Fatokun calls for implementation of building insurance

Dachi Maduako, Lagos - updated: Thursday 25-09-2008

Dosu Fatokun, former President,
NIESV.FORMER President of the Nigerian Institu tion of Estate Surveyors and Valuers (NIESV), Chief Dosu Fatokun, has described the Federal Government’s directive on the insurance of any building up to the height of three floors and above as a welcome development. The directive, he said, should be implemented by the National Insurance Commission (NICOM) and subscribed to by all the parties involved in the building industry.

Speaking to Tribune Property in Lagos in an exclusive interview, Chief Fatokun said that apart from being its duty to ensure that this government’s directive was obeyed, its implementation of the policy would deepen the insurance industry and bring more business and diversification of risk business. “This would also make the insurance industry be better business footing because more premiums will be paid,” he said, adding that, “the insurance business on construction and property business is not really thriving much because of lack of awareness”.

Under the policy, which is an off shoot of the Insurance Act 2004, owners of buildings that are three floors and above are to insure them, an issue which Federal Government considers very important and therefore necessitated the instruction. The instruction covers all government ministries, agencies, parastatals and extra-ministerial departments. This also involves buildings under construction. According to him, the issue is a welcomed development because of the benefits that will fall out of it. Apart from the accommodation of the owners, he stated that it would diversify the risks and open up new vistas of opportunities for estate surveyors and valuers. “The insurance operators will base the values based on the valuation of estate surveyors. As from the point of view of facilities management, it is very welcome because adequate protection of facilities is an aspect of facility management,” he said.

Giving instance of the working of this, he stated that infernos that leave most affected structures yearning for restoration for many years would not be so if they are properly covered by insurance, which would have ensured their rehabilitation. Such structures include such imposing structures as the Independence Building, now Defence House, that is yet to be fully rehabilitated after many years after it was gutted by fire. He challenged property developers to patronise the new policy, as it would be to their benefits. He allayed the fears of many saying that the problem of under insurance and over insurance would not arise, as the policy would rely on the valuation of estate surveyors and valuers. He therefore, urged them to patronise the estate surveyors and valuers to valuate their properties.

The former NIESV boss pointed out that the importance of the policy was far reaching, as it would take care of consequential losses and any other risk factor in the event of building collapse. He added that an inspection of the site would enable the ownership to be advised for the additional risk. On who is most qualified for insurance valuation, Chief Fatokun said that though two professionals in the building industry – the estate surveyor and the quantity surveyor were both qualified to do this, the estate surveyor and valuer is more suited for it. As for the quantity surveyor, he said their input was required because insurance valuation requires current construction cost input.

“So, both professionals – the estate surveyor and valuer and the quantity surveyor are both suited and can do the valuation but because of other considerations, the estate surveyor and valuer is best suited,” he said. To buttress his claims, he stated that the issue of consequential loss plays itself out in cases of commercial property inhabited by tenants where loss of rent occurs both to the landlord and the tenants especially in case of fire incidence. “While the hazards last, the landlord will not receive rents just as the tenants might have paid some rents,” he said.

In such a situation, he said the estate surveyor and valuer is in the best place to ascertain the value of rents loss both to the landlord and the tenants, adding that it is in this area that the competence of the estate surveyor is preferred. “We have a wider competence than the narrow replacement valuation,” he stressed. He charged insurance operators in the country to create more awareness of the policy as most Nigerians are not aware of its existence and importance adding that the penalties should be implemented to check the anomalies being experienced in the building industry currently.