Fire incidents overwhelm N600m insurance funds

Nigeria’s Fire Service Maintenance Fund, financed through a statutory 0.25 per cent levy on fire insurance premiums, is emerging as grossly inadequate when weighed against the scale of fire disasters across the country, with industry estimates showing that the fund may have generated less than N600 million in 2024.

Based on an estimated N230 billion fire insurance premium income for 2024, the mandatory 0.25 per cent contribution by insurers would translate to roughly N575 million nationwide for the entire year.

This figure stands in sharp contrast to the billions of naira lost annually to market infernos, industrial fires and residential blazes, particularly in major commercial centres such as Lagos, Onitsha, Aba and Kano.

The modest size of the fund has also been acknowledged by the insurance regulator, the National Insurance Commission (NAICOM), which has lamented that the net premium accrued from fire insurance is too small to effectively support fire service operations across the federation.

Under the Insurance Act, insurers are required to remit 0.25 per cent of net fire premiums into the Fire Service Maintenance Fund, which is to be shared among federal and state fire services to support equipment, training and operations.

However, even under the most optimistic scenario, assuming full compliance by insurers, the total annual pool from the levy would still struggle to exceed N650 million, raising questions about the fund’s real impact.

A comparison with Lagos State’s fire service spending further exposes the imbalance. Lagos alone budgets and spends several billions of naira annually on its fire and rescue services.

In recent fiscal years, Lagos State has earmarked between N4 billion and N5 billion for fire protection services, covering the procurement of fire trucks, construction of stations, personnel training and emergency response infrastructure.

In effect, one state’s fire budget dwarfs the entire national Fire Service Maintenance Fund, which is expected to serve all 36 states and the Federal Fire Service.

When spread across the federation, the estimated N575 million fund amounts to about N15 million per fire service per year, a sum widely regarded as insufficient to procure even basic firefighting equipment.

Industry experts note that a single modern fire truck can cost between N150 million and N300 million, far beyond what most state fire services could afford from their share of the fund.

Deputy Commissioner for Insurance Technical, Dr. Usman Jankara Jimada said the fund’s biggest limitation is its size, stressing that it cannot meet the expectations placed on it by law.

“The challenge with the Fire Service Maintenance Fund is the adequacy of the funds. The fund is not big enough to enable the Commission to support the 36 states of the federation and the FCT, which is the actual intention of the law,” he said.

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Jankara explained that the structure of the levy itself limits its impact.

 “It is 0.25 per cent of the net premium received from fire policies, so it isn’t anything substantial,” he stated.

According to him, the mathematics of the fund makes large-scale impact impossible under current conditions.

 “When you look at the total premium on fire insurance and then take the net premium, and calculate 0.25 per cent of that amount, it is not a lot of money — that is the real challenge,” he added.

Jankara also blamed weak enforcement structures for poor insurance penetration and low premium volumes.

 “The major problem has always been enforcement. Law enforcement agencies are overwhelmed, the prosecution system is stretched, and cases often get abandoned because there are no resources and no capacity to follow through,” he said.

He added that the crisis is systemic, not sector-specific.

 “This is not just a NAICOM problem. The same enforcement challenges exist across other sectors, and that is why compliance remains weak,” he noted.

On the way forward, Jankara said the Commission is shifting strategy from reactive enforcement to structural prevention.

“We are adopting a systemic and preventive approach by working with the police, and embedding compulsory insurance requirements into approval systems so that people cannot get approvals unless they have done the right thing from the onset,” he said.