Insurance policyholders as well as brokers across the country are seeking suspension of the new N15,000 rate for third-party motor insurance, which is expected to commence today, 1st of January, 2023, LEADERSHIP can exclusively reveal.
The National Insurance Commission (NAICOM) had earlier issued a circular reviewing rates for Motor Insurance effective January 1, 2023, hence, raiding the current rate by 200 per cent.
Believing that proper stakeholders’ engagement were not carried out before announcing the new rate which its implementation was also expected to commence about two weeks after announcement, the policyholders and insurance brokers called for more time and engagement before the new rate becomes effective.
In a statement signed by the executive secretary/chief executive officer(CEO), Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Tope Adaramola, and made available to LEADERSHIP yesterday, the council said, there were intense mixed reactions by its members on different platforms, depicting the fact that the circular did not absolutely sit well with all them.
To this end, it said, NCRIB president, Barr. Rotimi Edu conveyed an emergency joint meeting of the Technical and Legal Committees to expeditiously meet on the matter.
Motorists To Pay N15,000 For Third Party Motor Insurance
At the end of their deliberations, the statement said, the council made a representation to the commission, to among other things, defer the implementation of the new rates till July 1, 2023, during which it would use the opportunity to hold better consultations with brokers and other stakeholders.
“The council in unambiguous terms applauded NAICOM for striving to grow the industry through better insurance penetration, but felt that such actions should be done with due consultation with industry operators, consideration for the mood of the times and to build a statistically persuasive case for whatever direction presented. We hope that the commission would yield to our entreaties for the benefit of all.,” it pointed out.
Meanwhile, insurance policyholders, under the auspices of the Insurance Consumers Association of Nigeria (INSCAN), in a letter signed by its national coordinator, Chief Yemi Soladoye, requests NAICOM to reverse its directive on the increase of 3rd Party Motor Insurance premium in Nigeria.
According to the group, “we hereby demand that the Directive be reversed as it amounts to a deliberate breach of the fundamental Principle of the Utmost Good Faith and other decent regulatory principles that guide Insurance practice on your part.”
Stating that the NAICOM failed to understand the full implications of its directive that the real organ the regulator will punish is the Nigerian Insurance Consumers who provide the income that accrue to the entire Insurance Industry, INSCAN queried that, “how much has your Commission paid out to Victims of Hit and Run Vehicles and Customers of Proscribed Insurance Companies over the past 20 years as required under Sec. 78 of the Insurance Act 2003 to justify this astronomical increase in Premium amount? Where are the insurance ratios to justify that premium Increase by a whooping 200%?”
Disclosing that the predictable outcome of this directive will be substantial increase in the number of fake insurance underwriters in Nigeria, more money to the pockets of NAICOM and insurance operators and more hardship to the Nigerian insurance consumers, the group added that, the decision to increase the income of the underwriters and regulators without due consideration for the feelings of the consumers, particularly in Nigeria, where the good customers who don’t make claims are never otherwise rewarded, is too insensitive.
“We hereby conclude that your Policy Directive on TPM Premium Increase was not subjected to Civilized Trade Practices, Professionally-Accepted Insurance Principles, Transparent Customer- oriented Regulations and Humane Attention to the Economic Situation of most Nigerians at the moment before you hurriedly passed same.
“The Nigeria Insurance Consumers are further convinced that the motive behind your Directive is self-serving, arrogant and detrimental to their interest which you are established to protect and therefore demand that you reverse same pending proper consideration of the grey areas of the directive,” it pointed out.
LEADERSHIP findings also revealed the insurance operators, under the auspices of the Nigerian Insurers Association (NIA) had an emergency meeting on this issue at the weekend, where they assess the development and its impact with the hope to make their stand known by the time work resumes tomorrow.
The circular from NAICOM had earlier attributed 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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