Towards eliminating quackery in motor vehicle insurance
They are ubiquitous. They are seemingly immune to security agencies’ onslaught. As soon as you complete your motor vehicle license, road worthiness certificate, they happen on you. “Do you want insurance certificate for your car?” They will chorus with cacophony of voice. If you agree to go their offer, an insurance certificate is issued in less than 10minutes without question.
It is usually a third party certificate from, most times, insurance firms that are long dead or subsumed by other firm during the consolidation exercise. The fee is usually between N500 and N1000, depending on your bargaining power.
Bet it, what you have is a fake certificate only meant to keep policemen off your neck at checkpoints. The original Third Party Insurance certificate is N5000. Indeed, you have been swindled on two fronts.
In Nigeria, it is compulsory to have motor insurance before using or keeping a motor vehicle on public roads. However, since most Nigerians buy insurance just to get cleared from law enforcement agents on the roads, they choose to go for third party motor insurance which is a lot cheaper than comprehensive policy.
Consequently, because of the preconceived notions that third party policy is just to beat law enforcement agents, many don’t realize that a third party policy is actually legal and indemnifies the insured from third party losses.
Unfortunately, a lot of vehicles involved in an accident which ordinarily would have been repaired by the insurance company are borne by the car owners.
Unfortunately, despite the prescription for the processes designed to ensure motorists are fully covered under the law, quacks have progressively swindled unsuspecting vehicle owners by posing as insurance agents at motor licensing offices at various local government areas across the country.
This has become worrisome as the insurance stakeholders have continue to wonder why some agents have continued to issue fake insurance license to motorist.
The Nigerian Insurance Act 2003 prescribed for compulsory Third-Party Motor Insurance in Section 68 of the Insurance Act, 2003.
Section 68 of the Insurance Act and Section 3 of the Motor Vehicle (Third Party) Insurance Act requires that no person shall use, or cause or permit any other person to use, a motor vehicle unless such a motor vehicle is insured against damage to the property of third parties.
“According to section 68 (1),no person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third party is insured with an insurer Registered under this Act. It said the insurance taken out pursuant to sub- section (1) of this section, shall cover liability of not less than N1 million. It also said a person who contravenes the provisions of this section commits an offence and liable on conviction to a fine of N250,000 or imprisonment for one year or both.”
Insurance laws vary from nation to nation based on what legislators in each country think will be best for the citizens (policyholders) and the insurance providers in general.
The Commissioner, National Insurance Commission ( NAICOM) , Fola Daniel, had said that the commission would engage in vigorous awareness campaign of the policies for voluntary participation, but the commission may not hesitate to employ sanction as part of its enforcement strategies where necessary.
Motor Insurance, which is the most common of all the known classes of insurance, is designed to protect the insured from loss of or damage to his vehicle, damage to Third Party property including bodily injury and death to Third Parties caused by accident.
Among the types of cover obtainable in the industry include the Third Party Risk Cover which covers bodily injury including death to Third Parties caused by accidents occurring on public roads.
Under this, claimants’ costs and other costs incurred are also recoverable and the third Party property damage is covered in addition to bodily injury and costs described above. The third Party property damage limited to N1,000,000 is covered, whilst bodily injury and death are unlimited.
Third Party Fire and Theft Cover, takes care of Loss of or damage to the insured vehicle caused by fire and theft is covered in addition to the covers available under the “Third Party Risk only” cover described above.
There is also the Comprehensive Cover which is the widest cover available in motor insurance as it covers loss of or damage to the insured vehicle in addition to the covers available under the two described above.
The Interim Chairman, Nigeria Council of Registered Insurance Brokers ( NCRIB), Abuja Chapter, Ifeanyi Opara, lamented that insurance agents saddled with the responsibility of enforcing the Third party insurance have compromised as some end up issuing fake insurance to motorist.
“Now government, in an attempt to improve on insurance penetration came up with the law that you must compulsorily insure. Over the years, you know we had third party insurance made compulsory but the enforcement has been a problem .
Now if you don’t have the money to obtain the comprehensive insurance, for instant, on your vehicle, you can afford the minimum price of about five thousand Naira to take up a third party insurance.So that one is made compulsory.
You see the Vehicle Inspection Officers (VIO) or the Road Safety Corps or even the Nigerian police that are given the responsibility to ensure that this compulsory insurance policies are enforced but they have not effectively carried out the task. Because of that you still found that the level of compliance is not near 10%.
“We have so many vehicles in this country and most of them don’t have third party insurance and even those who may have something that looks like third party to protect you if you examine it thoroughly you find out it is a fake.
“The National Insurance Commission (NAICOM) which is the regulatory body and the other body which is the Nigeria Insurance Association (NIA ) and the Nigeria Council of Registered Insurance Brokers ( NCRIB) all have very serious role to play in this . There is need for us to create awareness among the people. Create a platform where they can always educate the public on the insurance.” He said .
Also, kingsley Opurum , the spokesperson , Transparent Protection Limited (TPL) , an insurance organisation said that some government agents issue out fake insurance.
“The government must rise up because some of the people that are causing the problems belong to government agencies. VIO wear uniform and when you see somebody in uniform you respect him because he has government power.
The VIO does not have power to issue motor third party insurance. The motor vehicle insurance are issued by insurance companies or through an insurance agent. VIO is not an agent . They have no power and they have no reason to issue motor insurance. Government should be able to condemn it and those VIO should stop selling it.
Also speaking on the issue, Mr Sunday Thomas, Director-General, NIA, disclosed that his association was already discussing with the Lagos State government, to deploy mobile devices into the state, for verification of motor insurance policies of road users. He added that Kwara State government had also been approached to key into this initiative.
Explaining the reason NIA chose Ogun State as a pilot state for the database, he stressed that insurance in Nigeria was traceable to Abeokuta, Ogun State, saying, the state was also one of the states to first indicate interest in the project.
Applauding the performance of the project since it was introduced, he noted that the success achieved so far from the first module had led to the proposed implementation of the second module in marine business.
Mr. Wale Banmore, Managing Director, Royal Exchange Prudential Life Assurance plc, says there must be agencies to strictly enforce compulsory insurance laws in Nigeria to make the laws effective.
Banmore said if the provisions of the law on compulsory insurance covers are not being implemented, one cannot say compulsory insurance covers actually exist in the country.