Microinsurance And The New National Minimum Wage

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Wednesday, April 24, 2019  / 09:37AM / By Ekerete Ola Gam-Ikon MNIM, CPP


The history of the active poor, the vulnerable and the real workers in Nigeria will be favourable to the administration of President Muhammadu Buhari. During his tenure, he has fought and denied the elites, the hustlers and the blue bloods access to the high corridors of power, usually translated to money, no thanks to his close-knitted advisers. In time, we might be facing a more balanced economic conflict between the enlightened poor and the irresistible rich, both financially included. Who will win?


No, that's not the right question. Let's rather ask: What will win?


Today, after President Buhari has signed the National Minimum Wage Bill into law to ensure the least a worker gets is N30,000; the winner is not necessarily the worker(s) but the things that the money will go for. For example, food, transport, rent, school fees, healthcare, recharge card and contributions are the lines of expenses that the money will go.


However, some of us would desire that part of the money goes to any of the defined elements of financial inclusion: savings, credit, insurance, payments, pension and investments. 


Recently, micro-pensions for the informal sector was launched by the President as further efforts to serve the underserved and unserved amongst us. 


Next is Microinsurance 


Of the things that the Nigerian worker spends his/her money on, the most critical ones like rent, school fees and healthcare find expressions in microinsurance. Let me explain.


The dilemma of non-payment of rent and school fees arises commonly from the loss of the breadwinner or his job thus leaving the family exposed to soliciting and begging from people who are equally vulnerable to the same situation. 


Without any plan in form of insurance in place, the poor parents and guardians have no option but to beg, and where help does not come, the child/ward is left to the vagaries of the society. 


If only the victim of job loss or the deceased knew that there was an insurance policy to cover those who lose their employment or child education policy to ensure the child continues to have education after the death of his/her parents.


Microinsurance is intended to address these challenges and enable us enjoy a more stable and secured environment.


Nigerian workers, having waited for so long to get a shift from N18,000 to N30,000 minimum wage need to be wiser in the way they spend their money. 


Importantly, they must be ready to invest in getting reliable information and acquiring authentic knowledge that optimizes their gains.


Who will tell them?


There is an emergent group of micro-professional and micro-financial services providers compromising persons who had worked in banks, insurance companies, finance houses and investment firms. Some of these persons are already engaged in some form of business service with the active poor involved in agriculture, footwear and technology to mention a few.


Increasingly recognized as Business Development Services Providers (BDSPs), these persons or those with similar knowledge and skills could be engaged by insurers that have suited products for low income earners to educate and enlighten these workers.


Otherwise, adopting the Train the Trainers curricula for enterprise development, current agents of insurance companies could be trained to have the capacity of BDSPs and engage the workers towards a better future with microinsurance. 


Too often, potential and existing customers (policyholders) of insurance companies have complained about the quality of service they get from insurance agents or marketing executives, so there is need to migrate from the current curriculum to something more responsive to the needs of people.


This time calls for much improved narratives and instruments to be employed in communicating with Nigerian workers even as it is very important to get the right persons doing it.


What the Insured Nigerian Worker Enjoys


Given that there are several laws that ensures the Nigerian worker is adequately insured, it will surprise the enforcer to discover that there exist an embarrassing insurance gap which needs to be covered.


The following laws ensure that the Nigerian worker is insured:


1. Pension Reforms (Amendment) Act 2014 requires that an employer provides group life assurance for her employees;


2. National Social Insurance Trust Fund requires that employers have employees' benefits that will protect them in the course of work;


3. Insurance Act 2003 requires that all vehicles on Nigerian roads must have Third Party Insurance thus ensuring that Nigerian workers in any form of transportation within Nigeria can be indemnified in the event of accident during working hours;


4. Also, the Insurance Act 2003 requires that all public buildings are insured against incidents that may result in injuries or death to visitors and other persons using such facilities.


More benefits exist in other classes of insurance not made compulsory by law, for example, Group Personal Accident which is a 24-hour cover to compensate persons or their beneficiaries who are injured or dead as a result of an accident.


Should the Nigerian Labour Congress (NLC) that boast of over 30m members decide to pursue the implementation of these laws, Nigerian workers will enjoy a new lease of life.


No Nigerian worker should be engaged without adequate insurance covers for himself/herself and his/her family members!


It is expected that when microinsurance takes root in our environment, there will be greater value from the minimum wage and less demand for its increase.


To put it differently, when Nigerian workers become more aware and enlightened about the value of various classes of insurance especially the compulsory ones, they would rather be demanding for a more insured environment where they are protected from the vagaries of the society.


Money alone will not address our financial challenges, knowledge of several other financial instruments will surely help us to navigate our national economic landscape and stand firm if we smell recession.


Insurance, in form of microinsurance, takaful, health insurance and transportation insurance, holds the trust that is desperately needed in the relationship between the government and its citizens.


We shall progress assuredly! 


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About The Author

Ekerete Olawoye Gam-Ikon, MNIM, CPP is a management consultant with specialization in Strategy and Insurance. He can be reached vide telephone on +234-806-648-1111 and +234-802-585-0344 or by e-mail vide olagamola@gmail.com


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