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Insurance Industry Loses N74bn To 14m Uninsured Automobiles

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The number of uninsured automobiles on Nigerian roads have increased to about 14.7 million, making the insurance industry to lose about N73.5 billion annually, LEADERSHIP can exclusively reveal.

According to the Nigerian Bureau of Statistics(NBS) report released yesterday, estimated vehicle population in Nigeria as at the end of second quarter of 2018 was put at 11.7 million, with the Nigerian Insurers Association (NIA) disclosing that about 5 million of these vehicles are insured, leaving 6.7 million vehicles uninsured.

In the same vein, LEADERSHIP investigation shows that an estimated 8 million out of 1million tricycles and motorcycles who ply Nigerian roads are without genuine insurance cover.

The Federal Roads Safety Corps (FRSC) Act demands that any automobile on Nigerian roads must have at least third party motor insurance policy or comprehensive insurance coverage which goes for 10 per cent of the value of the automobile.

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.

To this end, insurance industry is now losing N33.5 billion to non-insurance of 6.7 million vehicles and N40 billion to uninsured  8 million motorcycles and tricycles, translating to a cumulative N73.5 billion loss from the 14.7 million uninsured automobiles in the country.

Investigation revealed that 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.

The reason for the continuous neglect of insurance cover by road users according to some drivers, especially, transporters interviewed by  our correspondent, was because the law enforcement agencies, such as; the Federal Road Safety Corps(FRSC) and  Vehicle Inspection Officers (VIOs) are too lenient with motorcycle and tricycle riders as they focus more on vehicles for insurance enforcement.

The president, Nigerian Council of Registered Insurance Brokers(NCRIB), Mr. Shola Tinubu, was unhappy that despite the existence of compulsory insurance Act of which Third Party Motor Insurance is part of, some motorists have decided to patronise fake insurers at the detriment of the registered insurance firms, while some are uninsured, thereby, making insurance industry loses billions of Naira on an annual basis.

While calling on relevant stakeholders to increase insurance awareness to let some of these motorists and other Nigerians understand the benefits of insurance, he urged the people to do their insurances through brokers, as insurance brokers have the needed expertise to advise them on the right policies that suit their needs.

On his part, the managing director, Consolidated Hallmark Insurance PLC, Mr. Eddie Efekoha, urged government and law enforcement agencies to support insurers  by enforcing the procurement of compulsory insurances, adding that operators cannot be selling products and at the same time carry out enforcement.

He believes if there is proper enforcement and the right sanctions meted on the violators, road users would not want to put their cars on the roads without valid cover.

With enforcement, he said, the insurance industry will not only get more premium income, it would also increase the contribution of insurance industry to the nation’s Gross Domestic Product (GDP).

Speaking at the Business Today’s 5th Anniversary and Awards in Ikeja, Lagos, yesterday,  the managing director/CEO, Sovereign Trust Insurance(STI)  PLC, Mr. Olaotan Soyinka, said the Nigerian Police Force(NPF) and other law enforcement agencies on the roads must avoid compromise  when a violator is caught, saying, if road users are aware that enforcement agents cannot be compromised, they will do the needful.

At an event in Lagos earlier in the year, Corp Marshal, Federal Road Safety Corps(FRSC), Mr. Boboye Oyeyemi, said increasing insurance patronage, such as subscription of insurance by motorcycles, among other insurances, requires a joint commitment to a public-private partnership process that combines the development of a conducive enabling environment, the building of strong public institutions and programme, and a local private sector that has the capital and knowledge to successfully embed road safety in insurance products.

The president, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, on his part, urged insurers to reach out to Okada riders and Keke drivers, advising them to get the parties to buy insurance as it would enhance the premium base of the industry and by extension, shareholders.

Section 38 of the National Insurance Act 2003, currently in use, states that 3rd Party Motor Insurance is required as part of the minimum amount of auto cover one must carry as a road user. Penalties for non-compliance can include a fine of up to N250,000 and/or one-year imprisonment.



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