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Insurance Sector Loses N106bn Annually

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A data sourced from the Nigerian Insurers Association (NIA) shows that there are about 16 million vehicles on roads across the country, with only four million of them having genuine Third Party cover. This, leaves 12 million vehicles uninsured or parading fake insurance papers.

Third Party Vehicle Insurance comes at a fixed price of N5, 000 for privately used saloons and SUVs, while commercially used vehicles are charged N7, 500.
On a yearly basis, it was discovered that the Nigerian insurance industry loses a cumulative of

N106 billion to insurance racketeers, through fake Third Party motor insurance and marine cargo insurance, and about N8million through uninsured automobiles in the country, even as underwriters are losing about N40 billion on a yearly basis to eight million uninsured tricycles and motorcycles in the country.

This is aside hundreds of billions of naira the industry is equally losing on comprehensive motor insurance, which demands that 10 per cent of the cost of a vehicle be paid as annual premium.
Further investigation shows that most of the motorists carrying fake insurance papers do obtain them at some vehicle licensing offices, an agency that is under the purview of Vehicle Inspection Offices (VIO), even as there are racketeers who market fake insurance particularly to commercial vehicle drivers at their parks, garage and popular bus-stops.

The fake insurance papers, it was learnt, are being sold for between N300 to N1000, and they bear names of insurance firms that don’t exist. Most drivers go for fake insurance because it is cheap as well as to avoid the wrath of the law enforcement agents, as they have little or no knowledge of the benefits of buying original insurance cover.

Other uninsured motorists, it was learnt, prefer to bribe their way out with law enforcement agents should in case they meet them on the roads.

A Lagos driver, who spoke to LEADERSHIP Sunday said, he got his insurance papers (which are fake) at the old licensing office along GRA, Ikeja, Lagos, during renewal of his vehicle documents, pointing out that he and most of his colleagues do get it at a price of between N300 to N1000.
When asked the name of his insurer, he said: ‘The name on my insurance certificate is Pacific Insurance.’ Our correspondent later discovered that there was no name of such insurance company on the list of the registered 58 insurance companies in the country.

When questioned on the allegation that fake insurance papers are being issued in some licensing offices, the VIO spokesperson, Lagos State, Mr. Gbolahan Toriola, said, the VIOs in Lagos State do not condone such act, and that any of its staff found marketing and selling fake insurance will be immediately penalized.

“So, if anybody has issues with a policy that he or she obtained in any of our licensing offices, he or she should go back to that office and identify the staff. In Lagos state, we don’t condone that.

What we want is for people to obey the law. The staff caught will face disciplinary action and will be dismissed,” he pointed out.

To reduce the number of fake vehicle insurance particulars Toriola, he said the agency in Lagos has partnered Nigeria Insurers Association, NIA, to access its Nigerian Insurance Industry Database (NIID), adding that, through the database, motorists can confirm whether the insurance they obtained is a fake or a genuine one.

The chairman/CEO, Boff & Company Insurance Brokers Limited, Mr. Babajide Olatunde-Agbeja, is unhappy that the insurance industry is losing billions of naira on a yearly basis, because motorists refuse to obtain genuine insurance, stating that if the industry can get this huge fund, it will increase its contribution to GDP, have more funds to increase insurance awareness, engage in more CSR projects.

The industry loses about N40 billion on a yearly basis to uninsured tricycles and motorcycles as virtually all of them have no third party motor insurance cover which is sold at N5,000 per policy, even though these means of transportation are covered under the Third Party Motor Insurance Act.

The reason for the continuous neglect of insurance cover by tricycles and motorcycles, findings show, is because the law enforcement agencies are too lenient on their owners and operators; as they only focus on vehicles for insurance enforcement.

Even the few tricycles and motorcycles that probably have insurance, findings show, have fake insurance papers.

A commercial tricycle operator who shuttles between Abule-Egba area of Lagos State and Giwa area of Ogun State, confided in our correspondent that he and his colleagues do not bother about insurance papers because they had never been disturbed by any official over it.

The former managing director, LASACO Assurance Plc, Mr. Olusola Ladipo-Ajayi, noted that the inability of law enforcement agents to enforce the purchase of insurance by tricycle and motorcycle owners had continued to deny insurance operators billions of Naira yearly.

He noted that insurance companies parade good products for Keke NAPEP and Okada riders, but that the lack of enforcement had made the parties not to patronise the products.
LEADERSHIP Sunday can also reveal that of the 1.1 million cargoes that enter the country on a yearly basis, about 300,000 of them bear fake insurance coverage.

Although, there is no fixed premium for marine cargo insurance, as the price is determined by the worth of the goods in a cargo, there are indications that the least valued cargo is worth N10 million. To this end, insurer demands 0.2 per cent of the N10 million, translating to N20,000 per policy, hence, the country is losing over N6 billion to the 300,000 cargoes parading fake insurance annually.

The estimated 300,000 cargoes that bear fake insurance, representing 30 per cent of the total cargoes in the country, according to experts, is worrisome, unless drastic steps are taken to address the issue.

In Lagos state, fake insurers, issue fake marine certificates to customers at major centres where shipping activities are carried out in Apapa and its environs.

Further findings reveal that one can get an Institute Cargo Clauses ( ICC) “C” marine insurance cover, which is the minimum marine cover, for N2,500 not minding the real insurance value.

Information has it that most of these fake certificates bear the names and logos of registered insurance companies, even though the genuine insurers would know nothing about thedirty deals.

Others out rightly parade fake names to public, while they sell their fake covers at a cheap price.
Cargo insurance is classified into three categories, such as; ICC ‘A’ which has the most risk covered with ICC ‘B’ and ICC ‘C’ having less insurance coverage, with an importer expected to choose which one best suits him.

Speaking with our correspondent on these developments, the director-general, NIA, Mr Sunday Thomas said, NIA, in a bid to increase genuine insurance adoption among motorists, had partnered with Federal Roads Safety Corps(FRSC) and VIOs in some states, such as Ogun and Lagos states, with plans to extend it to all the states as time goes on.

Thomas said, the insured vehicles captured on association’s database is still between 3.5 to 4 million, advising motorists to stop patronising fake insurers, who will only give them worthless paper that cannot be used to process claims, when the need arises.

He said the physical combat being witnessed on Nigerian roads because of minor vehicle accidents, could be avoided if the two parties have third party insurance as they just need to exchange their insurances to repair the damaged car at no cost.

On non-insurance of motorcycles and tricycles, Thomas attributed the development to low insurance awareness in the country, pointing out also that lack of enforcement is a major problem.
He confirmed that Keke NAPEP and motorcycles were covered in the Third Party Motor Vehicle Insurance Act.

Thomas urged law enforcement agencies, comprising FRSC and VIOs, among others, to assist the insurance industry to implement the insurance policy as the industry cannot enforce it by itself.

Reacting to fake marine insurance, he said the association has expanded its NIID to capture marine insurance, in a move to end fake insurance in the maritime sector of the economy.

Currently, he said, his association, through the NIID, has captured 50,000 cargoes on its database, noting that the capturing was still ongoing.

When concluded, he said, the NIID, which is an electronic system that identifies original insurance certificates, would help the customs to verify authentic certificates and subsequently clamp down on those parading fake insurance papers.

The NIID is an information technology-based system to facilitate easy collation and dissemination of statistical and other information relating to insurance while helping to check activities of fake documents.

While the NIID portal is the only central record of all insured vehicles in the country to ensure that only insured vehicles are driven on the roads, the website is used by the police and other agencies to enforce motor insurance law and now, marine insurance.





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