FEMI OWOEYE with reports from ROTIMI ASHER and WALE RAHEEM
Most motorists, who pay for the annual third party insurance policy in Nigeria are uninterested in approaching insurance companies for claims, when involved in an accident, Motoring World’s investigation has revealed.
In a random interview with 822 private and commercial motorists in Lagos, Ogun and Ekiti States during the Yuletide and New Year festive season, 53 motorists claimed to have taken comprehensive insurance cover for their private vehicles. 113, all commercial vehicle operators said they do not own the vehicles; hence the third party insurance policies are handled by the owners.
Out of the 656 motorists, who obviously take compulsory third party insurance policies on their vehicles (private and commercial), only 51(less than 10%), mostly non-commercial, agreed to understand the procedure and are ready to or have in the past made third party insurance claims.
Whereas, about 90% (605) either do not understand the claim procedure, find the procedure too cumbersome or do not believe a claim could be made, hence their decisions to go on amicable settlements, whenever they are involved in an accident resulting in personal or third party damages.
“Most of the time, if the damage is minor, I accept apology and simply move on,” said one of the respondents, Mr. Felix Idahoh, an Ibadan-based pharmacist, who owns a Toyota Highlander.
Mr. Idahoh, said he had been involved in minor accidents with other vehicles thrice.
“In one of the occasions, it was my fault and I simply paid for the repair of the vehicle. The other two instances, I accepted apology and repaired the dent by myself. There was an instance, when I got the culprit to buy and fix my damaged lights.”
On why they avoid going to insurance companies, most of our respondents describe the procedure as a waste of time. Others expressed abhorrence against what they describe as awful procedures, which they are not willing to go through.
“Let me be honest with you,” explained Mrs Funmilayo Olaiya, a Lagos based civil servant, “I won’t hand over my car to any insurance company over an accident that I can get sorted in few days and be back on the road. Every motorist knows that third party vehicle insurance policy in Nigeria is a mere police-let-me-go document. And increasing the premium is uncalled for. It is insensitive on the part of the government.”
It would be recalled that, towards the end of December 2022, Nigeria’s Insurance sector regulator, the National Insurance Commission (NAICOM), announced a 200% increase in premium rates payable on the compulsory vehicle third-party insurance by motorists in Nigeria.
Under these new rates that took effect from January 1, 2023, annual premium payment for private vehicles was increased from N5000 to N15,000. That of commercial vehicles rose from N7500 to N20,000.
Defending the premium increase, the deputy president, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Tunde Oguntade described it as one of the best things to have happened recently in the insurance industry, saying it would help address the soaring cost of repairing vehicles.
He implored motorists to consider the value created by the new regime, which moved claims limit from N1 million to N3 million for private third vehicles and N5 million for commercial, stressing that, it has been difficult to repair most vehicles with N1 million owing to the high cost of spare parts.
However, in response, Nigerians from all walks of life have condemned the increase, which they view as a way to further make life difficult for them amidst the global economic downturn, which has resulted in skyrocketing prices of goods and services.
Most of the motorists, who spoke to Motoring World Correspondents, disagree with the NCRIB’s position, saying third party insurance policy in Nigeria has been merely a free pool of money compulsorily paid to insurance companies every year.
Reacting, Engr. Tajudeen Olanrewaju, a retired civil servant, described the recent increase as an insensitivity to the plight of Nigerians.
“From 1987 till date,” he claimed, “I have owned not less than eight cars on which I have never claimed insurance from an insurance company. Of course, I experienced minor accidents a couple of time. All I did was to get the culprits, who are mostly commercial drivers to either pay for the repair or take my vehicle to a panel beater whom they pay for the service.”
Another respondent, who is popularly known as Ori-Ejo, a commercial transporter, who plies Lagos – Ekiti said he was unaware of the increase.
Asked how many times he had made an insurance claim or benefitted from one, Ori-Ejo laughed, saying he does not know how to and so had never applied for any claim.
Responding in Yoruba, Ori-Ejo said:“Onimote melo lo maa gba ki a gbe moto oun lo fun insurance? Ti o ba se pe Olopa maa ma disturb eeyan, ko seni to maa waste odindi N7500 lati gba beba lasan(It’s rare for any motorist to agree to go for insurance claim. If not to avoid police disturbance, most people would not waste N7500 for a useless paper)
A private car owner, who spoke on the condition of anonymity said, ‘’ I am not aware of the increase. This is the first time I am hearing about this. In fact, I do not do third party insurance personally. Somebody handles it for me. I just lost the person recently. Neither have I ever made any claim.
‘’Anyway, if it has been increased from N5, 000 to N15,000, I am not happy about it. I have never made a claim. And I believe most motorists who pay do not make any claim. It is free money they collect every year. It is, therefore, insensitive to raise the premium rate now that things are hard. ’’
Another motorist, a private car owner, Seun Owokolade, who is into signage said, ‘’It is expected because everything seems to be moving in the direction of dollar. Rice has moved up 100%, cement, bread and other commodities. Insurance companies may want to increase the wages of their workers. Prices of products are skyrocketing all over the world. It is expected that insurance companies will follow the trend.’’
In a recent statement, Editorial board of Transport Day newspaper, slammed NAICOM for increasing the premium at a time when the purchasing power of most Nigerians was heading south, despite its failure to enlighten motorists on how they can make claims when there is a need.
“How do you want the ordinary motorists to adjust to an alarming 200% increment by making an announcement just a few days to implementation,” the editors queried, and called on relevant stakeholders to call for the immediate sack of the Commissioner of Insurance/Chief Executive of the NICOM, if the commission refuses to revert the arbitrary and inhuman increment.
The editors also called on road transport operators and motorists to use all available legal means to resist the move.
In the same vein, the pan-Yoruba socio-political organization, Afenifere, in a statement issued by the body’s National Publicity Secretary, Jare Ajayi, described the increase of insurance premium as anti-people.
It states: “It is a matter of serious concern to us that NAICOM, like some other government agencies here, appears to fatalistically gloat when policies are put in place to bring pain to Nigerians. Otherwise, why should motor owners be asked to pay 200 more than they have been paying for an insurance cover – especially when it is known that such high cost would be passed on to the poor Nigerians who patronize the motorists,” he said.
Attacking from the legal angle, A law firm, the Chambers of Evans Ufeli , has threatened to sue NAICOM if it does not reverse the increase.
It argued: “That the law that established your commission (NAICOM) did not empower you to be insensitive to the plight of the masses, to take such outrageous decisions in times of economic depression like we have today.
“It is therefore not a well-thought-out policy as same is riddled with avarice and a gross display of ambivalence.
“By the provisions of the 1999 constitution as amended (which is a superior legislation to the law establishing the commission), ‘sovereignty belongs to the people’ and their rights, not to be subjected to torture and undue socio-economic hardship is guaranteed and protected by the law under reference. Your policy, therefore, amounts to economic torture, targeted at putting Nigerians under dehumanizing conditions and the constitution forbids the same.
“It is against public policy to ambush Nigerians with such policy at a time when the same government has grounded the nation’s economy and has failed to restart it for the benefit of the masses.
The law firm, therefore called on NAICOM to reappraise the law in its own interest, as every policy must conform to socio-economic variables before same can pass the test of time.
From all indications, the increase of the annual premium payment on third party motor insurance is one of the most unpopular policies rolled out under President Muhammadu Buhari’s administration.
And analysts and economic washers believe that despite NAICOM’s reasons for the controversial policy, it is wrongly timed and would worsen the impact of the global economic recession on average Nigerians.
In a media report, Actuarial scientist and managing director, Achor Actuarial Services Limited, Mr. Pius Apere, was quoted to have said even though, the increase is good for the industry, the full potentials may not be achieved as there are implications and challenges to be dealt with.
“Through the new policy, Fake Motor insurance policies will be on the increase to avoid paying the full price,” he explained, adding that the insuring public would resist the increase, because the insured normally do not make claims on third party motor policies, even if there is an accident involving third parties. In other words, it is free money for insurers.
“There will be an increase in the number of uninsured vehicles in the country because many motorists may not be able to afford to pay the new price having considered the economic conditions in the country.
“Motorists would like to pass the increase to the passengers by increasing transport fares as a result of the new price on third party motor policy.”
The general call from Nigerians is that President Buhari and the national assembly should, as a matter of public interest, wade in and ensure that the controversial policy is reversed.
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