The insurance industry has lost a whopping N240 billion premium income from the non-insurance of an estimated eight million tricycles and motorcycles which ply Nigerian roads, over a period of 6 years, from year 2010 to 2016, LEADERSHIP investigation has revealed.
This figure, according to findings, is only N10 billion less than the total premium income generated by insurance companies in the current year (2016), which is put at N250 billion, following a drop in insurance renewals, with only few new covers recorded and the preference for quarterly and monthly premiums as a result of the current economic recession.
Further investigation shows that 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 3rd Party Motor Insurance Act.
Since the year 2000, there has been an influx of tricycles, popularly known as Keke NAPEP, and motorcycles, commonly called Okada, as means of transportation in most urban and rural areas across the federation, following rising unemployment, with a lot people eking out a livelihood through them.
Despite this influx, insurance companies have been unable to sell their products and services to these transporters as the owners refuse to buy insurance cover.
The reason for the continuous neglect of insurance cover by these transporters, findings show, is because the law enforcement agencies are too lenient with tricycle and motorcycle owners; they rather focus on vehicles for insurance enforcement.
Even the few tricycles and motorcycles that probably have insurance, findings show, have fake insurance papers.
With no enforcement, the riders do not care about having an insurance cover, especially as they are unaware of the benefits of insurance.
A commercial tricycle operator who shuttles between Abule-Egba area of Lagos State and Giwa area of Ogun State, confided in LEADERSHIP that he and his colleagues do not bother about insurance papers because they had never been disturbed by any official over it.
A check carried out by our correspondent within the Lagos metropolis at the weekend showed that the Vehicle Inspection Officers (VIOs) only stopped vehicles with incomplete vehicle documents, insurance inclusive, but did not stop Keke NAPEP and motorcyclists who passed their checkpoints.
In an exclusive interview with LEADERSHIP, director-general, Nigeria Insurers Association (NIA), Mr Sunday Thomas, attributed the development to low insurance awareness in the country, pointing out that lack of enforcement is a major problem.
He, however, confirmed that Keke NAPEP and motorcycles were covered in the Insurance Act.
“On the motor vehicles, we still have the majority not having genuine insurance, not to talk of millions of Keke NAPEP and Okada across the country. They are all motor vehicles under the 3rd Party Motor Vehicle Insurance Act. They are also expected to get cover, but the capacity of the law enforcement agents again might be responsible,” he said.
Thomas urged law enforcement agencies, comprising the Federal Road Safety Corps (FRSC) and Vehicle Inspection Officers (VIOs), among others, to assist the insurance industry to implement the insurance policy as the industry cannot enforce it by itself.
“It’s about sensitisation; just create the awareness. First and foremost, start with the awareness before you start to enforce by making someone a scape goat,” he pointed out.
Corroborating this stance is the immediate past managing director, LASACO Assurance Plc, Mr. Olusola Ladipo-Ajayi, who affirmed 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.
According to him, prior to now, when the laws were enforced, the parties were buying the products, but now they operate with no insurance cover because they are not compelled to buy.
He urged the government to support the insurance industry by enforcing the procurement of compulsory insurance cover, adding that the insurance operators cannot sell the products and, at the same time, carry out enforcement.
When asked whether he was aware that most tricycles and motorcycles have no insurance cover at all, the VIO spokesperson in Lagos State, Mr Gbolahan Toriola, said his inspectorate would conduct an investigation into the matter to ascertain the veracity of this claim, promising to address the matter if found to be true.
‘They (Keke NAPEP and Okada) are equally covered by law. We will do our investigation on this,’ he said.
The president, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, on his part, urged insurers to reach out to Okada riders and Keke drivers and encourage them 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.
LEADERSHIP had exclusively reported that the insurance industry was losing a whopping N60 billion every year as only 25 per cent, translating to four million of the estimated 16 million vehicles on Nigerian roads, have genuine 3rd party motor insurance policy.