Lately, the Federal Authorities elevated the quantity to be paid for the obligatory third-party automobile insurance coverage coverage by motorists in Nigeria from N5,000 to N15,000, representing 200 per cent enhance. Sadly, not many automobile homeowners are conscious of this new charge, which took impact from January 1, 2023, till their outdated insurance coverage papers expire and are about to resume them. Whereas many see it as insensitivity on the a part of the federal government, insurance coverage specialists see it as a means of pooling sources for underwriters to allow them to pay claims promptly. Different stakeholders faulted the increment and accused insurance coverage firms of being infamous for nonpayment of claims even with their enormous sources. CHIJIOKE IREMEKA writes:
After months of hypothesis that the quantity paid for the third-party insurance coverage coverage for motor autos could be elevated, the Nationwide Insurance coverage Fee (NAICOM) has lastly made the increment after assembly with sure stakeholders within the insurance coverage sector. Exactly, in December 22, 2022, the first regulatory physique for the insurance coverage business in Nigeria circulated a memo that elevated the premium and raised the legal responsibility of varied lessons of motor insurance coverage within the nation.
In line with NAICOM, third social gathering premium insurance coverage charge for motorists now goes to N15,000 as an alternative of the outdated N5,000. The regulatory physique additionally raised claims for motorists from the outdated N1 million to N3 million within the occasion of an accident that concerned a 3rd social gathering.
The brand new growth was detailed in a round dated December 22, 2022, signed by the Director of Coverage and Regulation of NAICOM, Leonard Akah and issued to all insurance coverage firms.
The round titled ‘New Premium Fee for Motor Insurance coverage’ warned towards defaulting, explaining that below the train of its operate of approving charges of insurance coverage premium below Part 7 of NAICOM Act 1997 and different extant legal guidelines, the fee issued the round on the brand new motor insurance coverage premium charges efficient from January 1, 2023.
The doc maintained that the general public autos carrying items would pay N20, 000 premium simply as employees buses would additionally pay N20, 000 premium; vans and common cartage autos would pay N100,000. A specific kind of carriage automobile additionally can pay N20,000. Whereas tricycles, generally often called Keke Napep, can pay N5,000, bikes, popularly known as Okada, can pay N3,000.
The Guardian learnt that motor third-party insurance coverage is among the six obligatory insurance coverage insurance policies and what NAICOM did was to extend the third-party property injury for all classes of autos.
In Nigeria, it’s obligatory to have a motor insurance coverage coverage earlier than bringing a motorcar to public roads and since most Nigerians subscribe to an insurance coverage coverage simply to get cleared by regulation enforcement brokers on the roads, they go for the third social gathering, which is so much cheaper than the great coverage.
With the preconceived notion that the third-party insurance coverage coverage is simply to forestall arrest by regulation enforcement brokers, many individuals don’t realise that the coverage is definitely authorized and indemnifies the insured from third-party losses. It provides the proprietor the authorized minimal stage of automobile insurance coverage cowl, and it’s probably the most primary one is ready to get.
It was learnt that this type of coverage protects different individuals’s autos and property within the occasion of an accident that was deemed to be one’s fault. For example, if whereas driving, your automobile ram into the bumper of somebody’s automobile, inflicting injury to the bumper and injuring the driving force, your third social gathering insurance coverage would cowl the price of repairing the opposite individual’s automobile and the medical bills.
What will not be coated is injury to your personal automobile or any damage you endure. For that, you would want a complete insurance coverage coverage. In any other case, these prices are on you. Sadly, the price of repairing autos which can be concerned in accident, which ordinarily ought to have been borne by insurance coverage firms, are being borne by the homeowners of such autos.
For a 3rd social gathering motor coverage, the primary social gathering is you; the second social gathering is the insurance coverage firm whereas the third social gathering is everybody else. In a complete motor insurance coverage coverage, it’s a case of two insurance coverage covers bundled collectively – the third social gathering insurance coverage and the personal damages cowl. Some additionally include a built-in private accident cowl.
Because the names recommend, the ‘personal damages’ and ‘private accident’ insurance coverage parts are to cowl your losses, injury to your automobile or private accidents, incapacity and loss of life. Whereas the 2 are optionally available covers, third social gathering insurance coverage is obligatory for all automobile homeowners as per the Motor Autos Act.
Accordingly, the third social gathering legal responsibility protection is a part of your primary motor coverage and covers you for claims made towards you by different drivers after a crash however many motorists are usually not conscious of this, whereas those that are conscious wouldn’t wish to waste their time going for a protracted interval of declare processes.
Part 3 of Motor Autos (third social gathering insurance coverage) Act mandates customers of motor autos to be insured towards third social gathering dangers.
In line with Part 3 (1), “no individual shall use (placed on the freeway), or trigger or allow another individual to make use of a motorcar except there may be in pressure in relation to the consumer of that motorcar by such individual or such different individual because the case could also be such a coverage of insurance coverage or such a safety in respect of third social gathering dangers as complies with the provisions of this Act.”
Part 3 (2) warns that, “Any individual appearing in contravention of this part shall be liable on conviction to a advantageous of 4 hundred naira or to imprisonment for one yr or to each such advantageous and imprisonment and an individual convicted of an offence below this part shall be disqualified for holding or acquiring a driving licence.”
The Guardian learnt that these positions of the Act had been what have despatched chilly quivers to the backbone of most motorists who solely buy the Third Social gathering Motor Coverage to flee police harassment whereas on the street, not understanding that the coverage can indemnify the third social gathering’s autos in case of an accident.
To the Managing Director, Cowry Asset Administration Restricted, Mr. Johnson Chukwu, the important thing problem is the truth that the motorists don’t appear to grasp why this increment was made and the true worth of insurance coverage. “Insurance coverage is there to indemnify one who has a premium to the place they had been earlier than the loss occurred,” he quipped.
Shedding extra mild, the Managing Director/Chief Govt, Titan Insurance coverage Brokers Restricted, Francis Ewherido, mentioned many individuals used to pay the N5, 000 premium as ‘rooster feed’ to get motor third social gathering insurance coverage certificates to get irritant and nosey regulation enforcement brokers off their backs.
“Now, N15, 000 isn’t any extra ‘rooster feed.’ Now, you must take your time to know the advantages or reliefs that your N15, 000 can present for you. For those who hit a 3rd social gathering and he’s injured, your insurance coverage firm is liable to pay the price of therapy.
“God forbid, in case your automobile kills a 3rd social gathering, your insurance coverage firm is liable. Within the case of damage, the hospital invoice will present a foundation for compensation. Whether it is loss of life, the household of the deceased will meet with the policyholder/his insurance coverage firm to agree on compensation. The place no settlement is reached, you go to courtroom.
“Within the occasion of property injury, the restrict is N3million. If the injury is past N3 million, the insurance coverage firm might be liable to pay solely N3million. The policyholder has to pay the stability from his pocket. Notice that each one non-life insurance policies are topic to indemnity,” he defined.
In different phrases, the job of insurance coverage firms is to place you within the monetary place you had been instantly earlier than the incident and you aren’t purported to make revenue from a loss. For loss of life or bodily accidents, they don’t seem to be topic to indemnity since you can’t place a worth on life, accidents or lack of limb. The cures he highlighted earlier and different issues just like the annual revenue of the deceased are determinant, contemplating what the compensation could be.
“Some commentators have been accusing NAICOM of being insensitive to the plight of peculiar Nigerians. Did NAICOM enhance the speed with out doing its homework? Is it not the identical NAICOM that is aware of that some insurance coverage firms are making underwriting losses and depend on revenue from investments to remain afloat? Is it not the identical NAICOM that has cancelled licenses of insurance coverage firms resulting from lack of ability to satisfy claims and different obligations? Is it against the law that NAICOM needs applicable pricing to allow insurance coverage firms meet their claims and different obligations? The questions can go on and on, however let me cease right here.
“On the minimal, it takes roughly N10, 000 to gas your automobile and maintain it on the street month-to-month, whereas the N15, 000 new premium is the annual premium. The N10, 000 per week occasions 52 weeks a yr involves N520, 000 to maintain your automobile on the street each year.
“Let’s even assume you utilize it solely half of the time; that’s nonetheless N260, 000, a far cry from the N15, 000 premium each year for third social gathering premium. I personally really feel the problem individuals have with the hike within the charge of TP premium is the overall lack of appreciation of insurance coverage in Nigeria (insurance coverage penetration in Nigeria is lower than one per cent) and lack of appreciation of the advantages of Motor TP Insurance coverage.
“That’s what I really feel practitioners ought to take care of and the best way to construct belief in insurance coverage, not arguments about applicable pricing and different makes an attempt to deodorise charge chopping. Allow us to be sincere, what led to the demise of some insurance coverage firms? Other than lack of company governance and monetary rascality by the board and administration, a significant component accountable for lack of ability to pay claims by insurance coverage firms is the charging of unsustainable premium charges.
“The first activity of insurance coverage firms is to pay claims all the time. To do this, you need to cost applicable premiums to allow firms have good pool of sources from which they’ll pay claims in any respect time. Or don’t you, the insuring public, need your real motor TP claims paid with out grammar?
“One factor for positive in regards to the new charges is that potential policyholders will take extra curiosity in the advantages of the third-party insurance coverage they’re shopping for as highlighted above. The N15, 000, not like N5, 000, will not be rooster feed. Policyholders may even take extra curiosity in the place they get their motor insurance policies.
“Definitely, you gained’t go below the bridge to get TP insurance coverage with N15, 000. Native authorities places of work are additionally not licensed to problem insurance coverage insurance policies. If an insurance coverage firm will get an area in an area authorities workplace to problem motor insurance policies, it’s a totally different matter. The one firms licensed to promote motor insurance coverage in Nigeria are underwriting firms and Registered Insurance coverage Brokers (RIB),” Ewherido mentioned.
It was learnt that if a motorist goes to anyplace else to get the coverage quite than the required locations, such a motorist dangers shopping for faux motor insurance coverage coverage and the implications are grievous. Within the occasion of an accident, such a motorist is on his personal. “You need to bear all of the third social gathering liabilities, along with personal injury. If you’re caught, you threat a advantageous of N250, 000 or/and a yr imprisonment for not having a real motor insurance coverage earlier than utilizing your automobile on a public street.
“Those that discover it tough to purchase N5, 000 insurance coverage coverage will now have the rationale to not purchase once more. In truth, an enormous variety of them will now patronise Oluwole (faux) coverage as N15, 000 would have meant three years insurance coverage insurance policies for them. That is extra so when majority of third social gathering insurance coverage coverage holders are illiterates who see it as a means of beating the regulation enforcement businesses on the street,” Rafiu Adegoroye, a motorist, mentioned.
Reacting to the priority that the hike within the premium coverage would enhance the patronage of faux insurance policies, an insurance coverage dealer, Samuel Nwosa mentioned: “Those that argued that the hike in premium would pressure individuals to go for faux motor insurance coverage wouldn’t stand as there may be Nigerian Insurance coverage Business Database (NIID) which many cops on the street have the app on their telephones and may use automobile quantity or insurance coverage certificates to verify if the insurance coverage is faux or real. If the coverage is faux, there might be advantageous to be paid (N250, 000) or the motorist stands the chance of going to jail for one yr.
“I’m not ruling out the truth that poor motorists, particularly the business bus drivers, could also be tempted to make use of the faux coverage to beat the police or resort to settling at each checkpoint, the non-public motorists might not have the power to do that, they may pay and make insurance coverage firm pay for any third social gathering injury now that they’ll declare N3 million.”
It’s being alleged that solely two out of each eight autos on the roads have real motor insurance coverage. An estimated 12 million autos with insurance coverage insurance policies are faux and so, many Nigerian third social gathering street customers would haven’t any entry to any compensation within the occasion of bodily accidents, loss of life or injury to their property as an implication. Other than the widespread ignorance about this coverage, many street accidents are resolved with quarrels and fisticuffs. That is the time the motorists will be certain that insurance coverage firms pay their shoppers’ claims. With an estimated 12 million faux insurance policies, Nigeria’s income loss involves about N60 billion yearly (N5, 000 X 12 million autos).
Stories have it that income losses to the federal government are additionally huge within the occasion of faux insurance coverage coverage. Billions of naira in worth added tax, remittances to the Nationwide Insurance coverage Fee, firm revenue taxes and pay-as-you-earn (PAYE) are misplaced.
On the best way ahead, the Govt Officer of Titan Insurance coverage Brokers, Ewherido mentioned: “There’s a easy treatment to the avalanche of faux motor insurance coverage insurance policies. The umbrella physique of underwriters in Nigeria, the Nigerian Insurers Affiliation (NIA), has a platform, the Nigerian Insurance coverage Business Database.
“It has a database of all real motor insurances issued by Nigerian insurance coverage firms and thus far has information of over 4 million real motor insurance policies within the database. You possibly can verify the standing of a motor coverage both with the coverage quantity or registration variety of the automobile.
“However, I assume this all-important database has both not been given sufficient publicity or it’s not well worth the whereas of many policyholders to verify the standing of a coverage that prices solely N5, 000. Loads of regulation enforcement brokers have taken benefit of this mindset. They haven’t helped the business specifically and Nigerians basically.
“They go to the street to verify automobile particulars not for love of mankind, Nigeria or the insurance coverage business however due to what they’ll get from defaulters or gullible and ignorant automobile customers.
“Point out, nevertheless, should be product of the few regulation enforcement brokers who name insurance coverage firms to verify the authenticity of the motor insurance policies purportedly issued by them or entry the NIID proper there on the street to verify the authenticity of a coverage. Provided that the nice regulation enforcement brokers are within the majority…”
However an insurance coverage knowledgeable, Mr. Basil Amobi, mentioned making a 3rd social gathering motor declare will not be simple. In line with him, the complicated course begins with submitting a report with the police and acquiring a cost sheet, which is a large activity in itself. After this, one has to strategy a motor claims lawyer, who recordsdata a case in a particular courtroom, the Motor Accident Claims Tribunal, as civil courts can’t resolve street accident compensation claims.
“The case must be both filed within the tribunal with jurisdiction over the realm the place the accident occurred or with the tribunal with jurisdiction over the realm the place the claimant or the defendant resides. The courtroom then hears either side, examines the proof, and fixes the legal responsibility. If the choice is in your favour, you get compensated to your loss,” Amobi added.
“Going to the insurance coverage firm for a 3rd social gathering insurance coverage declare is a waste of time. Those that have complete insurance coverage insurance policies discover it tough to get compensation within the case of an accident, rather more than the third social gathering insurance coverage policyholder. It isn’t value it. This fashion, we’re earning money for insurance coverage firms with out claims,” a world businessman, Igwe Godwin, mentioned.
The Guardian gathered that this three-step course of will not be all that straightforward as the foundations differ, in response to a situation and the insurance coverage protection that each events have. This makes the bottom actuality way more difficult than what seems on paper.
Assuming your automobile injured a pedestrian, the insurance coverage firm will decide up the medical payments and thus prevent from being torn aside by the family members of the injured. It was learnt that the declare you may make on an auto insurance coverage coverage is restricted.
For instance, an auto insurance coverage coverage might solely cowl loss as much as a specific amount, say N1, 000, 000. Which means if the automobile you broken is value greater than that, the insurance coverage firm will solely present N1, 000, 000.
Extra importantly, it was learnt that as quickly because the insurer thinks you aren’t appearing ‘in good religion’, in different phrases, they suppose you are attempting to tear them off, they may refuse to pay the declare, cancel your insurance coverage, report you to the police for fraud and put you on a blacklist.
Abiola Adebowale, an insurance coverage dealer, mentioned although it’s legally doable, insurers hardly obtain circumstances claiming third-party compensation for less than automobile injury.
“Individuals are suggested to settle it out-of-court as the method will not be solely cumbersome however extremely time consuming.
Third-party claims are filed for damage and loss of life however a settlement of those additionally takes a very long time. On common, in third-party claims involving bodily damage the turnaround time is one to 2 years. In case of loss of life, it takes about three to 4 years to settle claims.
“Clearly, except one doesn’t have a complete cowl, no buyer is keen to take a lot hassle for a small crash that may be swiftly settled with an personal damages declare, even when it means shedding out on the No Declare Bonus (NCB),” the knowledgeable mentioned.
He described NCB as a reward given by an insurance coverage firm to an insured for not elevating any declare requests throughout a coverage yr. In line with him, NCB can be a reduction ranging between 20 per cent and 50 per cent and is given to the insured whereas renewing a coverage.
Charles Ndukwe defined that in a case of damage, one can declare medical bills, compensation for bodily disfigurement and likewise for lack of earnings if one is unable to work after the accident.
“In case of loss of life, the dependents of the deceased can declare compensation on the premise of the revenue misplaced. Medical bills may also be claimed for therapy of the damage that was the reason for loss of life. For property injury, surveyor’s report, authentic payments from an authorised storage and motorcar inspection report are required to quantify the loss. If you’re profitable in your compensation declare, then you definately could be paid (as much as the boundaries within the coverage) by the opposite individual’s insurer below his/her third social gathering insurance coverage coverage,” Ndukwe added.
