Against the backdrop of huge premium annually lost by insurers to racketeers of Motor Third Party Insurance certificates and increasing accident cases on major roads, insurers currently face the challenge of bringing every vehicle owner under genuine and compulsory insurance cover, writes Ebere Nwoji
The Motor Third Party Insurance is one of the compulsory classes of insurance in Nigeria and possibly the most popular among the existing six compulsory insurance policies stipulated by the insurance Act 2003, which is still the template guiding insurance operation in Nigeria.
Insurance experts and law enforcement agents have described the Motor Third Party Insurance as the minimum level of motor insurance cover you can take before putting your vehicle on the road.
According to them, it is a legal requirement and is meant to protect the other party on the road whose vehicle you may damage.
The term, ‘third party, according to the experts, refers to a person involved with a car insurance claim who is not the holder of the policy or the driver. So, this is usually the other party involved in an accident.
Insurers said that a third party car insurance policy ensures that if you are responsible for an accident, any damage to the other person’s vehicle or property will be paid for by your insurer.
Misunderstanding and Abuse
Unfortunately, as important and as compulsory as the policy is, it stands today as the most abused and misunderstood policy by the masses. The policy also stands as the widest loophole through which insurers lose huge revenue.
In terms of misunderstanding, some vehicle owners take this policy to be comprehensive motor insurance and as such, when their vehicles are involved in an accident, they will present their Motor Third Party Insurance certificate to the insurance company and demand for repair of their own vehicles, in addition to the vehicle of the Third Party affected. Some will even demand for claim with the certificate when their vehicles got burnt or are stolen.
Where insurance firms fail to pay in any of the above cases, the certificate holder will take it that the insurance managers have denied him his claims.
Insurance operators say this is wrong because if such a vehicle owner had read the statement in the certificate he is holding, he would have seen that the insurance covers any other road user his vehicle may cause damage to or an injured person, not his own vehicle.
In the area of abuse, it comes in the form of faking and selling of the motor third party certificates by touts at motor parks and licensing offices.
Also, insurance firms take advantage of total ignorance of the insuring public on the rights of holders of genuine Motor Third Party Insurance certificates to deny holders their claims.
Indeed, this particular policy has suffered so much abuse that few years back, former Chairman of the Nigeria Insurers Association (NIA), Mr. Godwin Wiggle, said insurers annually lose as high as N60 billion to fakers of the policy. Latest media reports indicate that currently, insurers lose as much as N530 billion annually to fake insurance certificate sellers.
The police, on their part, said this particular policy remains the worst hit in insurance certificate faking.
According to SP Mary Ubangha, former DPO, Sabo Police Division, Yaba, Lagos, who spoke at one of the members’ evenings of the Nigerian Council of Registered Insurance Brokers (NCRIB), before the current fight against faking of insurance certificates by the NIA through its Nigeria Insurance Industry Data Base (NIID), 90 percent of third party motor insurance certificates presented to police on demand by motorists at checkpoints were fake certificates.
According to her, the insurance industry loses huge sums of money on daily basis on insurance fraud perpetrated by touts in various motor licensing and registration offices across the country through the Motor Third Party Insurance certificate faking.
She said the fraud is increasing on a daily basis and that the police are often stunned when they see names of non-existing insurance firms on the fake certificates presented by motorists at checkpoints.
She said true the position of these fake certificates usually comes out when there is accident and the parties involved are asked to show their insurance certificates.
According to her, it is at this point that the authenticity or not of the certificates are determined.
She said in some cases, vehicle users don’t have insurance at all, whereas the law provides that nobody should drive any vehicle on Nigerian roads without insurance cover.
She attributed the problem to impatience among Nigerians, adding that Nigerians are always in a hurry as such would prefer to pay more than the official rate of N5,000 for genuine insurance certificate to a tout at a licensing office to obtain fake insurance certificate rather than going to an authorized insurance firm.
She said government can help by making law against fake insurance certificate buying and selling to discourage people from perpetrating the act.
Apart from the abuse perpetrated by the fake certificate sellers and buyers, the insurers themselves also abuse the policy.
According to observers, whereas the official rate for third party insurance policy is N5,000, insurance marketers and their managers accept much lower rates.
Some marketers, they observed, can charge as low as N2,000 from vehicle owners and issue genuine certificate, but when an accident occurs, they will take advantage of ignorance of the insured to deny the claim by giving one excuse or the other .
THISDAY gathered that some insurance operators give the vehicle owners, especially those who have repaired the vehicle they damaged and filed claims to their insurers, as low as N5,000.
This is often the practice whereas the law guiding the policy says that the insurer is required by law not to pay damage to the vehicle of the holder of the certificate but to pay damage to the third party’s vehicle and even the passengers in his car if the certificate holder is at fault.
Findings by THISDAY shows that insurance firms can pay up to N1,000,000 for accidental damage to the property or vehicle of a third party or for death of any passenger in the vehicle.
But an average Nigerian road user, who holds even the genuine Motor Third Party Insurance certificate, is ignorant of any benefit or claims attached to this certificate he purchased with N5,000.
Analyst said the result is that when accident occurs and damage is done to a third party’s vehicle, he will hold the other party and demand for immediate repair of his vehicle.
According to them, even if the other party brings out his insurance certificate, the victim often insists on instant settlement or repair of his vehicle with the argument that he will not wait for insurance company in question to conduct all its investigations before embarking on repairs.
According to them, on the other side, when the certificate holder repairs the vehicle and files in his claims, some insurance firms will not pay and where some pay, they shortchange the certificate holder.
The analysts said these make members of the public to conclude that the Motor Third Party Insurance has no benefits, and therefore does not deserve wasting time to look for genuine insurers for the purpose of obtaining the authentic certificate.
Against this backdrop, vehicle owners prefer to obtain their insurance certificate along with vehicle license, not bothering to know whether the certificates are genuine or fake.
The fakers themselves are always handy at the licensing offices and motor parks to sell such fake certificates.
Irked by the quantum of premium that drift to these certificate fakers, the National Insurance Commission (NAICOM) some years back embarked on awareness campaigns against fake motor insurance certificate hawking.
The commission, in collaboration with the insurers, took the campaign message to licensing offices and motor parks to sensitise the public on the existence and activities of the touts.
In addition to this, the NIA designed a special logo for its members to differentiate genuine insurers from fake ones.
After this, NAICOM launched a nationwide sensitisation and implementation of the five compulsory insurance policies in the country in the six geopolitical zones in Nigeria.
Insurance Industry Data Base
This was followed by the NIA action on the NIID initiative. According to the NIA spokesman, Davis Iyasere, the NIID, is the central data base of all compulsory insurances in Nigeria.
He said it is used by the NIA as a tool to checkmate fake compulsory insurance certificates and is also used by both the certificate buyers and law enforcement agents to validate the insurance certificates they are holding.
These efforts and initiatives were geared towards curbing the activities of fake certificate sellers and encourage motor vehicle owners to spare a little time and buy their Motor Third Party Insurance policies from genuine insurers.
The insurers were also encouraged to make their services in this regard handy by opening offices at vehicle licensing offices or to station their agents at motor parks.
Improvement on Policy
With these efforts and advent of digital marketing, which has inspired some insurance firms to come up with various platforms through which vehicle owners can click one or two buttons on their phones to buy the policy, analysts said the insurers were very close to winning the long drawn battle against fake motor insurance certificates.
THISDAY observed that some have in their bid to improve on the policy attached a top up policy that will give additional benefits to motorists and lure them into buying their Motor Third party insurance from genuine insurers.
For instance, Linkage Assurance Plc few years back introduced innovation into its own Motor Third Party Insurance through the launch of a product it tagged, ‘Linkage Third Party Plus’.
This, according to the company, enhances the consumer benefits in the existing compulsory Motor Third Party Insurance under the Insurance Act 2003.
The company said whereas the existing compulsory Motor Third Party Insurance Policy does not cover the insured and his/her motor vehicle, Linkage Motor Third Party Plus proffers an additional coverage by also providing cover for own damage cover for the insured.
A digital insurance marketing platform, AutoGenius, in its own contribution, said it was out to redefine the way people buy insurance by making Motor Third Party insurance an easy-to-buy policy.
The company is collaborating with insurance underwriting firms such as AIICO Insurance, Custodian and Allied Insurance, Leadway Assurance, NEM Insurance and Royal Exchange, to provide both Motor Third Party and comprehensive auto insurance packages to customers through very simple means.
“Key features of the extremely user-friendly site include automatic renewal reminders, integration with leading insurance partners, real-time client advisory provisions on claims and inspection, insurance verification, promotion code integration as well as an automated claims process. Since all the information is saved on the mobile platform, customers have no worries about losing their printed copy of car insurance policy. Simple, straightforward, easy – that’s why it is called “Genius”, said Kola Oyeneyin, the Chief Executive Officer and founder of the firm.
Collaboration With States
The latest effort by the insurers in the fight against faking of Motor Third Party Insurance Certificate is their ongoing collaboration with five state governments to ensure that motorists get their insurance policy from genuine insurers.
The Chairman, NIA, Mr. Ganiyu Musa, who disclosed this in Lagos, said aside their discussion with the Lagos State Government, the insurers are currently discussing with Kaduna, Niger, Kogi and Ogun state governments to ensure that motorists get genuine insurance cover at the point of renewing their vehicle particulars at licensing offices across the aforementioned states.
Musa said the industry was embittered about what it is losing to insurance racketeers and non-insurance of vehicles, disclosing that, the association, on behalf of the insurance industry, aside engaging these five states, plans to extend to other states as the time progresses.
“We are also working closely with the state vehicle Inspection service on enforcement of Motor Third Party Insurance in the state.
“We are also engaging Niger, Kaduna, Kogi and Ogun States, and remain hopeful that other states will see value in the platform and embrace it.
“Out of the estimated 13 million vehicles in Nigeria, only about 2,939,767 Motor Third Party policies are in force as at Apr 26, 2021,” he added.
Musa, who is also the Group Managing Director/CEO of Cornerstone Insurance Plc, disclosed that the association was also partnering the Federal Roads Safety Corps (FRSC) and the police to give them access to the Nigerian Insurance Industry Portal (NIIP), such that, when a vehicle is apprehended, they can assess whether such vehicle carries fake or genuine insurance certificates.
Speaking on the Nigerian Insurance Industry Database/Nigerian Insurance Industry Portal (NIID/NIIP), Musa said: “The Nigerian Insurance Industry database was established to reduce soft market practices and eliminate fake insurance policies.
“The association has taken a step further by creating the Nigerian Insurance Industry platform to enable vehicle owners’ purchase their third-party motor vehicle insurance cover from the comfort of their homes and telephones.
“So far, we are seeing a lot of traction on the platform across the states of the federation and we are hopeful that other states will key into the project before the end of the year.”
But in the mist of these efforts, one area where the insurers have failed to make much headway is in the area of insuring motorcycles.
Indeed, most of the motorbike operators don’t have insurance cover. Traffic controllers said the operators are not concerned about insurance cover and that the few that buy the cover buy from fake sellers.
This is what obtains whereas the greater number of fatal accidents on the highways involves motorcycle operators, popularly called Okada.
The NIA says it is still making efforts to discourage the purchase of insurance policy from fake certificate sellers.
The Director-General NIA, Mrs. Yetunde Ilori, said the NIID system, now in its 10th year of implementation, has been effective in transforming the motor insurance policy landscape of the industry, adding that the NIIP – a unified platform for the sale of Motor Third Party Insurance cover, has since been deployed and is running live for business transactions.
She said through this platform the association will bring all vehicle users under genuine insurance cover.
“As part of efforts to promote Motor Third Party Insurance uptake among the populace, the Secretariat embarked on a mass media campaign on insurance awareness, tagged: ‘WETIN YOU CARRY’ with the deployment of fully-kitted insurance squad.
During the period of the campaign, there was an upsurge in the use of the USSD code *565*11#, which enables policyholders and enforcement agencies to confirm the authenticity of motor insurance policy through their mobile phones,” she stated.