L– Chairman, publicity sub committee of the insurers committee and the Head of Corporate Communications and Market Development, Mr Rasaaq Salami,
By Favour Nnabugwu
Vehicle owners in the country can now benefit huge claims in the event of accident for self and third party damage liabilities, snd in event of loss of vehicle following 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 adequate enough to meet their liability costs, particularly now that inflation and FX shortage have pushed up cost of living.
The Federal Government, through the National Insurance Commission (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 is contained in a circular issued 22nd of December 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 reads, “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 National Insurance 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 of reviewing the Premium rates for the Third Party Insurance noted that there is not any particularly good time to raise a fee, adding that the focus of most commentators on the premium increase has been the hike rather than the attendant benefits.
Speaking on the issue, Mr. Muyiwa Awodire, a Regional Manager at Linkage Assurance Plc, said the 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,” Awodire said.
He added, “But beyond the hike, let us also 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 policy holder can make claim of up to N3 million. We all know how expensive vehicles have become 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, 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 the generality of Nigerians, it is our belief that a marginal adjustment in the current rate is desirable.”
While emphasizing the need for NAICOM to carry all stakeholders along in the implementation of the new policy, NECA said given that the just changed rate had been operated for about 19 years while the cost of motor vehicles had increased exponentially, the rate adjustment was not out of order.
Also speaking on the benefit of the premium increase, NAICOM’s Head of Corporate Communications and Market Development, Mr Rasaaq Salami, noted that the ECOWAS Brown card had been captured in the new premium for third party motor insurance.
According to him, motorists driving within the West Africa sub-region would not need to get the ECOWAS Brown Card again once they had the third party insurance cover issued by Nigerian companies.
He stated that the brown card provides motorists complete guarantee for a prompt, fair and immediate compensation for any accident that may be caused by them outside their country of residence.