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•Uninsured vehicles rose to 9m in 2023 –FRSC, NIA
By Henry Uche , [email protected],
As many Nigerians struggle with a depreciating purchasing power accentuated by inflation, a number of car owners are unable to renew their insurance policies even as the number of uninsured vehicles on Nigerian roads rose to about nine million in 2023, industry sources reval.
Data sourced from the Federal Roads Safety Corps (FRSC) and the Nigerian Insurers Association (NIA) revealed that there are already 12 million vehicles plying Nigerian roads. From that figure, only about 3.11million were insured as at the end of 2023, indicating only 25 per cent of vehicles currently insured.
With the obvious economic trajectory, insurance professionals fear that the number of insured vehicles may even dip further by the time the data for the year 2024 is revealed.
Already, the number of insured vehicles sunk from 3.70 million in 2022 to 3.11million in 2023, showing that, about 600,000 vehicles failed to renew their insurances when their previous policies expired, owing to tough operating business atmosphere and increasing cost of living that has forced Nigerians to relegate insurance in their scale of preference.
With increase in fuel pump price coupled with hike in price of vehicle spare parts, some motorists, it was learnt, decided to either sell their vehicles or park them at home, hence, seeing no reason to insure or renew.
Interviews with some car owners in Lagos revealed that vehicle insurance is now a forgone alternative for some people.
A private car owner, Emeka Nwachukwu, told Daily Sun said he is not interested in checking the validity of his car documents and particulars as feeding his children remains his top priority.
He said: “From day I bought a car many years ago, I used to have comprehensive motor insurance. I renew my particulars including driver’s license, insurance and other documents. Even when i bought my second car, I always renewed all my particulars but since the end of former President Muhammadu Buhari’s administration and the begining of BolaTinubu’s presidency, I’m no longer talk about checking my car documents again including insurance and I’m not interested in checking them. Nobody should disturb me about it. Even the officers on the roads are hungry, so anything insurance is an opportunity cost for now.”
Another corporate driver, Ayo (surname witheld) who drives for a company but pleaded anonymity on the name of his employer, said his not immune to the current economic crunch in Nigeria, as they have been one of the worst hit by the crisis. According to him, the company where he works is still struggling to survive and the least anybody is talking about is insurance policy renewal or any renewal of any documents for vehicles.
Ayo, who has nine children and lives in the suburbs of Lagos is semi literate. While speaking, he became emotional, saying: “We are finding it very difficult to break even in some products lines and services we launched not too long ago. Even to pay salary is difficult, people would have to feed first before you talk about any other thing. My boss does not even talk about insurance now. We don’t know the direction Tinubu is taking Nigeria to. Nobody should ask us about insurance or anything for now.”
Investigation by Daily Sun shows that some of vehicle owners parade fake motor insurance papers, while some do not have any insurance coverage.
The FRSC Act demands that any automobile on Nigerian roads must have at least a third party motor insurance policy or comprehensive insurance coverage which goes for about 10 per cent of the value of a vehicle which comes at a fixed price of N15,000 after it was increased from N5,000 in January 2023.
By implementation, the insurance industry is losing billions of naira on motor insurance to fake insurance racketeers who sell only papers to motorists.
From our findings, most drivers go for fake insurance documents to avoid the wrath of the law enforcement agents, as they have little or no knowledge of the benefits of buying original insurance cover. Other uninsured motorists, it was learnt, prefer to bribe their way out with law enforcement agents should they meet them on the roads.
During a recent press briefing in Lagos the chairman of NIA, Segun Omosehin, said that besides the hardship in the country, the 300 per cent increase in third party motor insurance certificate is responsible for the drop in motor insurance in the same year.
“Inflation, fuel subsidy removal, the high price of petrol, foreign exchange issues, all of these put together affected uptake of insurance.
“Insurance perception is critical to policy acceptance and insurance is the easiest gift a poor man can give his family,” he said.
This tough time is the best time to buy insurance with minimal premium and extremely huge values. The industry should do more financial education.”
Speaking on the apathy for insurance in the country, Omosehin stressed that tough times demand more insurance coverage, especially, because of hike in replacement values.
He said, it makes economic sense to pay a small premium and have the insured assets replaced when disaster strikes than having to dip hands into one’s savings to replace the damaged assets.
How much is insurance even? A lot of people spend more than N5,000 monthly on recharge cards to talk with friends, but cannot spend the same N5,000 to protect their beloved ones in case of the unexpected. If you ask me, the best time to take insurance is now because it protects the future of your children’s education, their health, and everything concerning planning their future,” he pointed out.
Pressing for the right enabling environment for insurance to thrive, he urged underwriters to, in view of the current volatile operating environment, have a shorter period of review, which could be quarterly to ensure that reality is in line with projections.
“The industry needs to collaborate more with the government to ensure things are done. Security is essential and key to our business. Stability in political, FX, agric sectors are critical. Stability of the structure and system is critical. Insurers will weather the storm,” he added.
