Nigerians reject 200% third-party vehicle insurance premium hike

•Industry loses over N160b yearly to fake policies

Citing the harsh economy, private car owners have condemned the announcement by National Insurance Commission (NAICOM) to increase third-party insurance premiums from N5,000 to N15,000, effective January 1, 2023.

Third-party is one of the compulsory classes of insurance and the most popular among the six policies stipulated by the Insurance Act 2003.

The increment followed several deliberations by relevant stakeholders since 2021 and was to have taken effect in September this year after a comparative study of rates across African markets.

Affected Nigerians, who spoke to The Guardian in Lagos, observed that the decision was ill-timed and did not take the suffering in the land into consideration.

One of the drivers, Clement Prosper, said what the underwriting firms needed to do was to educate Nigerians on insurance this festive period instead of the increase at a time the masses are struggling to feed.

He pointed out that if at the prevailing N5,000 fee, Nigerians were cutting corners, how much more would it be in 2023 when they are being asked to pay more.

Prosper said the nation 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.

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

Market analysts attribute the low insurance penetration to poor access to information technology; weak regulatory framework; lack of skilled personnel; dismal knowledge of insurance service by prospective customers and low standard of living.

Given the unpalatable scenario, where most third-party motor insurance policies are sold at shopping malls and licensing offices at a rate between N1,000 and N1,500 as against the official N5,000 price, industry watchers are wondering how worse the situation could be when the new rate regime commences next month.

Checks by The Guardian revealed that the industry loses over N160 billion to fake motor insurance policies yearly. While over 9.4 million vehicles ply Nigerian roads with fake certificates, only about 2.74 million have genuine policies, according to the Nigerian Insurance Industry Database (NIID).

The NIID is a verification platform initiated and owned by the Nigerian Insurers Association (NIA).

Immediate past chairman of NIA, Ganiyu Musa, in one of the gatherings, said the 2.74 million vehicles were captured on NIID, implying that over 70 per cent of them have either fake insurance certificates or are uninsured.

He stressed total enforcement of compulsory insurance nationwide, adding that NIA was working with the Lagos State government for validation of genuine third-party insurance through the automatic number plate recognition (ANPR) device of VIS on the NIID verification platform.

Musa said the partnership would be replicated in parts of the country for people to patronise registered insurance companies.