Developers shun flood insurance despite climate change threat

Real estate developers building along the coastal lines of most cities in Nigeria have neglected flood insurance despite expected harsh weather conditions such as rising sea levels, increased rainfall and the resultant flooding due to climate change worldwide.

The value of insuring a property is 0.275 percent of the property’s total value, however, this cover does not extend to cases of flood, Wole Adetimehin, past president, Chartered Insurance Institute, has explained.

Checks by BusinessDay revealed that the additional expenses of flood insurance which fall under special peril has forced developers to ignore such an integral part of any building project.

“It is quite unfortunate that most developers do not subscribe to the idea of flood insurance when compared to the numerous upcoming estates springing up along the coastal line in this era of climate change”, Adetimehin said.

The fact that most developers do not insure against flood is true as most of them perceive it as a natural disaster that is not popular in this part of the world, Adeleke Adebayo, chief executive officer, Lancelot Ventures, a real estate development company, told BusinessDay.

Okechukwu Iwuagwu, a property consultant in the Lekki-Epe axis of Lagos, noted that most developers close their eyes to flood insurance because of the additional cost it requires.

He also highlighted lack of timely intervention by the insurance companies in time of distress as another factor that has forced developers not to insure against flood.

According to Adetimehin, “It is a case of not getting priorities right because insurance of properties is very important anywhere in the world”.

According to him, the major problem is that there is no legislation compelling developers to insure there properties against flood despite anticipated harsh weather conditions and this has given rise to the nonchalant attitude of developers insuring there structures.

On the whole, insurance culture is not common in Nigeria, that is why people do not give it the attention it deserves, as most people seem not to be aware of the numerous advantages of insuring properties, Adetimehin added.

It is quite appalling because in developed countries even during construction, the site workers either skilled or unskilled, are insured and the building as well but in Nigeria the case is different lamented Samson Akinyosoye, chief executive officer, Proximal Heights.

“I will also push some of the blame to the insurance companies because some of them prior to now have failed Nigerians and as such the level of confidence of most Nigerians in insurance has gradually diminished when it comes to insurance of any kind”, he continued.

Adetimehin maintained that despite the huge campaigns by insurance firms through various media such as the press most developers have remained reluctant to go beyond the basic insurance cover for their buildings.

“I will suggest the enforcement of legislation that all structures are properly insured and strict measures against defaulters taken because lives are almost lost on daily basis”.

Adeleke said flood insurance should be an integral part of any developer’s plan especially for those who build along the coastal lines where event of rising sea level are likely.