Some motorists have kicked against the new increment of the price of third-party motor insurance from N5000 to N15,000.
They all unanimously agreed that it would cause them to pay more in premium with the addition of N10,000 to it.
The National Insurance Commission had on Thursday raised the claims and cost of insurance on all classes of motor insurance, including motorcycles.
According to NAICOM, third party premium insurance rate for motorists will now go for N15, 000 from N5,000.
NAICOM also raised claims for motorists to N3m in the event of an accident.
Sunday PUNCH reports that buyers of comprehensive motor insurance shall not pay less than five per cent of the sum insured or the price of the vehicle after all rebates and discounts.
The new development was stated in a circular dated December 22, 2022, signed by Director, Policy & Regulation, Leonard Akah with the number ‘NAICOM/DPR/CIR/46/2022’, and issued to all insurance companies on Friday.
The highest cost in the new rates, Sunday PUNCH reports, is N100,000 for a commercial truck/general cartage which also fetches the policyholders N5 m claims in the event of an accident.
Following the policy, premium income from motor insurance is expected to improve the earnings of the industry operators by 200 percent following the addition of N10, 000 to the cheapest third party which currently stands at N5,000.
The implication of this to the industry is an improved premium income in the class of business from the Year 2023.
Until recently, the motor insurance class has been the major earner of income for some insurance underwriters and this new development will swell their income, Sunday PUNCH reports.
According to business reports, the industry earned a total of N77.7 bn from motor insurance in a period of six months covering April to September 2022.
The class of business also fetched the industry N32.4bn between April and June and also, N45.3 bn between July and September.
The commission according to the circular stated that it was empowered to approve the new rates for motor insurance premiums by Section 7 of the NAICOM Act 1997 and other extant laws, noting that the new motor insurance premium rates become effective from January 1, 2023.
The commission warned that failure to comply with the circular shall attract appropriate regulatory sanction.
For commercial vehicles, trucks/general cartage has a claims limit of N5 m while the new premium is N100,000; special types of insurance have a claims limit of N3 million while the new premium is N20,000, and owners of tricycles will pay N5,000 for insurance of each to enjoy N2 m claims.
For motorcycle insurance, the new premium is N3,000 while the claims limit is now N1m.
Reacting, a Lagos-based car owner, Olayinka Dada, said NAICOM was being unrealistic with the increment.
He noted that it would bring more pain to the drivers as this would all ‘fall back on the car owners’ to make these payments.
“When I heard the news, I just knew that those people (NAICOM) were not realistic. Third-party insurance, as I know it, is one of the cheapest insurance covers for a reason. Are they trying to make more money for themselves by directing insurance firms to ‘kill’ us?
“How much do they now expect us to pay for a comprehensive motor insurance cover?” he said.
Another Lagos-based car owner, who also operates on one of the e-hailing services, Mrs Omo Olamide, said the new increment was ‘unfair’ on car owners and other road users.
“The policy is unfair. If it is the way I understand it, that I will not be paying N15000, a N10, 000 raise for something that I used to pay N5000, it cannot work. It is unfair to us. It is too high.
“I am pleading that the policy is reviewed to suit us. If you want to increase something like this, they are supposed to do it with a human face. The car I am using for this e-hailing service is insured and I know how much I pay my insurance providers. The policy should be put on hold for now till all parties involved are well carried along,” she added.
However, the Founder and Chief Executive Officer of the Centre of the Promotion of Private Enterprise, Dr Muda Yusuf, said the increment was long overdue.
He said, “What can N5,000 buy today? The premium has been at N5,000 for so long.”
Also speaking on the matter, the Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, said, “The key thing here that motorists do not seem to understand is why this increment was made and the true value of insurance. Insurance is there to indemnify one who has a premium to where they were before the loss occurred.
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