Vehicle owners in Nigeria can now enjoy higher claim amounts in the event of an accident for self and third-party damage liabilities, as well as in the event of loss of a vehicle follo
wing a 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 want insured
vehicles to get compensated adequately enough to meet their liability costs,
particularly now that inflation and FX shortage have pushed up the 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 on 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 a comprehensive motor insurance policy, the
premium rate shall not be less than 5% of the sum insured after all rebates and
discounts.
Beyond this, the review also offers motorists plying the
ECOWAS Region the benefits of third-party liability protection under the ECOWAS
Brown Card Scheme.
The card provides motorists a complete guarantee for prompt,
fair, and immediate compensation for any accident that may occur outside their
habitual residence country.
According to the National Insurance Commission, ECOWAS Brown
card used by motorists plying within the West African 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 motorists from other
West African countries in Nigeria will get third-party compensation in the
event of an 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 anyone could make on
third-party motor insurance was N1 million because that was the limit. But that
has changed now.
A policyholder can make a 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 that
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 a complete
guarantee for prompt, fair, and immediate compensation for any accident that
may be caused by them outside their country of residence.