By John Omachonu
If there is any sector whose potential has not been tapped to the fullest, it is the insurance, metronusinessnews.com investigations have revealed.
Until few years back, the sector had been taken over by quarks and illegal operators as the sector operatives lacked initiative and creativity to make it appealing to customers, who had rather found the illegal operators more accessible.
Specifically, the third party motor insurance is one of the major areas where the operators have abdicated their responsibilities with the the attendant revenue loss to the illegal operators.
Metrobusinessnews.com investigations further revealed that most of the third party policy being held by most motorists are fake and neither do the regulators and operators feel it necessary to penetrate the market with innovative products and confidence building campaign to arrest the situation.
This is beside other challenging, including the inappropriate pricing and risk profiling, low public confidence due to late payment of compensation, lack of innovative products to attract customers as well as inadequate distribution channels that have continued to erode public confidence.
This partly explains why few insurance companies are doing well today.
This is why some analysts see the hike in third party cover to N15, 000 from N5000 as tantamount to exposing innefficiency in the sector.
“What we need in the sector is a highly focused and determined regulator for close monitory and supervision of both the activities and the operators.
“Hike in he premium would not solve the problem, but, rather, would embolden the illegal operators because sector operators have basically abandoned that section of insurance and the regulator is aware,” says Friday Ameh, Lagos based analyst.
Most of the analysts say the hike will embolden the illegal operators and later reduce further little confidence being enjoyed in the sector due to the sterling performance of few firms operating either as subsidiaries of big companies, foreign affiliations or run by few credible and focused Nigerian professionals.
According to the News Agency of Nigeria the National Insurance Commission (NAICOM) has raised Third Party insurance cover for motorists from N5,000 to N15,000 yearly with effect from January 2023.
The approval is contained in a circular: NAICOM/DPR/CIR/46/2022 addressed to insurance companies and dated Dec. 22, 2022.
It was titled: New Premium Rate for Motor Insurance and signed by the Director, Policy and Regulation, NAICOM, Mr Leo Akah for the Commissioner for Insurance.
“Pursuant to the exercise of its function of approving rates of insurance premium under Section 7 of NAICOM Act 1997 and other extant laws, the Commission hereby issues this circular on the new motor insurance premium rates effective from Jan. 1, 2023,’’ it stated.
The commission also stated that the Third Party Property Damage (TPPD) which is the limit of claims an insured can enjoy on a policy for private vehicle will now be N3 million for the new premium of N15,000.
It stated that the limit for own goods would be N5 million, with a new premium of N20,000.
Insurance premium rate payable on staff buses is now N20,000 and its TPPD would be N3 million.
NAICOM stated that commercial vehicles, trucks and general cartage now has a TPPD limit of N5 million with N100,000 premium rate; “special types’’ now has a TPPD limit of N3 million and premium of N20,000.
Tricycles now have a TPPD limit of N2 million and premium of N5000 while motorcycles now have a TPPD limit N1 million and premium of N3000.
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According to NAICOM, Comprehensive insurance policy premium rate shall not be less than 5 per cent of the sum insured after all rebates or discounts.
The commission warned insurers to be guided by the new policy as failure to comply would be appropriately sanctioned.
Some Nigerians have suffered losses in the past due to regulatory laxity.