Experts Speak On Motor Insurance Issues | Independent Newspapers Limited
Newsletter subscribe

Business, Science

Experts Speak On Motor Insurance Issues

Posted: Apr 30, 2015 at 12:33 am   /   by   /   comments (0)

Experts in the insurance sector are not left out in the agitation for a better administration of the insurance sector, especially, that of motor insurance class. It has been observed over the years that the sector needs a revamp for it to be able to rank among the best in the world.

It is also believed that operators in the sector will have to unite if they intend to make insurance part of the way of life of Nigerians, especially at a time when the economy of the country is ranked as the best in Africa.



Motor Insurance, which is the most common of all the known classes of insurance, is designed to protect the insured from loss of or damage to his vehicle, damage to Third Party property including bodily injury and death to Third Parties caused by accident.

Among the types of cover obtainable in the industry include the Third Party Risk Cover which covers bodily injury including death to Third Parties caused by accidents occurring on public roads.

Under this, claimants’ costs and other costs incurred are also recoverable and the third Party property damage is covered in addition to bodily injury and costs described above. The third Party property damage limited to N1,000,000 is covered, whilst bodily injury and death are unlimited.

Third Party Fire and Theft Cover, takes care of Loss of or damage to the insured vehicle caused by fire and theft is covered in addition to the covers available under the “Third Party Risk only” cover described above.

There is also the Comprehensive Cover, which is the widest cover available in motor insurance as it covers loss of or damage to the insured vehicle in addition to the covers available under the two described above.

The Interim Chairman, Nigeria Council of Registered Insurance Brokers ( NCRIB), Abuja Chapter, Ifeanyi Opara, lamented that insurance agents saddled with the responsibility of enforcing the Third party insurance have compromised as some end up issuing fake insurance to motorist.

“Now government, in an attempt to improve on insurance penetration came up with the law that you must compulsorily insure. Over the years, you know we had third party insurance made compulsory but the enforcement has been a problem.

Now if you don’t have the money to obtain the comprehensive insurance, for instant, on your vehicle, you can afford the minimum price of about five thousand Naira to take up a third party insurance. So, that one is made compulsory.

You see the Vehicle Inspection Officers (VIO) or the Road Safety Corps or even the Nigerian police that are given the responsibility to ensure that this compulsory insurance policies are enforced but they have not effectively carried out the task. Because of that you still found that the level of compliance is not near 10 percent.

“We have so many vehicles in this country and most of them don’t have third party insurance and even those who may have something that looks like third party to protect you  if you examine it thoroughly you find out it is a fake.

“The National Insurance Commission (NAICOM) which is the regulatory body and the other body which is the Nigeria Insurance Association (NIA ) and the Nigeria Council of Registered Insurance Brokers ( NCRIB) all have very serious role to play in this. There is need for us to create awareness among the people. Create a platform where they can always educate the public on the insurance.” He said.

Also, kingsley Opurum, the spokesperson , Transparent Protection Limited (TPL) , an insurance organisation, said that some government agents issue out fake insurance.

“The government must rise up because some of the people that are causing the problems belong to government agencies. VIO wear uniform and when you see somebody in uniform you respect him because he has government power.

The VIO does not have power to issue motor third party insurance. The motor vehicle insurance is issued by insurance companies or through an insurance agent. VIO is not an agent. They have no power and they have no reason to issue motor insurance. Government should be able to condemn it and those VIO should stop selling it.

Also speaking on the issue, Mr Sunday Thomas, Director-General, NIA, disclosed that his association was already discussing with the Lagos State government, to deploy mobile devices into the state, for verification of motor insurance policies of road users. He added that Kwara State government had also been approached to key into this initiative.

Explaining the reason NIA chose Ogun State as a pilot state for the database, he stressed that insurance in Nigeria was traceable to Abeokuta, Ogun State, saying, the state was also one of the states to first indicate interest in the project.

Applauding the performance of the project since it was introduced; he noted that the success achieved so far from the first module had led to the proposed implementation of the second module in marine business.

Mr. Wale Banmore, Managing Director, Royal Exchange Prudential Life Assurance plc, says there must be agencies to strictly enforce compulsory insurance laws in Nigeria to make the laws effective.

Banmore said if the provisions of the law on compulsory insurance covers are not being implemented, one cannot say compulsory insurance covers actually exist in the country.


Operators unite

Statistics from the Nigerian Insurers Association indicate that about 76 per cent of certificates being circulated in the marine sector are fakes, while 75 per cent of certificates used by motorists are not genuine.

Marine and motor insurance policies are two relevant areas where the country’s laws require stakeholders to have insurance certificates. Because of these mandatory requirements, many people have continued to buy fake papers at cheap rates.

Drivers and importers often present such fake papers to law enforcement agents to show they have complied with the law.

The Group Managing Director, Mutual Benefits Assurance Plc, Dr. Akin Ogunbiyi, says poor awareness is not the only reason a lot of motorists patronise fake vendors.

He observed that most insurance firms were concentrated in big cities and those in remote areas had less access to them. A reason, he noted, had allowed fake vendors to continue to proliferate fake certificates.

The Nigerian law mandates all importers who bring in goods through the country’s ports to fulfil the requirement of insuring cargos with a local insurance company.

Specifically, Section 67 subsections 1 of the 2003 Insurance Act says, “Insurance in respect of goods to be imported into Nigeria shall be made with an insurer registered under this Act.”

Section 67 subsection 4 adds that “an importer, broker or agent who effects any insurance otherwise than in compliance with the provisions of this section commits an offence and is liable on conviction to a fine of N500,000.”

The Insurance Act 2003 also mandates all motorists to have a minimum of third party motor insurance policy.

Section 68 of the 2003 Insurance Act states, “No person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third parties is insured with an insurer registered under this Act.’

It further explains that the insurance of this section shall cover the liability of not less than N1m.

According to the Act, a person who contravenes the provisions of this section commits an offence and is liable on conviction to a fine of N250,000 or an imprisonment of one year or both.

A motor insurance is statutorily mandatory for all motorists to have before they can drive their vehicles on the road. The essence is to ensure necessary compensation for any accident that the motorist may cause to other road users.

Motorists are however required to pay premiums to insurance firms who will thereafter take liability for any damage the driver may cause as a result of an accident.

The Managing Director of LASACO Assurance Plc, Mr. Olusola Ladipo-Ajayi, says an authentic motor insurance will protect the motorists against third party liability if he causes an accident.

Again, he explains that if the insured driver is charged to court for any damage caused with his vehicle, the insurance company will provide him with a lawyer to defend him in court.

The only thing that the insurance company cannot do for the motorist, he notes, is to take care of the penalties that he needs to suffer in criminal law.

“If damages are awarded, then the insurance companies will take up the limit of the liability. It covers the third party damage or body injury and vehicle damage,” he adds.

However, the NIID aims to provide information on the details of vehicles available on Nigerian roads, as well as helps in the verification of fake certificates.

Before efforts by NAICOM and NIA commenced on the fight against fake papers four years ago, NAICOM had said that 90 per cent of vehicles on Nigerian roads were having fake documents. Presently, the figure has reduced to 75 per cent, according to the NIA.

The Director-General, NIA, Mr. Sunday Thomas, says the NIID is an electronic means which allows drivers to verify the authenticity of their certificates.

According to him, policyholders whose vehicle insurance details have been uploaded on the NIID can check their motor insurance policy status through SMS and on the Internet.

He says the NIID is a joint initiative of all insurance firms in the NIA, adding that it has concluded its packaging which is structured for the marine sector.

Thomas told our correspondent that as of October; only 2.7 million vehicles had been registered by licensed insurance firms under the NIID.

He notes that this is a significant improvement over a figure of more than a million which was recorded in the corresponding period of 2013.

According to figures from the NIA, 11.4 million vehicles were registered across the states in the country by the Federal Road Safety Corps in 2012.

This means that at least, 8.75 million vehicles moving on Nigerian roads are operating without genuine insurance certificates.

After seeing the improvement made by the NIID in reducing fake papers in the motor insurance sector, Thomas says similar progress will soon be made in the marine sector.

He says the NIID will help the Nigeria Customs Service to verify authentic certificates because touts have been proliferating fake insurance certificates.

“What we are doing right now is that we are test running it; we want to fully deploy it for the first three months and see the performance and the value-added to the system in the marine sector,” he says.

According to him, the association has identified the stakeholders in the process such as banks, the customs, clearing agents and importers.

The NIA boss explains that if an importer borrows from the bank and uses fake paper for the purpose of getting a clearance and something happens, to repay the loan can be difficult.

With genuine insurance, he says that the interest of the lender is fully protected and the importer will be able to continue with business when claims are settled.

Thomas says, with the introduction of the NIID, the customs can no longer be deceived because they can verify the genuineness of the insurance document from their desk.