Insurers adopt installment to keep motor underwriting business

* Promote hybrid third party policy

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Chuks Udo Okonta

Three months into the implementation of new motor insurance premium, many companies underwriting motor business have resorted to installment to enable them keep their policyholders amid the increase of vehicle insurance premium.

The National Insurance Commission (NAICOM) had on January 1, this year mandated insurers to sell third party policy for N15,000 as against N5,000 and comprehensive policy for not less than five per cent of the value of a vehicle.

Inspenonline in an interview with some insurers, brokers and agents, learnt that most policyholders were unhappy with the increase, but to ensure they didn’t violate the law, they entered into an agreements with their insurers to adopt installment which gives them opportunity to pay either quarterly and half yearly.

An insurer told this medium that his firm reached an agreement with its policyholders on comprehensive to pay in installment with a promise to pay the full premium when there is a loss.

He noted that the firm has also intensified efforts to push sales of its hybrid third party vehicle insurance which has elements of third party and comprehensive, adding that they encouraged clients to acquire hybrid so as to secure both themselves and the third party.

Another insurer said his firm sells hybrid policy for N30,000 and that the policy offers the policyholder all benefits provided for in third party policy, N1 million for vehicle damage and accident cover for the policyholder.

He said most clients who don’t want to take installment settle for hybrid policy.

A broker said the increase in premium has really affected the uptake of motor insurance policy, adding that due to economic situation most policyholders are grappling with challenge of effectively insuring their vehicles.

He noted that in a bit to cut cost most vehicles that were hitherto covered comprehensively are now insured through hybrid or third party.

He foresaw a likely increase in motor insurance premium, but said the increase may be wiped out by claims to be incurred.

An agent said many of his clients had resorted to third party as against comprehensive.

According to him a client who has a vehicle worth N10 million and spent at least N200,000 on comprehensive before the increase now has to pay N500,000 if he gets an insurers to insure the vehicle for five per cent.

He noted that though the increase is good for the industry, but on the other hand, it has led to loss of revenue.

According to NAICOM the Non-Life segment of insurance market showed that
motor Insurance generated 14.9 per cent which was N62.03 billion out of the total non-life premium of N146.3 billion.

Oil & Gas business sustaining its market share dominance at 30.25 per cent, increasing by 2.4 per cent compared to the previous

It said the figure posted by fire insurance came a distant second of 22.2 per cent maintaining same pattern of contribution to the gross premium pool of the market while marine & aviation 12.2 per cent, General Accident 11.1 per cent and Miscellaneous 9.5 per cent followed in that

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