Challenges Associated with the Implementation of Insurance in Building Projects in Nigeria

Abstract

The nature, complexity of activities and multiple stakeholders involved in the delivery of construction projects have made the construction industry to be filled with risks and uncertainties. These uncertain events impact mostly on time, cost and quality performance of construction projects. The uptake of insurance is one of the key risk management tools for mitigating the impact of construction project risks. While, the implementation of insurance is important and widely used in developed countries, the same cannot be said about developing countries because of some challenges. The purpose of this study is to assess the challenges associated with the implementation of insurance in building projects in Nigeria. The well-structured questionnaire and convenient sampling technique were adopted in the collection of data from experienced clients, contractors, construction professionals and insurance experts on educational projects executed from 2012 to 2016 at the Federal University of Technology, Akure, Ondo State. With a response rate of 75.71% and a reliability index of 0.897, the gathered data were analysed using appropriate descriptive statistical tools and the Kruskal-Wallis test. The study that the major challenges with the implementation of insurance in a building project are; Lack of trust and confidence in insurance agents, No strict instruction from the government, Complex policy language, Failure to administer contractor's claim in time and Rising cost of the premium. Sensitization of the customer is also important as it is necessary to continue building trust and confidence in current and potential customers of insurance companies. Government should strengthen existing policies and institutions to ensure that implementation and compliances are strictly followed and monitored