With the recent increase in the rate of third party motor insurance certificate from N5,000 to N15,000 by the National Insurance Commission (NAICOM), the rate hike has also jacked up the maximum claims limit from N1million to N3million for each damaged property, LEADERSHIP can now reveal.
This means that each third party vehicle could claim up to N3million to repair the damage done to his vehicle or property. When the certificate was being sold at N5,000, the maximum claims limit was N1 million but the current hike to N15,000 has further increased the maximum claims limit known as Third Party Property Damage(TPPD) by 200 per cent, to N3 million.
Similarly, the claims for loss of life in an accident to a third party is limitless, hence, making the new rate regime more attractive than the previous regime.
NAICOM had earlier issued a circular reviewing rates for Motor Insurance effective January 1, 2023, hence, raising the rate by 200 per cent from N5,000 to N15,000.
To this end, the insurance industry regulatory body said, the TPPD, which is the limit of claims an insured can enjoy on the policy, noted that, TPPD on private vehicle is now N3 million; Goods vehicle and staff bus goes for N5 million, even as trucks/general cartage will now have maximum Claims limit of N3 million, adding that, the special types is N5 million; tricycle N3 million and N1 million for motorcycle.
Meanwhile, NAICOM said: “the new motor insurance premium rate increase third party motor insurance to
N15, 000 for private, while commercial is N20, 000. Goods and staff busses are to pay N20,000 while truck pays N100,000 even as tricycle has been mandated to pay N5,000 and motorcycle goes for N3,000.
Speaking on this development earlier in Victoria Island, Lagos, earlier in the week, the managing director/CEO, Royal Exchange General Insurance Company(REGIC) Limited, Mrs. Ebele Nwachukwu, said, the industry is ripe to have the new motor rate, as the N5,000 third party motor insurance rate has been in existence since 19 years ago, adding that, within these 19 years, a lot of economic dynamics have changed, inflation has risen severally and replacement cost had risen astronomically.
Motorists To Pay N15,000 For Third Party Motor Insurance
According to her, “in those 19 years, the price of everything else has change except for insurance. The replacement cost for damaged vehicles has increased, the price of vehicle parts has risen over time owing to the development in the forex market and inflation and yet, insurance industry had maintain the same rate for these number of years. So, the increase in rate is justified.”
Alongside the hike in rate, she said, the Third Party Property Damage(TPPD) has also been increased which is to the benefits of the motoring public, adding that, the current regime allows more damages to be covered.
Stating that, though this also increased the expected claims the industry might be paying going forward, she was optimistic insurance operators, especially her company, are equal to the task, especially, as the claims payment by the industry has improved over time.
While applauding NAICOM for this development, she said, there is need for sensitisation of the motoring public by both the regulator and operators, hammering on the benefits therein.
Similarly, the chairman, the Compassionate Farms, Mr. Fatal Adegbenro, said the new development is critical to the growth and development of the insurance industry as both operators and policyholders would benefit immensely from such rate increase.
Adegbenro, who was the former executive secretary/CEO, Nigerian Council of Registered Insurance Brokers (NCRIB), disclosed that, the costs of vehicles and repairs have gone up astronomically as a result of inflation, hence, the need to have higher limits for third party liability.
Stressing that, the new rate adjustrnent and implementation remains one of the primary responsibilities of NAICOM to protect the policyholders and the public that may suffer loss or damage, he appealed to motorists to cooperate with the regulator for the betterment of all.
To him, “it is a step in the right direction that everyone should embrace and support. If a motorist who cannot afford an extra N10,000 premium incurred a liability of N1.7 million or N2 million plus and the old policy limit was N1 million. How is such a motorist able to raise the difference of either N700k or N1 million plus?”
He wondered what will be the fate of the third party that has suffered the loss or damage if the negligent motorist cannot afford the extra payment to argument the cost of loss suffered?
Earlier, the deputy president, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Tunde Oguntade had said, the new premium and claims regime is one of the best things to have happened recently in the insurance industry as it would help address the soaring cost of repairing vehicles.
He implored motorists to consider the value created by the new regime which moved claims limit from N1 million to N3 million for private third vehicles and N5 million for commercial, stressing that, it has been difficult to repair most vehicles with N1 million owing to the high cost of spare parts.
Similarly, the national vice president, Association of Registered Insurance Agents of Nigeria (ARIAN), Kehinde Jegede, sees the introduction of new premium for auto insurance as a development that would aid better service and improvement of claim settlement for motor insurance policyholders.
He noted that, with the new rate and NAICOM’s monitoring, all the stakeholders shall have fair sharing, adding that, motorists with genuine policy shall have access to timely indemnity, as confident of the public on insurance will be reassured.
The present premium regime, he said, does give room for better service, while members of the public shall be better served with the new introduction of premium rates and regulations.
A Lagos-based private vehicle owner, Mr. Busari Basiru Ismaila, when told about the maximum claims limit of the current third party rate regime, said, if that is so, and insurance companies can live up to expectation on this promise of N3million property damage limit, then, its a good policy, given the erratic driving on Lagos roads.
He said, it makes business sense for motorist to pay N15,000 for a policy knowingful well that he will be compensated to the tune of N3 million, urging insurance companies to improve in the area of paying genuine claims as they are always fond of giving excuses in order to avoid claims payment.
In December, 2022, NAICOM had issued a circular on this development, attributing the new rates to hike in inflation rate, even though, the existing rate has being in use for about 19 years.
The circular titled: ‘The New Premium Rate for Motor Insurance’ with reference number NAICOM/DPR/CIR/46/2022 signed by the director, Policy & Regulations, Mr Leo Akah, disclosed that, “in pursuant to its function of approving premium rate of insurance companies under Section 7 of NAICOM Act 1997, and other extant laws, the Commission hereby issue this circular on the new motor insurance premium rate effective from January 1, 2023.
“The new motor insurance premium rate increase third party motor insurance to N15, 000 for private, while commercial is N20, 000. Goods and staff busses are to pay N20,000 while truck pays N100,000 even as tricycle has been mandated to pay N5,000 and motorcycle goes for N3,000.”
Similarly, with the premium increase, the Third Party Property Damage(TPPD) has equally increased from the usual N1 million to N3million and above, depending on the classes of automobile.
The regulatory body said, the TPPD, which is the limit of claims an insured can enjoy on the policy, noted that, TPPD on private vehicle is N3 million; Goods vehicle and staff bus go for N5 million, even as trucks/general cartage will now be assured at N3 million, adding that, special types is N5 million; tricycle N3 million and Sum assured for motorcycle is N1milion.
Moreover, NAICOM said, comprehensive insurance motor insurance premium rate shall not be less than 5 per cent of the sum insured after all rebates/ discounts.
Stressing that failure to comply with the circular will invite the wrath of the commission, it added that, “failure to comply with this circular shall attract appropriate regulatory sanction” The new rate is expected to be effective by 1st of January, 2023.
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