By Odimegwu Onwumere

Some insurance firms argue that they would pay COVID-19 claim, while others said they would not. In some countries like South Africa, there have been litigations with defendants and plaintiffs asking court to define whether there should be payment to the insureds or not.

In other countries like Nigeria, the umbrella body of insurers, the Nigerian Insurers Association (NIA), believed that its member-companies would honour claims arising from COVID-19.

Looking for proof to back the supposition, some experts argued that there was a similar controversy that surrounded insurance policies in Tunisia and Egypt during the Arab Spring. To the experts, decision on the matter was characterised by confusion given that every policy operated different wordings.

Some believed that they had claim on life and have not to break head on that; and however, the different wordings or policies were operated by different firms, it was a slap on their face when regulators were imposing pronouncements on the reinsurers about paying the insureds.

“On the insurer side, we are quite clear that a pandemic is not covered when it comes to business interruption (BI), but on the client side there is a lot of confusion,” said Rajiv Ranjan, CMO and executive director at East African insurer Mayfair.

Some believed that till reinsurers can do a proper audit, they will not ascertain number of policies out there. Notwithstanding, some firms had manifestly said they won’t pay for reasons best known to them. Others said they would pay and their reasons were curiously stated.

At Continental Re, Mr. Lawrence Nazare, Executive Director said: “We are reinsuring group life and the wording does specifically exclude pandemics. We did advise the market at the start of this crisis, sending out a circular making sure they were aware of the exclusion and that it would be triggered when the World Health Organisation declared the pandemic.”

Some who agreed on what to or not to pay however defined terms of their stance, saying that as it stood, there was financial market decline, reducing their ability to handle the reality.

According to analysts, “The capital buffers of some of the largest reinsurance companies have been significantly shrunken by the financial market decline seen in the last months because of the COVID-19 outbreak, potentially reducing their ability to weather any major catastrophic events that occurred.”

Confusion of what to make of the pandemic

There was serious confusion of what reinsurers on the continent would make of the pandemic situation. The pressure was on them, and there was insignificant apprehension surrounding regulators about which company would still be solvent after the pandemic.

At East Africa Re, the CEO, Peter Maina said, “We may have a problem in the future if claims start coming through. Treaties are very silent on the issue of pandemic.”

Experts believed that the pandemic had paved way for loss of premiums given that there were scarcity of businesses and this might affect businesses during the year and next year.

According to Nazare, “One of the largest insurers maintained that there is a suppliers’ extension for BI that was sold as part of their property policies and might in fact respond to COVID-19 without needing any physical damage. We are investigating.

“We do participate in some policies that were written by this insurer in Namibia, but at the moment, we don’t have a clear answer. There is a fear that in South Africa there will be significant losses arising out of that extension.”

Experts saw this as “the greater risk”. According to the group CEO and Managing Director of Africa Re, Dr. Corneille Karekezi, “No one is really working at the moment, so it is hard for us to react…The one group that is really working is the IT sector, because they have been in demand like never before as we all work from home.

“Some have asked for premium rebates, for example, but we need to explain to them how insurance works and that even if a plant is shut down it still requires protection. There has also been talk of premium relief, particularly in South Africa.”

Body of insurers agrees to pay

On the contrary, the Nigerian Insurers Association (NIA), the umbrella body of insurers in Nigeria in April, had taken a position, saying that its member-companies would honour claims arising from COVID-19, “even as it confirmed full reinsurance backing.”

“The cover provides for life benefit, so any incident by this cause will be honoured,” Tope Smart, chairman of the NIA said.

For Moruf Apampa, Executive Director, Operations, FBN Insurance, “This is a situation like no other one ever, no statistics, so I do not see any reinsurance company rejecting claims from COVID-19.”

Although, the CEO of Nairobi-headquartered Zep Re, Hope Murera said, “Sadly, we had already received their first COVID-19-related life claim to handle.”

Suing reinsurers

However, hospitality firms took South Africa’s largest general insurer Santam to court to contest its endeavours to avoid paying out for COVID-19 losses. But “Santam argued that the pandemic itself and government’s lockdown response are two separate events.”

Despite the belief that insurers were positioned to survive shocks because they have been intensely capitalised given the work of the ratings agencies, there were speculations that well-organised markets would face challenges occasioned by the volume of their books.

According to Beat Strebel, Swiss Re’s head of Middle East and Africa, “The costs of global pandemics such as COVID-19 exceed the capacity of the global insurance industry, making them effectively “uninsurable risks”.

The statement continued, “Compensating businesses for the disruption they have suffered is a job for governments, with whom Swiss Re wants to engage to create public-private partnerships. We can’t do it alone.”

An instance was given that Africa, for example, with exemption of South Africa, “event cancellation is not commonly sold and nor is business interruption, unless it has a physical damage requirement, which means few COVID-19 events will be covered.”

Claims widely disputed

Checks revealed that COVID-19 insurance claims were widely denied by insurers in South Africa, “maintaining that pandemics are not insurable events. Similar to ongoing insurance coverage lawsuits in the U.S., South African insurers and insureds are disputing what constitutes “physical damage” to trigger payouts under business policies. (A Michigan judge recently ruled in favour of an insurer, noting that physical must be “something with material existence. . . that alters the physical integrity of the property.”)

While some reinsurers were finding it difficult, by June in South Africa, as according to Bloomberg, “Momentum Metropolitan Holdings Ltd.’s Guardrisk will submit payments to policyholders who claimed business interruption losses during South Africa’s five-week shutdown beginning in late March.

“The settlement amount will cover the first three months of the lockdown. Santam Ltd., the nation’s largest property & casualty insurer, and Hollard Insurance Co said they would offer one-time financial relief to small-and-medium-sized clients. Santam, alone, has committed to 1 billion rand ($60 million) in payments.”

For Lize Lambrechts, CEO of Santam, “We remain confident in our interpretation of our policy wording as it pertains to the CBI extension in our cover. However, we also realise that our clients need financial support urgently and that the ongoing court cases on the interpretation of the policy wording may be lengthy.”

Experts had admonished the reinsurance sector on the continent to take a critical review of their reinsurance programmes but especially their risk exposure in order to prepare for future COVID-19 related pandemic.

According to data, “Such analysis will likely also prove necessary for purposes of (1) renewal negotiations, many of which will take place while the virus infection rates continue to rise and countries around the globe continue to enact containment measures, and (2) responding to requests by regulators and rating agencies calling for reinsurers to quantify their risk exposure.”

On the part of Dr. Karekezi, he warned that it could take the insurance industry on the continent months before it would come to terms with the effect of the pandemic on its business. He said, “We were asked by our board to stress test the possible exposures from the pandemic and they were surprised by our optimism when we reported back earlier this year. However, the problem is that today we don’t know the extent of the damage or the extent of the recovery.”

Onwumere writes from Rivers State.

The United Kingdom’s (UK) Department for International Trade says new trade agreements will come into force in January for the UK with 14 African partners with the prospect of more countries to follow.

This is according to a statement issued by the department’s Nigerian office on Saturday.

It added that 35 African partners will also receive preferential access to the UK through its trade presences scheme.

It also announced that the department would host a one-day virtual Africa Investment Conference on Jan. 20, 2021.

The conference is expected to bring together UK and African businesses to explore opportunities for partnership and investment.

The conference comes one year after the UK-Africa Investment Summit hosted in London by Prime Minister Boris Johnson, where 27 trade and investment deals worth 6.5 billion pounds and commitments worth 8.9 billion pounds were announced.

According to the statement, businesses will be able to discuss emerging and relevant themes around doing business in Africa.

They will also connect to investment opportunities across the African continent, all in the context of a challenging global economic outlook.

The development of the UK’s new trade arrangements alongside Africa’s own Continental Free Trade Agreement can unleash new opportunities for African and UK businesses, it said.

Gerry Grimstone, UK’s Minister for Investment, said that in spite of the current global economic context, the UK’s ambition to be Africa’s investment partner of choice had never been stronger.

”Growing investment relationships will be central in helping economies recover and build back better from the disruption caused by Coronavirus.

“Africa’s economic potential and investment opportunities are huge, and our partnership will help ensure UK and African businesses are able to capitalise on trade and investment opportunities, now and in the future.”

He said that the conference would be a platform for attendees to hear directly from UK companies about the opportunities and challenges of investing in and doing business across Africa.

Firms will also learn more about the UK’s new trade arrangements with Africa and support offered by the UK government to businesses and investors.

“The event will also explore how inclusive, sustainable and resilient investment can serve to help countries across the continent transition to a cleaner, greener economy and support recovery from the impact of coronavirus.”

Driven by the insights of the recently established Africa Investors Group, the conference will focus around four key sectors of activity.

They are sustainable infrastructure, renewable energy, financial and professional services and agriculture and agri-tech.

James Duddridge, Minister for Africa said that the UK was working with countries across Africa to build strong partnerships that secure investment and deliver more of the exports, jobs and economic growth that benefit both African and British businesses.

“Over 6.5 billion pounds worth of deals were signed at the UK-Africa Investment Summit 2020, which showcased the UK’s offer to African nations, as a global financial gateway and home to the world’s major investors, regulators and innovators.

January’s event will once again bring together British and African businesses and entrepreneurs, to support more prosperous African countries.”

Emma Wade-Smith, Her Majesty’s Trade Commissioner for Africa, said the conference would build on the achievements of 2020’s landmark UK-Africa Investment Summit.

According to her, connecting British businesses to the wealth of opportunities that exists across African markets and supporting them in the realisation of their commercial projects is at the heart of the department’s work.

“With the global disruption to markets caused by COVID-19, investment will be vital to accelerate the UK and Africa’s economic recovery.

“I am proud that the investment partnerships that exist between Africa and the UK continue to sustain jobs and improve lives.”

Andrew Skipper, Co-Chair of Africa Investor’s Group (AIG), said it was expected that the conference would demonstrate what had been achieved and establish a platform for what could be done working in collaboration in the future.

“A year on from the UK-Africa Investment Summit, and with the UK set on a new course, it is critical that we continue to demonstrate the UK government’s commitment to working with the private sector to promote, support and deliver trade in key sectors of British excellence, across UK and Africa.”

Minister of Education, Malam Adamu Adamu, has decried continuous fall in the standard of education in the country. Adamu, who spoke in Yola, the Adamawa State capital during official commissioning of completed projects in the college, lamented a situation in which graduates can neither read nor write in a tolerable manner.

He said the situation was a cause for concern, adding that students and teachers need to sit up and face their tasks squarely if the situation is to be reversed.

“Some graduates of tertiary institutions across the country cannot read or write applications,” said the minister who was represented by the Director of Tertiary Education in the Federal Ministry of Education, Hajia Rakiya Gambo Iliyasu.

The minister elaborated that students and even graduates had been found to be unable to write one full sentence without multiple corrections needing to be made.

The minister urged all stakeholders in the education sector to sit up to ensure that the decline in the value of education is bridged within the shortest time possible.

Six completed projects which included a computer ICT Centre, sports centre, a centre for early childhood education, an undergraduate studies complex, among others, were commissioned during the ceremony at the FCE main campus in Yola.

All the six complexes were built by the Tertiary Education Trust Fund (TETFund), a fact acknowledged by the Provost of the college, Prof Abdul-Mumin Sa’ad, who earlier in his welcome address said: “Today, the Federal College of Education, courtesy of TETFund, is proud to have achieved major breakthrough in structures.”

The Governor of Borno State, Babagana Zulum, has reiterated the need for more military personnel and mercenaries to be deployed to the state to fight insurgency.

According to the governor, there are still three major strongholds under the control of the insurgents and there are currently not enough security personnel.

Zulum said the shores of the Lake Chad, Sambisa forest and Mandara Hills are the most affected by the insurgents who invade and attack communities and return to their hideouts.

“There is a need for the Nigerian Military to take the war into these critical areas,” the governor said on Friday during an interview on Channels TV’s Politics Today.

Beyond that, he believes that for the war on insurgence to truly be won, the Federal Government should engage the security forces of neighbouring countries.

“Yes, you are right, the Nigerian Air Force have done a great job in using the airstrikes to bombard the place (Sambisa, etc) but military operations have to be followed by some stabilization mechanisms.

“One of the recommendations is for the Nigerian government to look into the possibility of a coalition with its neighbours such as the Lake Chad”.

The governor said this while reacting to the recent killings in the state and particularly the killing of at least 43 farmers in the Zabamari area of the state.

The farmers were waylaid on their way to their rice farms which they were harvesting before the surprise attack happened.

While the state is still trying to recover from the losses, with the government working towards making appropriate compensations, Zulum says so far, relative peace has been restored and residents are now able to go about their regular business.

*Upward review of 15% mobilisation fee to 30%
*Finance bill determines our ability to grow economy, tackle insecurity in 2021 ― Gbajabiamila

Federal Government is seeking National Assembly’s approval for the establishment of N500billion Crisis Intervention Fund as encapsulated in the proposed Finance Bill, 2020, which shall be provided in the Consolidated Revenue Fund and the Special Account.

According to the Finance Bill, “the Crisis Intervention Fund may be utilized for making funds available to meet expenditure as provided in the annual Appropriation act to meet any crisis-related expenditure or other such exigencies that may arise pursuant to section 12 of the Fiscal Responsibility Act (as amended) and section 306 of the 1999 Constitution (as amended).

It further seeks to amend section 44(1) and (2) of the 1999 Constitution with the view to establish by way of a trust fund, as a sub-fund of the crisis intervention fund, an Unclaimed Funds Trust Fund, into which unclaimed dividends of a public limited liability company quoted on the Nigerian Stock Exchange (NSE) and any unutilized amounts in a dormant bank account maintained in or by deposit money bank which has remained unclaimed or unutilized for a period of not less than six years from the date of declaring the dividend or domiciling the funds in bank accounts shall be transferred immediately to the Unclaimed Funds Trust Fund which shall be managed by Debt Management Office (DMO).

The bill, however, imposed a stiff penalty on any company or deposit money bank that fail to transfer the unclaimed dividends or unutilized amount in a dormant bank account to the Unclaimed Funds Trust Fund, to a fine of not less than five times, the value of the unclaimed dividends and unutilized funds, in addition to accumulated interest on the amount not transferred at the central bank of Nigeria’s monetary policy rate.

It, however, exempted official bank accounts owned by Federal, State and Local Governments as well as Ministries, Departments and Agencies (MDAs).

The provisions were contained in the proposed amendment of Section 39 of the Federal Inland Revenue Service (FIRS) Act, which was considered at the public hearing held at the instance of the House Committee on Finance, chaired by Hon. James Faleke, alongside other fiscal legislation, as contained in the Finance Bill, 2020.

The present administration also proposed 3-year imprisonment and/or both N1 million fine on any serving and former staff of Federal Inland Revenue Service (FIRS) or any agent who divulge or attempt to communicate taxpayer information to any person other than an authorized person to collect tax in the country.

In the same vein, Federal Government proposed for the upward review of 15% mobilisation to 30% to contractors in the extant Public Procurement Act, as well as the establishment of a general reserve fund by each MDAs in which one-fifth of its operating surplus for the fiscal year shall be allocated, provided that the cost-to-revenue ratio of each corporation shall not exceed 50 per cent or such other ratio as the Minister may publish for that particular corporation by way of the order published in the official gazette.

Similarly, Federal Government proposed amendment to section 12 of the fiscal responsibility Act, to empower the President to exceed the statutory 3 per cent deficit-to-gross domestic product threshold to fund the budget, in terms of designating situations where, due to the occurrence or imminent occurrence or conditions that may lead to the declaration of a state of emergency, such as a pandemic, as well as the provisions of sections 59 and 306 of the 1999 constitution (as amended).

While presenting his keynote address, the Speaker of the House of Representatives, Hon. Femi Gbajabiamila on Friday disclosed that the passage of the proposed Finance bill will determine the present administration’s ability to fund the 2021 budget and meet other socio-economic obligations.

Hon. Gbajabiamila who stated this during the public hearing on the Finance Bill, 2020 which passed through Second Reading on Thursday, reiterated the need to ensure that the views of the citizens yield good fruit and “not by narrow considerations of personal or group interests, but fealty to the best interests of the majority of our people and the pursuit of a more peaceful, prosperous and a more economically viable society for all.

“We must also remember that the proper operation of democracy requires that people be willing to listen to and hear each other out especially when they disagree. Let us remember also that whether or not people listen to what you have to say depends not only on the content of your message but also on the manner you choose to deliver it and following therefrom ensure that we observe decorum, and treat each other fairly in the manner of our contributions.”

He maintained that the proposed Finance, 2020 “will determine amongst other things, our ability as a nation to fund the 2021 budget, meet the obligations of government and implement policies to build infrastructure, address the problem of insecurity, grow the economy, and provide jobs that pay a living wage and lift families out of poverty.

“It is an important piece of legislation, deserving of thorough consideration, and reasoned debate by the parliament of the people, acting in the best interests of the people.

“We have a responsibility as legislators to meticulously review and examine every aspect of this Bill to ensure that we produce a legislative document that is clear in its objectives, thoughtful in the mandates it imposes and reflective of the best aspirations of all our citizens.”

On his part, Chairman, House Committee on Finance, Hon. James Faleke who stressed the need for Nigeria to think out of the box in order to turn around the prevailing negative economic narratives to a more positive one underscored the resolve of the three arms of government towards putting in place the necessary economic mechanisms to properly reposition the economy for effectiveness and efficiency.

He stressed that the proposed amendments seek to “revitalize the national economy, promote fiscal equity by mitigating instances of regressive taxation; reform domestic tax laws to align with global best practices, introduce tax incentives for investments in infrastructure and capital market, support small businesses in line with the ongoing ease of doing business reforms and raise revenue for the government by various fiscal measures.”

Hon. Faleke who reiterated the 9th Assembly’s commitment towards prioritizing the review of all federal tax laws to encourage investment; to incentivize enterprise; ensure fairness and curb tax avoidance and evasion through the use of ICT in tax collection and administration’, as well as attainment of substantive reduction in the percentage of and unemployed Nigerians, as encapsulated in the 9th House of Representatives Legislative Agenda.’