NAICOM, Insurers Agree on Upward Review of Motor Insurance

Motor vehicle users in Nigeria will have to pay more on the compulsory motor third party insurance policy as the National Insurance Commission (NAICOM) and insurance operators have decided to review upward the current N5,000 premium paid by motorists to obtain third party insurance.

The stakeholders took the decision at a recent meeting in Lagos.

The Chairperson, Publicity Committee of the Insurers’ Committee, Mrs. Ebelechukwu Nwachukwu, who disclosed this while briefing journalists on the outcome of the committee’s first meeting after the COVID -19 lockdown, said the committee has set up a body to discuss with operators and come up with a new rate to be paid by motorists on the policy.

Nwachukwu, who is also the Managing Director, NSIA Insurance Company, said the Commissioner for Insurance, Mr. Sunday Thomas, following a reactivation of the Insurers Committee, had directed the insurers to determine the adequacy of the current premium for the Motor Third Party insurance policy .

“The committee has received the permission of NAICOM to review and determine the adequacy of the current premium for the policy.

“When you have a third-party policy, it is necessary that you revisit it from time to time, so the technical and actuarial professionals will start working on that,” she said.

The current N5,000 official charge for the Motor Third Party Insurance has lasted for decades despite the inflation rate and changes in the prices of other goods. The insurers, judging from their reactions at different fora on the N5,000 minimum rate on the policy are obviously no longer at ease with the low rate.

According to them, they allowed the N5,000 rate over the years to avert the fake operators taking advantage of them.

Manage Director FBNInsurance, Mr Ojumah, speaking on the development said: “N5, 000 premium is still peanuts from what NIA is trying to achieve. But first, it is focused on supporting enforcement and compliance. NIA still will lose money at N5, 000 but this is a first step to proper pricing.

“Rating is an issue all over the world. Insurance buyers would rather not pay anything if they have the option. But because in Nigeria we have so many companies and each one of them is competing against themselves, so if they are to provide that cover properly as intended by law, the cost must be adequate.

“For the cost to be adequate, giving the level of irresponsible competition in the industry, there has to be some kind of control. That control is intended to remove the fake operators.