By Henry Uche
As more reactions trail the upward review of the third party motor Insurance by the National Insurance Commission (NAICOM) in December 2022, experts are taking time to x-ray the benefits of the review. To some insurance practitioners, the 200 percent increase was on a very high side; to others the timing was not apt while others maintained that NAICOM never consulted stakeholders in the industry to weigh the pros and cons. Howbeit, NAICOM has maintain it to reconsider its decision.
Speaking at the Nigerian Television Authority (NTA) recently on Business Express, an insurance and risk management consultant, Dr. Samuel Onyeka, said third party motor Insurance policyholders and other interest groups in the insuras the upward review was in the interest of every stakeholder particularly the insured.
According to him, when the third party motor insurance became compulsory in Nigeria by virtue of the provisions of the Motor Vehicles Third Party Act of 1945 which became operational in 1950, the Third Party Property Damage (TPPD) was not covered, but later in the 1980s, it became necessary to incorporate it in the third party motor Insurance.
Onyeka affirmed that NAICOM derived its authority from section 52 of National Insurance Commission Act of 1997 to review rates and premiums.
“The scope of the Insurance Act covered death and body injuries. 19 years ago, this Act didn’t capture the Third Party Property Damage (TPPD) cover which became fashionable and now part of the compulsory third party motor Insurance. NAICOM in an effort to protect the interest of road users, Policyholders and the public who are likely to be injured by reason of the use of vehicles, have fixed this rate.
“More so, the ECOWAS Brown Card insurance cover. By reason of ECOWAS treaty, we have freedom of movement, which includes vehicular movement, but one cannot drive (say) from here to Ghana without the ECOWAS baker cover which gives you protection while you are in any ECOWAS country.
“Now the condition is that any third party policy to be issued anywhere within the ECOWAS jurisdiction must have what is called ‘Automatic ECOWAS Brown Card insurance Cover’. These and more reasons NAICOM factored into the recent upward review,” The legal practitioner maintained that Third Party Property Cover provided under section 68 of the insurance Act, which extended the scope of cover as the vehicle motor third party insurance Act or 1945, now means additional payments in terms of Premium.
“From what has happened, there is no actually no increase because the public is getting ECOWAS Automatic Protection. ECOWAS cover is necessary else, you either buy it there or you buy it on entry into any ECOWAS country even at a higher cost. So you better buy it here because you can not tell, anything can take you to any ECOWAS country,”
He reminded the insuring public that it’s from the Premiums that insurers pay claims, moreover the cost of restating the to third party to his previous condition has soared due to it inflation, added that Under the N5000 arrangement, the insurer has just N1m, so he needs sufficient funds to indemnify the third party.
“NAICOM knew that there is need to boost the capacity of the insurance companies knowing well that insurance industry is not where it ought to be but I am sure NAICOM and Underwriters are working hard to ensure that the industry add more value and increase total gross Premium and we expect $2bn Gross Premium Written this 2023,” he affirmed.