Revisiting Third Party Vehicle Insurance Premium

Revisiting Third Party Vehicle Insurance Premium

Nigerians received a Christmas shock on Thursday, December 22, 2022 when the National Insurance Commission, NAICOM, announced an increase of the third party motor insurance premium by 200 per cent.

The NAICOM, in a circular signed by the Direc­tor of Policy and Regulation, Leonard Akah, announced that the increased third party vehicle insurance would take effect from Sunday, January 1, 2023.

Following the directive issued by the Insurance Commission, private car owners, who were paying N5,000 premium per vehicle for N1 million Third Party Property Damage, TPPD, limit, are now to pay N15,000 for N3 million TPPD, while staff buses owners are to pay N20,000 premium per vehicle for N3 million TPPD.

The policy which in a way was a blessing to the insurance industry as policyholders that have abandoned insurance, came back to renew at the old rate of N5,000 to beat the new rates of N15,000 for the most popular class, the third-party.

But Nigerians, in their numbers, especially those whose motor insurance is not due immediately are angry that the industry regulators are insensitive to their plight.

In its reaction, the Insurance Consumers Association of Nigeria, INSCAN, has rejected the increase, describing it as self-serving and anti-consumer.

In a letter to NAICOM, INSCAN said the increase was hurriedly ordered without consideration of the economic situation of most Nigerians at the moment.

The letter, titled ‘Demand for Reversal of Your Policy Directive on the Increase of Third Party Motor Insurance Premium in Nigeria by 200% under One Week Notice to the Nigeria Insurance Consumers’, and signed by its National Coordinator, Chief Yemi Soladoye, INSCAN demanded that NAICOM reversed the increase, pending proper consideration of the grey areas of the directive.

“Your policy directive on TPM premium increase was not subjected to civilised trade practices, professionally-accepted insurance principles, transparent customer-oriented regulations and humane attention to the economic situation of most Nigerians at the moment before you hurriedly passed the same”, he said.

Motorists have expressed sadness over the increasing financial burden imposed with the kick-off of the new Motor Premium Insurance rates. Vehicle owners are not happy that, while income remains constant, and in some cases dwindling, the NAICOM found it necessary to increase the misery of vehicle owners in the country.

The pan-Yoruba socio-political organisation, Afenifere, in a statement signed by its National Publicity Secretary, Comrade Jare Ajayi, said the rationale behind the hike “is difficult to fathom”, and called on the NAICOM to reverse its decision.

They noted that it was amid the various challenges that NAICOM came up with an unprecedented hike in the amount of money people had to pay to get the minimum insurance cover.

According to the Nigerian Insurance Industry Database, NIID, a verification platform initiated and owned by the Nigerian Insurers Association, NIA, only about 2.74 million have genuine policies, while over 9.4 million vehicles ply Nigerian roads with fake certificates.

From other records, roughly 3.4 million of the over 13 million vehicles in Nigeria have genuine third-party motor insurance policies as at the second quarter of 2022. The figure represents a minimal rise from the 2.94 million policyholders as at April 26, 2021.

If at N5,000 fee, Nigerians were already cutting corners, what would it be like in 2023 when they are to pay more? It then means that Nigeria should prepare to witness a deluge of fake insurance certificates, which the regulator and players have, over the years, tried to address to attain increased revenue and a better deal for accident victims.

We note that it is sad that many inhumane policies are prevalent in our country. It is of concern that Nigerians are made to undergo fresh hardship when they are already weighed down by sundry socio-economic challenges. How would anyone want the or­dinary motorists to adjust to an alarming 200% in­crement, by making an an­nouncement just a few days to implementation?

AljazirahNigeria is worried that, despite rejection by insurance consumers and other stakeholders, insurance companies have already commenced the implementation of the rise in Third Party Motor, TPM and insurance premium.

We, therefore, call on the relevant authorities to have a change of heart and reverse the third party vehicle insurance premium.

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