Earthquake ; Insurance our best bet?

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Justice Peprah AGYEI.

The President of Ghana has tasked the Engineering Council of the Ministry of Works and Housing to conduct a comprehensive integrity audit of all public buildings to enable the government to effectively plan for earthquakes and other natural disasters. The meeting was organised by the Ministry of the Interior on the theme: “Building Resilience to Earthquakes – A National Priority.”

He urged the ministers of Works and Housing, and local Government, Decentralization and Rural Development to collaborate with the Ghana Institution of Engineers to develop a scheme that would entail homeowners retrofitting their homes to make them resistant to earthquakes. Mr. President, it would be fully completed if all these properties are insured and the liability losses that may arise as a result of a possible earthquake also insured. Where it’s difficult to mitigate and retain the risk, transfer is a better option.

Kindly permit me to ask these questions;

  1. Why should public buildings be insured and what are they insured against?
  2. Is Ghana ready to stand the consequences of a possible earthquake? What can we do as a country now?

Earthquake

An earthquake is a sudden movement of a portion of the earth’s surface that is sometimes sufficient to cause property damage, injury, and death.

Design of building

The design of a building or other structure is another pre-loss action. A building in an earthquake zone should be constructed to ride atop the ground without damage. These are the two major types of earthquake-resistant construction.

Box Action

Box action design buildings are stiff and can withstand considerable ground motion. However, an intense earthquake can sever their foundations or other anchors.

Frame Action

Frame action design relies on the building’s ability to absorb the energy of the earth’s movement.

Do we have these structures in Ghana? Maybe the engineers can help answer these questions but if we don’t have them then insurance is our best bet for now as we go through the other engineering works. All the risk associated with earthquake damage can be transferred to private insurance companies or we could set up a national flood and earthquake insurance program to prepare for some of these eventualities.

When you work in a commercial building and there’s fire or collapse or earthquake or any other natural disaster that affects the building to cause injury or damage to your property, who will be responsible?

If you enter a shopping mall or mart and get hurt as a result of fire or other events, whose responsibility is it to take care of you?

Whose responsibility is it when we send our children to schools and they get injured or even die because of fire at the premises or any other event like collapse of building?

The questions can go on and on…….

The answer is the owner of the place should be responsible to protect you and your properties. The follow-up question is, what will be your situation if the owner does not have the capacity to compensate you or replace your properties after you have suffered injury or damage to our propert?

Fire Insurance

There is a need to insure all commercial properties. Insurers have various policies design to cover commercial buildings. These policies cover perils such as;

  • IMPACT DAMAGE
  • AIRCRAFT AND/OR ARTICLES DROPPED THEREFROM
  • EXPLOSION
  • HURRICANE, CYCLONE, TORNADO, TYPHOON, AND/OR WINDSTORM
  • BURSTING OR OVERFLOWING OF WATER PIPES, APPARATUS
  • AND THE LIKE
  • FLOOD
  • EARTHQUAKE AND VOLCANIC ERUPTION (FIRE AND SHOCK)
  • COLLAPSE for this extension shall mean the SUDDEN FALLING DOWN OR CAVING-IN OR FLATTENING INTO A MASS OF RUBBLE of a building or part of a building but excluding:

Liability Losses

Liability insurance is part of the general insurance system of risk financing to protect the policyholder from the risks of liabilities imposed by lawsuits and similar claims. Liability insurance is designed to offer specific protection against third party insurance claims i.e. payment is not typically made to the policyholder, but rather to someone suffering loss who is not a party to the insurance contract. Liability insurance falls within the law of delict, i.e. the branch of law whereby the wrongdoer is legally obliged to compensate an aggrieved party for damages. Most Liability Policies intend to provide cover only in respect of Negligent acts.

The Insurance Act 2006

Sections 183 and 184 of the Insurance Act of 2006, Act 742, make provision for the compulsory insurance of private commercial buildings – both under construction and completed. Also, compensation payment to 3rd party victims to whom the insured is legally liable.

Section 183(1) states: “A person shall not construct or cause to be constructed a commercial building without insuring with a registered insurer the liability in respect of construction risks caused by negligence or the negligence of servants, agents or consultants which may result in bodily injury or loss of life to or damage to property of any workman on the site or of any member of the public”.

Section 183(2) states:” A person who contravenes subsection (1) commits an offense”

Section 184(1) states “Every commercial building shall be insured with an insurer against the hazards of Collapse, Fire, earthquake, storm, and flood and an insurance policy issued for it”.

184 (2) “The insurance policy shall cover the legal liabilities of an owner or occupier of premises in respect of loss of or damage to property, bodily injury or death suffered by any user of premises and third parties”.

184 (3) “For the purposes of this section, “commercial building” means a privately owned building to which members of the public have ingress and egress for the purpose of obtaining educational or medical service, engaging in commercial activity for the purpose of recreation or transaction of business”.

Is Ghana ready to stand the consequences of a possible earthquake? What can we do as a country now?

Ghana has records of damaging earthquakes dating as far back as 1615. The last three major events occurred in 1862, 1906, and 1939. Do we have resilient buildings to stand against an earthquake? We quickly have to insure all commercial properties against property damage and liability losses as we continue to strengthen the buildings we have now.

Conclusion

All private dwelling owners can take advise from this and insure their buildings against fire, lightning damage, explosion, flood, earthquake, etc.

The writer is a Chartered Insurer and an Associate of the Chartered Insurance Institute of United Kingdom and also Ghana (ACII-UK, ACIIG), and holds MPhil in Enterprise Risk Management and Business Consulting from Kwame Nkrumah University of Science and Technology. Attained Bachelor’s degree from University of Ghana, Legon and have Applied Insurance studies, Diploma and Advanced Diploma (AAIS & AIS) from Ghana Insurance College / Malta Insurance Training Institute.  +233 (0) 549705031                      [email protected]

Reference

Navigating the Legal Landscape of Insurance, American Institute for Chartered Property and Casualty Underwriters. Edited by Martin J. Frappolli

https://en.wikipedia.org/wiki/Third-party_beneficiary#:~:text=A%20third-party%20beneficiary%2C%20in%20the%20law%20of%20contracts%2C,is%20the%20intended%20beneficiary%20of%20the%20contract%2C%20

insurance contract – Bing images

http://www.professionalrisk.com.au/pages/information/insurance-principles/what-does-fortuitous-mean.php

Weisbart. S (2018). How Insurance Drives Economic Growth, Insurance Information Institute [email protected]

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