a breach of this provision commits an offence and on conviction shall be liable to a fine of ₦250,000 or imprisonment for three years or both.”, Fola Daniel said.

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