By Chiamaka Ajeamo, [email protected] 08060655687
The National Insurance Commission (NAICOM) and insurers have disclosed plans to review the price of the current N5,000 premium paid by vehicle users to acquire the third-party motor insurance. This was revealed at the Insurers Committee meeting held recently in Lagos.
According to the operators, it is about time motorists paid more than the present N5,000 to obtain the compulsory motor third party insurance policy.
While briefing journalists on the outcome of the Committee’s first meeting after the COVID -19 lockdown, the Chairperson, Publicity Committee of the Insurers’ Committee, Mrs. Ebelechukwu Nwachukwu, who disclosed this, said the committee has set up a body to deliberate with operators and bring up a new rate to be paid by motorists on the policy.
Nwachukwu, who is also the Managing Director, NSIA Insurance Company, said the Commissioner for Insurance, Mr. Sunday Thomas, following a reactivation of the Insurers Committee, had directed the insurers to determine the adequacy of the current premium for the motor third-party insurance policy.
“The committee has received the permission of NAICOM to review and determine the adequacy of the current premium for the policy.
“When you have a third-party policy, it is necessary that you revisit it from time to time, so the technical and actuarial professionals will start working on that she said.
The current N5,000 official charge for the Motor Third Party Insurance has lasted for decades despite the inflation rate and changes in the prices of other goods, she said.
Operators at different industry events have spoken about the need to increase the rate of the policy. Giving reasons why they left the rate at N5,000 for decades, they disclosed it was to curb the number of fake operators in the industry.
Speaking on this development in a report, the Manage Director FBNInsurance, Mr Val Ojumah, said: “N5, 000 premium is still peanuts from what NIA is trying to achieve. But first, it is focused on supporting enforcement and compliance. NIA still will lose money at N5, 000 but this is a first step to proper pricing.
“Rating is an issue all over the world. Insurance buyers would rather not pay anything if they have the option. But because in Nigeria we have so many companies and each one of them is competing against themselves, so if they are to provide that cover properly as intended by law, the cost must be adequate.
“For the cost to be adequate, giving the level of irresponsible competition in the industry, there has to be some kind of control. That control is intended to remove the fake operators. So, with ordinary N5, 000 in a year, you are buying a liability cover of no less than a million naira with unlimited liability for bodily injury and death.
“Do you think N5, 000 is too much money to pay for one year for motor vehicle cover? Then look at the international market. Third-party liability covers in most climates in the world are extremely expensive.
“Yet people are comfortable with using fake covers that they were buying in motor parks, motor sales offices, local government offices and all of that,” he said. The Insurers Committee also revealed the Federal Government’s plans to insure all its assets across the federation.
Nwachukwu explained that representatives from the Ministry of Finance were at the meeting to update the regulator and operators of the development.
“The representative of the Ministry of Finance spoke to us on the willingness and readiness of the Federal Government to insure all its assets.
“As a result of the development, we are going to be having a meeting between the industry and the Ministry of Finance to discuss all the modalities and guidelines. Our discussion will address issues around data, premium payment, among others,” she said.
Nwachukwu said the industry is excited that the government was paying attention to insuring its assets and sustain the culture, as this would set a positive pace.
She explained that the Committee have also agreed to scale up the ECOWAS Brown card by going into automatic issuance in Nigeria.
She said, “Issues around enforcement of the brown card issuance and lots of issues around the claims that have occurred for people who have it were also discussed extensively.
She also hinted that NAICOM tasked operators to show more interest in financial inclusion, review the guidelines around it and report to the Commission.
She added that the operators are advised to show more interest in microinsurance and takaful insurance.
“The Commission has urged us to review the guidelines and get back to them if there is any issue on the operators’ side. The Commission will like to get feedback on anything that make people show more interest in microinsurance and Takaful insurance”.
Speaking on IFRS 17 and its implementation, Nwachukwu stated that NAICOM had encouraged all the insurers to ensure that they gather analysis and get ready by putting in place all internal requirements and board for the implementation.
“IFRS 17 will change the note at which numbers are accounted for going forward, it is a very serious accounting structure that we need to take seriously.”
She explained that the rebranding project of the industry has been extended and would be re-initiated soon with a new structure that was different from the former; adding that the sub-Committees of the Insurers Committee have been reduced from eight to six in number.
She listed the sub-committees as: Corporate Governance and Ethics, Market Development and Government relation, Customer Services, Credentials Guidelines, Technical and Publicity/ Communication subcommittee. The Insurers Committee is a body consisting of the National Insurance Commission and Chief Executive Officers of all underwriting Insurance companies in Nigeria. The Committee operates under a mandate to activate the industry’s change agenda, and strategically reposition the Insurance industry.