Lagos, July 24, 2023: Operators in the insurance industry have urged vehicle owners in Nigeria to focus on maximising the improved benefits in the revised motor insurance premium rate.
The National Insurance Commission (NAICOM) had on Dec. 22, 2022, increased the Third-Party Motor insurance policy, among other various classes, from the former N5,000 to N15,000.
The regulator announced this in a circular titled; New Premium Rate for Motor Insurance with number: NAICOM/DPR/CIR/46/2022, signed by the Director, Policy and Regulation, NAICOM, Mr Leo Akah, for the Commissioner for Insurance to all insurance companies.
“Pursuant to the exercise of its function of approving rates of insurance premium under Section 7 of NAICOM Act 1997 and other extant laws, the commission hereby issue this circular on the new motor insurance premium rates effective from Jan.1.
“The Third-Party Property Damage (TPPD) which is the limit of claims an insured can enjoy on a policy for private motor will now be N3 million for the new premium of N15,000.
“The limit for own goods will be N5 million, with a new premium of N20,000, premium rate for staff bus is now N20,000 and its TPPD would be N3 million,” the commission said.
According to the regulator, commercial vehicles, trucks and general cartage now has a TPPD limit of N5 million with N100,000 premium rate, special types now has a TPPD limit of N3 million and premium of N20,000.
The commission stated that tricycle now has a TPPD limit of N2 million and premium N5,000 while motorcycle now has a TPPD limit N1 million and premium of N3,000.
NAICOM noted that the comprehensive motor insurance policy premium rate shall not be less than five per cent of the sum insured after all rebates or discounts.
Beyond this, the review also offer motorists plying the ECOWAS region the benefits of third party liability protection under the ECOWAS Brown Card Scheme.
According to the commission, ECOWAS brown card used by motorists plying within West Africa sub-region had been captured in the revised premium for third party motor insurance.
The card provides motorists complete guarantee for a prompt, fair and immediate compensation for any accident that may occur outside their habitual residence country.
In his contribution, Mr Rasaaq Salami, Head, Corporate Communications and Market Development, NAICOM, explained that the revised motor insurance premium rate allows vehicle owners in Nigeria to enjoy higher claim amounts in the event of accident.
Salami said that the insurance premium was increased for the insured vehicle to get adequate compensation enough to meet their liability cost, following the inflation and foreign exchange shortage have pushed up cost of living.
He stated that registered Nigerian vehicles with third-party motor insurance automatically purchased the ECOWAS brown card and is covered for compensation when in and around any of the West African countries.
According to him, motorist from other West African countries into Nigeria will also get third party compensation in event of accident with a Nigerian vehicle.
Mr Muyiwa Awodire, Regional Manager, Linkage Assurance Plc, said that the premium hike was long overdue, after 19 years, considering the inflation rate.
“The last time we had an increase in premium for third party motor insurance was in 2004. So, if you consider the rate of inflation over the past 19 years, you will realise that the increase is long overdue.
“But beyond the hike, let us also consider the benefits. Until Dec. 2022, the highest claim any one could make on third party motor insurance was N1 million because that was the limit. But that has now changed.
“A policy holder can make claim of up to N3 million. We all know how expensive vehicles have become now.
“It is in the interest of policyholders that they embrace the increase. While it is true that no one prays for an accident, the indubitable fact is that accidents do happen.
“When they happen, the insurance companies are on hand to mitigate the loss. So, people should shift their focus from just the cost and consider the benefits, which outweigh the cost,” he said.
Similarly, the Director General, Nigeria Employers’ Consultative Association (NECA), Mr Adewale-Smatt Oyerinde, said that the premium increase would be beneficial to the economy.
Oyerinde noted that while the rate adjustment was not out of place, NAICOM should endeavour to carry all stakeholders along in the implementation of the new policy.
“In order to grow the economy, develop the industry and provide effective risk-mitigating services to the generality of Nigerians.
“It is our belief that a marginal adjustment in the current rate is desirable,” he said.
