By Henry Uche
Vehicle owners in Nigeria would enjoy higher compensation in the event of accident for self and third party damage liabilities, as well as in event of loss of vehicle following upward review of the premium rate for motor insurance in the country.
The insurance companies under the watch of the National Insurance Commission (NAICOM) in the new era of increased benefits wants insured vehicles get compensated adequately to meet their liability costs, particularly now that inflation and FX shortage have pushed up cost of living.
The Federal Government, through NAICOM in December 2022 reviewed the premium rate for motor insurance in Nigeria to become effective 1st January 2023.
In the new directive, private vehicles that were paying N5,000 premium for N1 million Third Party Property Damage (TPPD) limit, are now to pay N15,000 premium for N3 million TPPD, while owner good vehicles are to pay N20, 000 premium for N5 million claims limit, and staff busses are to pay N20,000 premium for N3 million claims limit.
This was contained in a circular issued on December 22, 2022 by NAICOM and sent to all insurance institutions, and signed by Leonard Akah, Director, Policy and Regulation at the Commission on behalf of the Commissioner for Insurance.
The circular read, “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 1st January 2023.”
For commercial trucks and general cartage, they are to pay N100,000 premium for N5 million TPPD limit; Tricycles N5,000 for N2 million TPPD limit, and Motor Cycles N3,000 for N1 million TPPD limit.
While for comprehensive motor insurance policy, premium rate shall not be less than 5% of the sum insured after all rebates and discount.
Beyond this, the review also offer motorists plying the ECOWAS Region the benefits of third party liability protection under the ECOWAS Brown Card Scheme.
The card provides motorist complete guarantee for a prompt, fair and immediate compensation for any accident that may occur outside his habitual residence country.
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.
This means a registered Nigerian vehicle with third-party motor insurance automatically purchased ECOWAS brown card and is covered when in and around any of the West African countries. While motorist from other West African countries into Nigeria will get third party compensation in event of accident with a Nigerian vehicle.
Industry analysts who responded to the concerns raised by some Nigerians (on the timing) noted that there was not any particularly good time to raise a fee. They noted that the focus of most commentators on the premium increase has been the hike rather than the attendant benefits.
Speaking, Mr. Muyiwa Awodire, a Regional Manager at Linkage Assurance Plc, reminded the public that premium hike came after 19 years. “The last time we had an increase in premium for third party motor insurance was in 2004. Now, if you consider the rate of inflation over the past 19 years, you will realise that the increase is long overdue,”
He added, “But beyond the hike, let us consider the benefits. Until December 2022, the highest claim any one could make on third party motor insurance was N1 million because that was the limit. But that has changed now.
“A policyholder can make claim of up to N3 million. Vehicles are expensive now. So, 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. The benefits, in my opinion, outweigh the cost.”
Similarly, the Nigeria Employers’ Consultative Association (NECA) has said that the premium increase would be beneficial to the economy.
The Director General of NECA, Adewale-Smatt Oyerinde, in a media interview said “In order to grow the economy, develop the industry and provide effective risk-mitigating services to Nigerians, it is our belief that a marginal adjustment in the current rate is desirable.”
Emphasizing the need for NAICOM to carry all stakeholders along in the implementation of the new policy regime, NECA said having operated for 19 years with inflation level, the rate adjustment was not out of order.