Efforts by insurance industry operators to reduce the number of vehicles plying Nigerian roads without the compulsory Third Party Motor Insurance, ensure motorists have genuine insurance cover is currently suffering a major set back due to unwholesome activities of internal revenue officers in various states; writes Ebere Nwoji
Internal revenue departments of various state governments have allegedly hijacked the sale of vehicle third party insurance cover without proper remittance of appropriate premium to insurance companies that would give adequate coverage to the insured vehicles. Similarly, some state governments have removed Third Party motor insurance from the list of documents their commercial motorists must renew.
Industry observers said the compulsory third party motor insurance business has been so abused that whereas the official premium for the policy is N5000, internal revenue officers in various states decide how much they collect from motorists along other payable taxes and remit any amount they like to insurance firms.
On their part, the insurers have insisted that any Third Party motor insurance certificate purchased at less than N5000 is fake and has no insurance coverage. Statistics from Nigeria Insurers Association showed that out of 16 million vehicles plying Nigerian roads, only four million have genuine insurance cover while 12 million have no insurance cover and fake certificates.
Kaduna State Experience
Just last weekend, the Kaduna State Internal Revenue Service (KADIRS), said it has removed third party insurance in the registration and renewal of commercial vehicles’ documents from its coverage, saying this was due to the N5, 000 premium tagged on the policy by the insurers which was said to be too expensive compared to N1, 500 paid in neighbouring state. A report by an online newspaper, said that the Executive Chairman, KADIRS, Dr. Zaid Abubakar, made the announcement in Kaduna during the sensitisation of taxpayers in Kaduna Central Senatorial zone.
According to the online news medium, Abubakar had explained that the compulsory third party insurance was paid at the same time as motor vehicle registration, adding however, that mainly private vehicle owners renew their vehicle documents in the state while commercial vehicle owners go to other states for renewal.
He said that commercial vehicle owners preferred to register and renew their vehicle documents in neighbouring states where the cost of third party insurance was lower than what obtained in the state.
“If the compulsory third party insurance will be a hindrance to tax collection and revenue generation in any way, we can do without it. This is very disturbing because these commercial vehicle owners conduct their business in Kaduna State but would rather renew their vehicle documents in other states.
“Therefore, we are taking off the third party insurance in the registration and renewal of vehicle documents for commercial vehicles. Following the removal of insurance in vehicle papers renewal, I am urging all commercial vehicle owners to renew their vehicle papers in Kaduna State. This will enable the state to optimise revenue generation from motor vehicle registration due to the state,’’ Abubakar said.
The report said in his reaction to this, Secretary, Road Transport Employers Association of Nigeria (RTEAN), Kaduna State, Mr Suleiman Shaba, lauded the gesture saying the step would encourage renewal of vehicle papers in the state.
Shaba acknowledged that most of the members travelled as far as Jigawa, Kano and other neighbouring states to either register new vehicles or renew expired papers.
Removal of Insurance Cover
He said that some of the members who preferred to go to other states argued that the N5, 000 charged in Kaduna State was too expensive compared to the N1, 500 or N2, 000 for the same insurance in Jigawa.
“Now that insurance has been taken off, we will encourage our members to renew their vehicle papers in Kaduna state,” he promised.
Efforts by THISDAY to speak to the Chairman umbrella body of insurance underwriters in Nigeria, the Nigeria Insurers Association (NIA), Mr Ganiyu Musa, yielded no result as his phone was switched off but NIA spokesman and Controller /Head Human Resources, Mr Davis Iyasere, said sale of Third Party Motor insurance has been hijacked by officials of internal revenue of various states except Lagos.
He said NIA has been dialoguing with them, especially on the need to ensure that adequate premiums were collected to ensure that insurers give adequate coverage to motorists but that they preferred to collect any amount they decided and which the motorists agreed to pay, remit any amount they decided to the insurers and keep the rest.
Asked if the motorists were covered with the amount the officers were willing to remit to the insurers since the official rate for the policy is N5000, he said, “You yourself can answer that question”.
Stopping Fake Operators
THISDAY findings reveal that while the insurers through NIA have in the past nine years been struggling to stop the activities of fakers of Third Party Motor insurance through the launch of the Nigeria Insurance Industry Data base (NIID), their major set back in achieving success is the activities of officials of internal revenue of various states who insist on collecting premium on Third Party Motor insurance just the same way they collect other taxes and issue certificates to the motorists.
It was also gathered that with the exception of Lagos State which is a more organised State when it comes to Third Party Motor insurance enforcement and the NIID, in every other state, internal revenue officers often insist on collecting any amount the motorists can afford, cut their own share and remit any amount of their choice to the insurance companies in the name of premium.
This is so whereas the official rate for Third Party Motor insurance is N5000 for private vehicles and N7, 500 for others.
The insurers instituted the NIID to enable motorists and law enforcement agents ascertain the status of Third Party Motor insurance they bought whether it is genuine or fake.
The development is working well in Lagos as most motorists now buy their insurance cover from genuine insurance firms. But enquiries on the situation in other states reveal that faking of the document is still on-going and that the situation has become worrisome because those who are on top of the game now are officials of internal revenue department of various states who collect the premium and remit any amount of their choice to the insurer.
Asked why the insurers would not use their own agents to ensure that the right premiums were collected and genuine coverage given, Iyasere replied that the various insurance firms have their few agents in the states whereas these internal revenue officers were everywhere in the states and that moreover, motorists who were in need of renewing their vehicle licsences and other papers often approach them and they include insurance in the whole package .
Huge Losses
Over the years, the Third Party Motor Insurance policy has suffered the worst abuse among other insurance policies whose certificates are faked.
The fakers hover around the streets, motor parks and licensing offices hawking their papers, which they give out at any cost. Insurers estimated that they lose as high as N60 billion every year to the fakers.
To stop their activities, the insurers staged sensitisation and awareness creation campaign to enlighten motorists and encourage them to patronise the genuine insurers.
They made it clear to the public that when they patronise the fakers, in the event of accident, they cannot hold any insurer responsible though the policy was meant to repair any vehicle damaged by the certificate holder.
The insurers in 2012, designed the NIID solution to help them monitor and authenticate all insurance policies issued in Nigeria towards reducing the incidence of fraudulent transactions and the loss of business by the insurance companies.
They also collaborated with vehicle licensing offices in the states to sell the policy on their behalf and remit the premium to them for coverage of the motorists.
From what is happening in various states now, it is obvious that the insurers are like moving from frying pan to fire, as having chased the street urchins from perpetrating their activities against genuine insurers, the licensing officers and other government officials they collaborated with to sell the policy on their behalf are the ones ripping them off by collecting any amount they like which is often lower than the official N5000 rate, remitting any amount they decided to remit while pocketing the rest.
Industry observers said members of the public would be at the receiving end as cases of hit- and -run vehicles will increase and even if the motorist were caught since they have no genuine insurance cover and often claim they don’t have any money, the victims would be left in their own fate.
Genuine Insurance Cover
Early this year, the NIA Chairman, Mr Ganiyu Musa had told journalists that the insurers have engaged Lagos State on enforcement of motor insurance through their licensing offices.
According to him, similarly, there were already ongoing discussions with Kaduna, Niger, Kogi and Ogun States 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 the operators were losing to insurance racketeers and non-insurance of vehicles, disclosing that, the association, on behalf of the insurance industry, was engaging five states with plans to extend to other states as the time progresses.
