Operators in Nigeria’s insurance industry have expressed their support for the ongoing plans to quadruple the country’s third party motor insurance policy from the current N5,000 premium per annum to N20,000.
According to LEADERSHIP findings, a bill to increase the insurance premium from N5,000 to N20,000 sponsored by Senator Umaru Kurfi from Katsina Central has scaled second reading and has been referred to the Senate committee on banking, insurance and other financial institutions.
According to data from the Nigerian Insurers Association (NIA) which indicates that there are about 16 million vehicles on roads across the country, if the bill becomes law in the country, the implication is that an additional N240 billion would be generated in the insurance sector.
The bill entitled: ‘SB 276 Motor Vehicles Third Party Insurance Act (Amendment) Bill, 2016’, seeks to amend the Act to ensure the accomplishment of objectives of the compulsory third party insurance cover.
The Senator who had earlier said increasing the premium from N5,000 to N20,000 will ensure effective settlement of claims also proposed the setting up of a fund by taxing motor underwriters.
He stressed that the said fund should be used to settle victims of accident who could not obtain compensation or where an insurance company becomes insolvent or goes into liquidation before judgment is obtained by the victim.
Speaking with LEADERSHIP yesterday, spokesperson for the Nigerian Insurers Association (NIA), Mr. Davis Iyesere, said the bill is in order, adding that the entire insurance industry fully supports it.
‘‘We support the initiative, it is welcome and commendable”, he said.
In the same vein, the President, Association of Registered Insurance Agents of Nigeria (ARIAN), Mr. Gbadebo Olameru, averred that although the proposed premium increase on third party insurance was a good initiative, it was coming at a wrong time.
This, he said, was because insurance premium has always been under-priced, stressing that the proposed N20,000 is a reasonable premium for 3rd party motor insurance, just as he urged Nigerians to reason with the insurance industry.
He, however, advised the National Assembly to put in place proper enforcement scheme so that if it eventually becomes law, the new price can be enforced.
“NASS should put into consideration the proper enforcement scheme in the course of approving this new premium. If there is an enforcement scheme in place, this will ensure that all cars plying Nigerian roads have genuine insurance. With this, enforcement of the new premium can be effective, but without this, it will increase access to fake insurance,” he advised.
The insurance industry, Olameru pointed out, is in full support of this bill, as it will not only ensure that underwriters serve their customers better, but also give the industry some level of credibility.
Meanwhile, some motorists on Nigerian roads have condemned the proposed hike, contending that it was coming at a time the country was battling with recession, which has led to drastic cut in disposable income of people, as they struggle to cope with double-digit inflation and Naira devaluation that have forced some of them to cut down their insurance budget.
LEADERSHIP findings revealed that motorists, especially commercial drivers, are furious with government for such a policy on the ground that it is not in the best interest of Nigerians.
Gbolagade Onadiya, a transporter who shuttles between Lagos and Abeokuta, Ogun State, said most of his colleagues had been complaining about the current premium of N5,000 for third party policy, and that some of them are now going for cheap fake insurance paper.
He said now that the government was proposing a further hike on the insurance policy, it would be an additional burden on commercial transporters.
“The problem with government is that they just take a unilateral decision without even consulting the people such policies will affect. We voted them in so that they can represent us. I think as our representatives, they should be able to dish out policies that will favour the masses and not the ones that will compound our woes”, he said.
Another commercial bus driver, Uche Kalu, said while to get a driver’s license now, one must have up to N15,000, another proposed increase on insurance has shown that this government wants to milk Nigerians dry.
He said, “If a senator could come up with this idea and all other senators supported him, the drivers have no option than to transfer this cost on the poor passengers and this will lead to a slight hike in price of transport fare.”
He believes government is pushing Nigerians to the wall and that when the frustration becomes unbearable, Nigerians will have no option than to react in a negative way, either through protest or other means.
Mr. Gideon Omoyibo, a Nigerian who owns a private car warned that the development will only lead to rapid increase in fake insurance, as motorists will want to ignore the genuine cover for a cheap fake insurance paper.
Wondering why the National Assembly would consent to such a bill at this critical time in the country when the income level of the people has deteriorated, he said. “It’s a fraud because people will not be able to meet up with that premium and everybody will go for fake insurance paper.
“At a time everybody is complaining of financial hardship, N20,000 is crazy in this recession. Some people will now get fake insurance and eventually bribe their way if the police stop them. Government tends to pretend to be ignorant of what people are going through”.
He also observed that the senator may not be acting unilaterally, as he must certainly have the backing of some insurance stakeholders or the insurance industry.
Iyesere, however, pointed out that motorists with contrary views on the proposed hike can go to the National Assembly and argue it out.