Industry’s endless losses and another N30 billion from transport sector
The nation’s insurance sector has been awash with series of losses arising from defiance to laws, poor business structures and the inability of the regulators and stakeholders to enforce rules.
Again, the industry lost premium income estimated at N30 billion in 2017, to the articulated haulage vehicles- trailers and tankers, a segment of the transport industry that should have enhanced underwriting business and the economy at large.
But sector operators said the ugly development thrived under operations that are below the standards by stakeholders, poor risk cultures and policy inconsistency.
The major operational hitches, according to the operators who spoke to The Guardian, include the poor state of most trucks in the fleet of the transport companies; lack of government policy, particularly on roadworthiness; poor state of road infrastructure; and non-adherence to standards of operational safety by the transport companies.
Stakeholders in the industry believed that non-availability of strategic plan or government-led initiative for mobilising long-term fund from the insurance industry to address the issue of re-fleeting the companies are responsible for the poor performance of the sector.
Reliably, The Guardian learnt that most trucks on Nigerian roads do not have valid insurance cover despite daily road accidents that continue to destroy property and lives, as evidenced by the recent incidence at Otedola Bridge, along Redeem/Ibadan expressway.
An industry analyst who preferred anonymity, said: “All vehicles plying Nigerian roads, by law, must have insurance cover. However, most articulated vehicles don’t carry any insurance because many of them are uninsurable.”
The analyst stressed that to be insurable, all articulated vehicles must be in good shape; have two drivers as obtainable in developed countries and both must be experienced drivers.
According to the source, in Nigeria, most articulated vehicles are not only in poor condition, they operated by inexperienced drivers that do not understand and observe road signs and at times, drive under the influence of alcohol and reckless.
Tankers are also badly maintained and they lack soundness in basic parts like tyres, brakes and other important aids.
“All these contribute to make articulated vehicles in Nigeria uninsurable. And when these accidents happen, and lives are lost, with property destroyed, there is no compensation whatsoever from any source, except when government decides to compensate the victims,” the source said.
Data obtained from the Federal Road Safety Corps (FRSC), showed that no fewer than 62 road crashes involving 65 tankers were recorded in the first quarter of 2017, with several lives lost and values estimated at N3.2 billion.
Investigation revealed that in 2016, FRSC report indicated that petrol tanker/trailers were involved in at least 338 crashes, consisting of 306 deaths and 750 others with various degrees of injuries.
According to the FRSC, tanker drivers are to blame for these incessant accidents.
“All over the world, there are supposed to be two drivers in a tanker, if the vehicle is embarking on a long trip. They are supposed to be equally proficient, and are also supposed to rest for 40 minutes after driving for four hours, while they switch roles every eight hours.
“In Nigeria, you only have a driver taking the tanker through the whole hog and when fatigue sets in, they sleep off, thereby losing control of the vehicles. These have resulted to many accidents and loss of lives and properties,” FRSC said.
The Managing Director of FBN Insurance, Val Ojumah, at a forum in Lagos, said that if articulated vehicles, especially tankers, were to meet the minimum risk management requirement from insurance companies and pay proper pricing, they will be covered.
He stated: “The trucks you see on the roads are in very poor conditions. Should insurers put their money into fire? Because just one tanker accident can clean up 10 years premium of an insurance company and these accidents are happening so often on our roads.
“It is not the responsibility of the insurance industry to deal with the situation. If the standards of operations of these tankers are modified, there will be insurance cover and they must be prepared to pay the adequate premium. Today, even if you charge them, N100,000, you will run the business at a loss and that is even if they are going to pay.”
According to insurers, the state and amount of accidents by articulated vehicles on the Nigerian roads make the risks not insurable.
“When you travel from Lagos to Benin, for instance, you could see about four trucks belonging to one organisation alone involved in accidents or veered off the road. As a result, insurers carry terrible claims experience with articulated vehicles. The industry suffers so much loss because of these articulated vehicles. That is why some underwriters avoid them.
“Abroad, insurers jack up premium rate for articulated vehicles to make it commensurate with the level of the risk, but in Nigeria, they are resistant to such things. In Nigeria, if you jack up your rate, the owners will not insure with you again.
“The drivers are not helping matters because they behave as if they are on the road to cause accident. Some of them drive all day and all night without rest, which is even part of the reason for incessant accidents.
“So, these are some of the damages that some underwriters have had to deal with. As such, no insurer will take an articulated vehicle that is supposed to have 12 tires, having only 10.”
On the way forward, Ojumah warned: “The authorities that are registering these articulated vehicles must sit up for their regulatory responsibilities and ensure that all vehicles that ply Nigerian roads are insurable. Otherwise, let the government insure the articulated vehicles.
“Are the authorities not aware of the poor conditions of the trucks? They are. Should we shift the responsibilities to insurance companies? No. If you invest your money in an insurance company, and you don’t get dividend and the share price does not increase, how will you feel?,” Ojuma queried.
The Deputy, Commissioner for Insurance, Technical, Sunday Thomas, who also spoke to The Guardian on the way forward, said insurers should jack up the premium rate for articulated vehicles.
“The best that many of them can get is third party to take care of third party liabilities because before you put your vehicle on the road, you must have minimum of third party. So, the best is to fulfill that legal obligation for them to have third party insurance to take care of liabilities.
“Importantly, the owners of the vehicles need to do their work. They need to improve the risks. Also, the drivers need reorientation in the way they drive because they drive like, ‘size is might’, which is wrong, as you cannot be on the road and become a threat and danger to other road users,” he said.
Thomas, noted that one of the reasons for instituting compulsory insurance is to encourage long term savings. And any economy that is not encouraging long term savings will never survive.
“Compulsory insurance can be leveraged on to create more funding for infrastructure development. But compulsory insurance should be sold at the price instituted by government and it should be strictly monitored. If we do that, we will generate quite a lot of revenue in investment fund for the industry and the economy generally.
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