Employer’s Liability Insurance in Nigeria Explained

Employer’s Liability Insurance in Nigeria

Employer’s Liability Insurance in Nigeria is a system designed to offer financial protection in case of losses related to employees. The primary focus is on safeguarding the lives of employees, as underscored by the implementation of the Pension Reform Act of 2014.

This insurance policy ensures compensation for employees’ families in the unfortunate events of death, disappearance, or disability while on the job. Enacted under the Pension Reform Act of 2014, it is one of the mandatory insurance schemes in Nigeria, applicable to both public and private sector employees.

Overview of Employer’s Liability Insurance in Nigeria

This legislation applies universally across public and private sectors, aiming to provide financial support to employees’ families in times of need. In the unfortunate event of an employee’s demise, their family reserves the right to claim compensation from the employer. Failure to adhere to this law as an employer can lead to penalties such as a fine of N250,000, a criminal record, and potential business closure.

Advantages of Employer’s Liability Insurance in Nigeria

The primary advantage of this insurance scheme in Nigeria is the financial security it provides to employees’ families. By ensuring this insurance coverage, employees can work confidently, knowing that their families will not face financial hardships in case of accidents.

Employers who neglect to implement this insurance may be perceived as acting unfairly by their employees.

Challenges Associated with Employer’s Liability Insurance in Nigeria

Despite being legislated in 2014, many businesses have yet to incorporate this insurance, citing various reasons. To address this, the National Insurance Commission (NAICOM) has engaged in discussions with relevant stakeholders to enhance enforcement. However, experts suggest that the federal government should enforce compliance similarly to the Contributory Pension Scheme (CPS). The major challenge facing this scheme is its implementation and enforcement.

Importance of Employer’s Liability Insurance

Both employers and employees are obligated to comply with this requirement. Employees do not bear any specific responsibility, as the scheme is the responsibility of the employer. Employers must secure this insurance as soon as they hire three or more employees. Failure to comply carries penalties such as a fine of N250,000, a criminal record, and potential business closure.

Where to Purchase Employer’s Liability Insurance in Nigeria

Numerous insurance companies in Nigeria offer this service, making it easily accessible. Examples include:

• AIICO Insurance Plc.
• Leadway Assurance Company Limited
• Universal Insurance Plc.

Conclusion

The Employer’s Liability Act serves to protect both employees and employers. It ensures compensation in the event of an employee’s demise, safeguarding their family’s financial stability and shielding the employer from potential lawsuits. Compliance with this legislation ensures mutual benefits for both parties involved.

See also: How to Build Financial Security for Your Family