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Motorists Lose Out On N1m Claims On N5,000 Premium

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Low awareness on the benefits of N5,000 third party motor insurance policy has denied each of about motorists N1million third party claims,  LEADERSHIP.

With N5,000 annual motor insurance premium, a motorist can actually claim N1million third party damages.

LEADERSHIP reports that of the 12 million vehicles on Nigerians roads, about 8.6million are uninsured while the remaining 3.4 million were insured.

However, out of the 3.4million insured vehicles, it is believed that about 2million carries third party motor insurance policy being  sold at N5,000 while the remaining 1.4million have comprehensive motor Insurance policy which is sold at between 5 to 10 per cent of the cost of a vehicle.

Third Party motor insurance covers the insured’s liability for death/injury to Third Party and loss or damage to the third-party property in the event of vehicular accidents.

While it is one of the compulsory insurance policies in Nigeria, it is the legal minimum level of motor insurance cover any motor vehicle owner plying the Nigerian roads is required to have by law.

Investigation shows that the policy takes care of the damage caused by the insured to the Third Party’s property or vehicle, as well as the Third Party’s medical expenses (if any) in the event of an accident, when the policyholder is at fault.

To this end, it covers accidental damage to the property or vehicle of a Third Party of up to N1million as this form of insurance is expected to reduce dispute on who bears repair costs in the scene of  accident between two or more vehicle drivers.

However, low awareness on the benefits of this form of insurance, has resulted in most motorists repairing the damaged vehicles of the third parties involved in an accident from their pockets, when indeed the policy they carry covers that.

LEADERSHIP investigation and interview conducted among, especially, public transporters, show that, only few of them, understand that they can lodge a claim on the policy they bought, even as some have never had of any insurance policy.

They said, they always settle out with motorists involved from their own pocket and if they don’t have the money, they begged the victim motorist and engage in fights.

They believe the certificate is just an ordinary paper that prevents them from the wrath of the law enforcement agencies on the roads.

To test the level of awareness on third party motor insurance, LEADERSHIP went round to interview some motorists and most of them were surprised their third party policy can do so much for them, yet, they were not aware of that.

According to a Lagos public transporter, Austin Akpan, “I am not aware that I should receive claims when being involved in an accident. This is the first time am hearing it even though my insurance is up-to-date. I have alway renewed my insurance certificates, yet, I have never lodge any claim in this regards.

I just do it because it is recommended and because of Vehicle Inspection Officers(VIO).

“If I damage someone’s car, I bear everything from my purse and more so, I do not know how to go about it and make claims, even as I always renew my insurance.”

On his part, Babatunde Anifowoshe, said, even though his vehicle has third party insurance, he don’t have the time to go and lodge claims in insurance companies.

“I insured my vehicle but when it comes to making contact with the insurance company as regards the accident, I do not have time for it simply because it involves a lot of process and time consuming which I am not comfortable with. I am a commercial bus driver,  I cannot be contacting insurance companies over just the N5,000 issue, because time is of the essence,” he pointed out.

For Femi Samuel, he said: “there was an issue like that when I had an accident, and when I went back to the insurance company, they did not pay me anything. I believe the insurance is for all the big cars and not commercial buses like our own. I believe they would not attend to us.”

Another person, who wants to be anonymous, said ignorance is the major problem when it comes to the issue of lodging insurance claims adding that, ‘and the greatest of it all is lack of patience for the process to take effect.’

With insurance penetration in the country under one per cent, low insurance awareness and education have been fingered as major issues for this.

To this end, the commissioner for insurance/CEO, National Insurance Commission(NAICOM), Mr. Sunday Thomas, had, on several occasions, implored insurance industry players to increase awareness and educate Nigerians on, majorly, the six compulsory insurances, which include, third party motor insurance.

He believes proper awareness on the features and importance of these insurance policies will deepen insurance penetration and drive the revenue of the industry up.

However, while some underwriters are spending money on raising awareness level, some are reluctant to do so, with the mindset that more awareness could lead to increased claims that may jeopardize their balance sheet.

Speaking on deepening insurance awareness and education, the chairman,  Nigerian Insurers Association(NIA),  Mr. Ganiyu Musa, said, the association has embarked on series of insurance awareness campaign in print and broadcast while some individual companies are doing same, in a bid to increase insurance awareness and adoption in the country.

Musa, who is also the group managing director/CEO, Cornerstone Insurance Plc, enjoined other motorists to procure, at least N5,000 third party motor insurance policy as this guarantee them up to N1million Sum Assured in case of any eventuality to the third party vehicle.

He promised that insurance operators will always pay genuine claims just as the industry has improved over time in the area of claims payment.

“The association will continue to emphasise the need for insurance companies to pay all genuine insurance claims and will not hesitate to sanction erring member companies,” he pointed out.

To this end, insurance industry paid over N240billion claims in 2021 while it paid about N280 billion in 2021 financial year.

Speaking to LEADERSHIP, the executive secretary/CEO, Nigerian Council of Registered Insurance Brokers(NCRIB), Mr. Tope Adaramola, acknowledged that insurance companies as well as brokers still need to do more to increase awareness of, especially, third party motor insurance, stating that, his association through, its six area committees, have been doing a lot in this regards, although, it could be better.

He charged the motoring public to insure their vehicles through insurance brokers, who, apart from enlightening them at the point of signing insurance contract, will also assist them to retrieve their claims in the insuring firms with ease.

He said the ultimate of insurance is peace of mind, adding that,”it often baffles me when I see two enlightened persons fighting themselves on the roads during a crash, when what they could have done is to exchange their respective third party motor insurance to get their cars fixed. Third party covers repair is to the tune of N1 million when in actual sense, you paid N5,000 premium.”

Insurance companies as risk buyer, he said, will always return back the insured to the financial position he was, prior to the occurrence of the insurable risks, urging people to utilise the tool of insurance to replace their assets.

The Federal Roads Safety Corps(FRSC) Act demands that any automobile on Nigerian roads must have at least third party motor insurance policy or comprehensive insurance coverage which goes for between 5 and 10 per cent of the value of a vehicle.

Third Party Vehicle Insurance comes at a fixed price of N5, 000 for privately used saloons and SUVs, while commercially used vehicles are charged N7, 500. But of recent, N5,000 has been the flat rates for all automobile.

On non-insurance of about 8.4million vehicles,  Actuarial scientist and managing director, Achor Actuarial Services Limited, Mr. Pius Apere, said it is pathetic that motorists can put their vehicles on the roads without appropriate insurance cover, despite the fact that law enforcement agencies such as FRSC, Vehicle Inspection Officers(VIOs) and the police are always checking for vehicle documents.

While calling for prosecution of offenders to serve as deterrent to others, he urged law enforcement officers to specifically ask for insurance certificate of motorists to increase insurance patronage.

He said though some of the uninsured vehicles have fake insurance papers, he noted that, majority of them, especially, transporters do not have appropriate insurance coverage, even as he accused government at the federal, state and local levels for failure to insure virtually all the vehicles in their coffers.

To him,” insurance industry is losing a lot to non-insurance of all these vehicles, despite Motor insurance is even one of the six compulsory ones. Imagine if all these 8.6 million vehicles  are insured even with third party cover, which is N5,000, that amounts to over N43 billion, it’s a lot of premium income to the insurance industry. The problem with Nigeria is not about law, but implementation is always the major problem.”

However, there were ongoing move by operators to increase the premium of third party motor insurance beyond the current N5,000 which could take the price to N7,500 or N10,000.

Reacting to this, the NIA chairman, Ganiyu Musa, disclosed that the Replacement cost of damaged vehicles or other assets has actually gone up in recent time, stating that, the cost of replacing some car parts is unimaginable, compared to a paltry sum of N5,000 premium.

He said, the process of implementing the new rate is almost concluded, and by the end of the first quarter, a new pricing may have been agreed and communicated to the insuring public.

This, according to him, will also Increase the sum assured on third party motor insurance above the current N1 million depending on the level of increase.

“Replacing an asset is costlier these days, which was what necessitated the review of the current rate. A new rate will soon be out after necessary discussions and approval. However, although, the premium will increase, the sum assured will equally increase as well which makes it good too for the insuring public,” he pointed out.

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