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By Henry Uche, [email protected]
The recent upward review of third- party motor Insurance by the National Insurance Commission (NAICOM) has set tongues wagging with most stakeholders insisting that its timing was quite inappropriate to policy holders. Many say that this might not be an auspicious time to increase a thing that is so germane to the survival of vehicle owners on the road considering the fact that many things pertaining to vehicle ownership and usage are being increased by government over time.
If NAICOM which is also a government agency is increasing motor insurance premium, it means it has no welfare consideration for Nigerians which runs contrary to section 14(2b), chapter 2 of 1999 constitution, laws of Federal Government of Nigeria (as altered) which states that the welfare of the people shall be the primary purpose of government. This was the opinion of some Nigerians.
NAICOM has in a circular \NAICOM/DPR/CIR/46/2022, dated December 22 2022, made this review giving insurance companies eight (10) days to start implementation, 1st January 2023. The new increment is from N5000 to N15,000, while claims for motorists was raised to N3million in the event of an accident.
Note that NAICOM circular also notified that buyers of comprehensive motor insurance shall not pay less than five per cent of the sum insured after all rebates and discounts. The highest cost in the new rates, is N100,000 for a commercial truck/general cartage which also gives the policyholders N5m claims in the event of an accident.
For commercial vehicles, trucks/general cartage has a claims limit of N5 m while the new premium is N100,000; special types of insurance have a claims limit of N3m while the new premium is N20,000, and owners of tricycles will pay N5,000 for insurance of each to enjoy N2m claims. For motorcycle insurance, the new premium is N3,000 while the claims limit is now N1m.
The commission according to the circular stated that it was empowered to approve the new rates for motor insurance premiums by Section 7 of the NAICOM Act 1997 and other extant laws. To cap it all, the commission warned that failure to comply with the circular shall attract appropriate regulatory sanction.
In separate interviews with stakeholders over the matter under review, some are of the view that NAICOM fixed the new without considering the harsh socio-economic condition of the Nigerian state. Others saw it an ambush against Nigerians and public policy at a time when the same government out of ineptitude in management and public administration has grounded the nation’s economy and has failed to resuscitate over it particularly in the last four years.
Speaking with some vehicles owners and road users in Lagos, the increment did not go well with them and their respective associations they represent. A Motorist who declined revealing his name said the addition of N10,000 was not well timed given the scorching economic weather.
A vehicle insurance consumer, Uchechukwu Abiodun, maintained that the increase amounted to intentional breach of the fundamental principle of Utmost Good Faith and other decent regulatory principles guiding Insurance business. According to him, NAICOM failed to understand the implications of its directive, saying that insurance consumers being at the receiving end provides the accrued income to the entire Insurance Industry, describing the duration as an blunt affront to the collective intelligence of Nigerians particularly motor insurance consumers.
A public affairs analyst, Ikechukwu Nzube said the media including the social media was awashed with the news followed by enormous reactions by Nigerians on the directive. For him, the decisions would not only drag the reputation of NAICOM to the mud but would portray it as a sadist.
He said, “Because of this, consumers and various arms of the federal government were being picked at, objurgated and anathemised because of the timing. Are they trying to ameliorate or aggravate the plight of Nigerians? See, no body in Nigeria is happy with the general situation except those who are milking the economy, so if the three arms of government including the MDAs are altruistic enough, they would dare not take any decision that would amount to increase sorrows of Nigerians, until the economy is back to its feat,” he asseverated.
Meanwhile, a body which speaks for the aggrieved Nigerians on Insurance Matters and to Promote the adoption of Insurance Mechanism in Nigeria among others mandates- The Insurance Consumers Association of Nigeria (INSCAN) in a letter signed by its National Coordinator, Chief Yemi Soladoye, requests (NAICOM) to reverse its Directive immediately.
The group said NAICOM failed to understand the full implications of its Directive stressing that the main target are the Nigerian Insurance Consumers who provide the income that accrue to the entire Insurance Industry.
“Tough, you threatened to sanction your Insurance Operators that may fail to comply with your directive come 1st January 2023, yet, the truth of the matter is that your Operators and yourself will be the beneficiaries of the windfall that will accrue from the Directive while the Insurance Consumers, are in the real sense of it, the ones being sanctioned. The almost 20 million Motor Insurance Consumers in Nigeria deserve more than one (1) week notice from you.
“You are definitely aware of the fact that even at the current N5,000 MTP Premium, many Nigerians still patronise the fake underwriters and this is not because these Nigerians cannot afford the N5,000 but because they don’t see any benefit be it under your Genuine or the Fake Cover.”
INSCAN maintained that it was senseless for NAICOM to based its decision on what is being pay as premium in other parts of the world, as basis to increase the Premium burden on Nigerians, noting that such would be tantamount to daylight robbery on the Nigerian Insurance Consumers by an Agency established to protect them without a corresponding comparison of the non-pecuniary Benefits that accrue to the policyholders and the Public at large in such Insurance climes.
“How much has your Commission paid out to Victims of Hit and Run Vehicles and Customers of Proscribed Insurance Companies over the past 2 years as required under Sec. 78 of the Insurance Act 2003 to justify this astronomical increase in Premium amount?
“Where is the report of an Ad-hoc Committee required to be set up under Sec. 52 of the Insurance Act 2003 stating the imperative of increasing Insurance Premium by a whooping 200percent. We also know that the referred Sec. 52 of that Insurance Law does not confer arbitrary powers on you because Insurance is a business affected by Public Policy and otherwise it becomes Legalised Robbery.
“To what extent have the interests of the Policyholders of the Insurance Underwriters whose Licences you revoked in the past one (1) year been protected and how much have you paid to the various Fire Brigades in Nigeria as Fire Service Maintenance Fund as prescribed under Sec. 65 of the Insurance Act 2003 but still, you are quick to increase the Premium burden on the largely dissatisfied Insurance Customers in Nigeria,”
The group referred NAICOM to the recent Currency Redesign and Cash Withdrawal Limit introduced by the CBN, (which is at nil cost to the depositors) gave enough time to the public for feedbacks and adjustments, thus, condemned the one (1) week Notice to Nigerians in this regard, describing it as ‘A great insult to the collective intelligence of Nigerians’.
“Your decision to wait till 22nd December (a day to the end of the year long holidays) clearly shows that you had made up your mind to deny the Consumers the opportunity to express their views, pass comments or negotiate on the issue and we say that this unfair trade practice is not acceptable to the Nigerian Insurance Consumers – whose funds are held in trust by your Underwriters.
“If your Commission would be transparent with this directive, we expected to see the Service and Benefit Gaps that exist in your offerings under the current premium of N5,000.00 via-a-vis the new Consumers Benefits that would accrue to the Consumers by increasing the premium to 300 percent with sufficient time notice given for compliance.
“It is sad to see that the good reputation being slowly built for the Nigeria Insurance Industry is being eroded, the practitioners being disparaged and the various Arms of the Central Government of Nigeria being cursed and vilified.
“The predictable outcome of this Directive of yours will be substantial increase in the number of Fake Insurance Underwriters in Nigeria, more money to the pockets of your Commission and the Insurance Operators and more hardship to the Nigerian Insurance Consumers.
“The decision of a regulator, established to protect the interest of the Consumers, to roll out its Circular a day to Public holidays and insisting on Consumer compliance by the last day of the same holidays, clearly shows that your Directive was in “Utmost Bad Faith” and that the Proximate Cause of the inability of Insurance to occupy its position of Strategic Importance in the economy of Nigeria for over a Century (since 1918) of its existence, is the Insurance Regulator.
“To decide to increase the income to the Underwriters and the Regulators without due consideration for the feelings of the Consumers, particularly in Nigeria, where the good Customers who don’t make Claims are never otherwise rewarded, will put you on record as the Regulator with the highest level of Impunity and Insensitivity in Nigeria if you failed to reverse yourself and got away with this obnoxious Directive.
“Your Policy Directive on TPM Premium Increase was not subjected to Civilized Trade Practices, Professionally-Accepted Insurance Principles, Transparent Customer- oriented Regulations and Humane Attention to the Economic Situation of most Nigerians at the moment before you hurriedly passed same.
“The Nigeria Insurance Consumers are further convinced that the motive behind your Directive is self-serving, arrogant and detrimental to their interest which you are established to protect and therefore demand that you reverse same pending proper consideration of the grey areas of the Directive,” they beckoned.
Another public affairs commentator, who pleaded anonymous said, “The decision though would amount to increase of revenue to NAICOM and underwriters, howbeit, it is additional financial burden on the vehicle owners which touches on the citizens’ welfare. So many things have been increased in recent past and anything that concerned transportation and transactions will have a ripple effect on commercial transactions and the basic of every commercial transactions is the movement of foodstuffs from the production point to the final consumer markets, so the final consumer bears the burden incident of increased cost of/in logistics. Undoubtedly this would make life unbearable for citizens, exactly what Nigerians lived with from 2020- to date.
“Primary economics tells us that government ought not to make money from its citizens but to provide among other responsibilities requisite environment and infrastructure for the people to thrive in their various endeavors. But the kind of government of today is the type that sucks blood from the veins of its citizens while government is supposed to be the blood bank of the people. Another ripple effect of this also is the reason why many Youths who see their parents shrinking and unlively are jetting out of the country because the environment is not conducive for living- hence the hyper inflation. Would the government continue to do this if we say we a country? It’s time for United Nations to declare Nigeria an emergency nation,” he called.
Justifying its decision, the Head of Corporate Communications of NAICOM, Mr. Rasaaq Salami, revealed that inflation (time value of money) led to the upward review. Besides, there would be an improved benefits to policyholders for Third Party Property Damage (TPPD) limit from N1m to 3m and in the case of death, benefit is unlimited and extension of cover on vehicle travelling across the West Africa states.
Defending its timing, he said the old rate came into effect in 2004 (19 years ago) and as a result the value of N5,000 then is not the same again in the present circumstance and same with the N1m TPPD limit. “It became imperative that the rates and the corresponding benefits are reviewed to reflect the prevailing economic environment. In fact, discussions around the need to review the rates started over 5 years ago and it took this long to conclude because of the need to ensure a thorough and sustainable outcome,”
Salami added that it was imperative for the insured to understand that the insurance cover is for their protection. “It’s unlike the other vehicle documents which are mainly to identify ownerships, rights and worthiness of the vehicle to be on the roads. Perhaps, this situation will awaken the motorists to the reality that the third-party motor liability insurance certificate is not a worthless document but that which is of great value.
“The motorists should begin to take interest in it, take out time to procure their insurances directly from any insurance company of their choice or through a registered insurance broker. By doing so, they’ll be able to put a face to the names and in the event of any accident, they know exactly who to contact to process their benefits,” he maintained.
