Ebere Nwoji
The recent increase in premium for motor third party insurance policy by the National Insurance Commission (NAICOM), has been greeted by reactions from motorists, licensing agents and other members of the public.
While members of the organised private sector (OPS) see the development as a desirable move that will grow the economy, some insurance consumers from the informal sector and licensing office agents frowned at it complaining that it has discouraged most motorists who come for their vehicle insurance from doing so.
NAICOM had late December 2022 announced 200 percent increase on premium payable on the compulsory Motor Third Party Insurance from N5000 to N15000.
The commission, equally increased claims on the policy from N1million to N3million
Since the commission made the pronouncement on December 22, 2022 saying that the new premium rate would take effect from January 1,2023, members of the insuring public have been awash with comments on the development .
While some viewed the development from the perspective of economic growth it will translate to especially on the side of the insurers, others viewed it from the perspective of negative effects on the pockets of the insuring public.
From the Organised Private Sectors’ side, the Director General Nigeria Employers’ Consultative Association (NECA), Mr Adewale-Smatt Oyerinde, told the News Agency of Nigeria NAN that the new rate for motor insurance is desirable in order to grow the economy.
Oyerinde said that in order to grow the economy, develop the insurance industry and provide effective risk-mitigating services to the generality of Nigerians he believes that a marginal adjustment in the current rate was desirable.
The NECA boss noted that NAICOM reserved the right, as provided in the extant law, in reviewing the rate.
He however said it was imperative for NAICOM to always carry stakeholders along in such review, especially with the timing.
“It is worthy of note that the current rate has been in existence for over five years, while the cost of motor vehicles has increased exponentially. Coupled with the general price increase of goods and services, the commission can be justified if there are guarantees for improved service delivery and a higher response rate from insurance companies, “ he said.
A female officer at Alaba Aragon in Ojo area of Lagos, who identified herself as Ruth said the premium rate increase has spoilt her business because many motorists who came in for enquiries for renewal of their insurance certificates walked away as soon as they heard her mention N15000 instead of N5000.
She said some opted for fake certificate at cheaper price but that she has been advising them to forget about that because of NIID capturing which must expose them.
Another licensing agent who works with the revenue department of Iba LCDA, Tunde Ortega said immediately he got the news, he called most of his clients whose insurance certificates would expire between January and February to come and renew their insurance papers before January 1 and some responded.
He said for those coming after, many went back with their old papers when they were told the new premium rate.
Similarly, Insurance Consumers Association (INSCAN) shortly after the announcement called on NAICO to reverse the new rate saying it was at variance with some of the works commissioned by the National Insurance Commission (NAICOM) which recommended phased increase of 3rd party motor insurance premium.
INSCAN National Coordinator, Yemi Soladoye, in a protest letter titled, “Demand for reversal of your policy directive on the increase of 3rd party motor insurance premium in Nigeria by 200% under one (1) week notice to the Nigeria insurance consumers,” noted that the increase required a staggered increase first to N7,500 and subsequently to N10,000, N12,500 and ultimately to N15,000 within a ten year period.
Soladoye outlined that the recommendation was not limited to premium increase but that there was a mandate to NAICOM in 2012 to include in the process initiatives that will ensure, “The emergence of high level confidence in insurance mechanism in Nigeria to the extent that by the year 2012, mere exchange of insurance papers would resolve any accident/damage dispute among Nigerian motorists.”
However, he said only the benefits were taken and he asks “Why take only the benefit and ignore the responsibility that was already 10 years overdue.
Meanwhile, the Nigerian Corporation of Registered Insurance Brokers (NCRIB), which actively participated in the prolonged process of announcing the new motor 3rd party insurance premium has assigned revered the matter to its technical committee to take a position.
THISDAY learnt that the Technical Committee of the brokers council are already sitting and would pass their recommendations to the Council of NCRIB for further deliberations at which point the NCRIB would present its position.
In its protest letter, INSCAN, which claimed to be representing almost 20 million motor insurance consumers in Nigeria argued that consumers deserved more than one week notice for the new rate.
In its argument over the new premium rate it said “We are not impressed by your corresponding increase in the indemnity limit to N3 million as the questions on the lips of our members are who requested for this increase to N3 million, how many claims have you really settled even when the limit was N1 million, are you aware that many fleet owners on their own volition do pay extra premium to the underwriters to increase their TPPD limit to N5 million and where are the insurance ratios to justify that premium increase by whooping 200 percent.”.
