A mortgage insurance scheme that will deepen insurance penetration in Nigeria is underway. The National Insurance Commission (NAICOM) in collaboration with the Federal Mortgage Bank of Nigeria (FMBN) is working out modalities for the implementation of the scheme.
To this end, funds will be channeled to the National Housing Fund (NHF) to bridge the housing deficit in the country. One of the ways to make the scheme a reality is that both NAICOM and FMBN are expected to enforce the provisions of Section 5(2) of the NHF Act which prescribed that every registered insurance company “shall invest a minimum of 20 per cent of non-life funds and 40 per cent of life funds in real property development of which not less than 50 per cent shall be paid into the NHF through FMBN.”
According to Mohammed Kari, Commissioner for Insurance, “the most important thing is the synergy we are trying to create to ensure that what is due to the mortgage sector goes to the mortgage sector.” The FMBN, he said, had promised that “all mortgages must be insured which is what the law expects but has not been enforced.”
Kari therefore enjoined the primary mortgage institutions to ensure that every mortgage and finance in that sector is insured properly. “That is going to be a big boost to the insurance industry as it’s going to increase penetration and provide more funds to the national housing fund to be able to invest in their projects.”
He said NAICOM would ensure that all operators comply with the law, whether they like it or not, adding that “that’s what laws are for and we believe it will help also in reducing the deficit in housing.”
Gimba Ya’u Kumo, managing director, FMBN, said that the additional funds expected to be generated would help significantly in reducing the housing deficit in Nigeria by making housing more affordable. “As you are paying your rent, when you finish payment for the cost of the house, the house becomes yours. That has been the practice all over the globe; so we would start to implement some of these international best practices so that Nigerians would have comfort.”
By Dike Onwuamaeze