Economy

Insurance: The Pains of Lost Premium On 9 Million Vehicles

The Nigerian Insurers Association (NIA) has revealed recently that there are over 12 million registered vehicles in the country. Lagos State alone is said to have 5 million vehicles.

Despite this large number of vehicles, the industry says that it loses millions in unpaid premium. About 9.64m vehicles have been revealed to hold fake motor insurance papers in Nigeria or are totally uninsured. The few possessing actual insurance policies most times refuse to renew them after expiration.

An estimate of 2.36m of the 12m registered vehicles on Nigerian roads have genuine motor insurance certificates.

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However, the Federal Roads Safety Corps (FRSC) Act requires all automobiles on Nigerian roads to have at least a third-party motor insurance policy or comprehensive insurance coverage of 10% of the value of the vehicle.

Motor insurance is one of the six compulsory classes of insurance in the country, according to Mr. Pius Apere, managing director of Anchor Actuarial Services.

‘Imagine if all these 9.64m vehicles are insured, even with only third party cover, which would mean a premium of NGN5,000 ($13.07) each, that amounts to over NGN45bn. It’s a lot of premium income to the insurance industry,’ he added.

Research shows that a large number of drivers in the country use of fake insurance, while a few others prefer to bribe their way out when caught by law enforcement agents.

Mr. Pius disclosed that apart from the insured vehicles having fake insurance papers, a large number of vehicle operators do not possess the necessary insurance coverage. He also accused the federal, state, and local governments of failure to insure practically all the vehicles in their coffers.

Read also: Woman Deliberately Cuts off Her Hand to Cash in on Insurance Claim

Mr. Shola Tinubu, president of the Nigerian Council of Registered Insurance Brokers (NCRIB) had earlier called for insurance awareness by relevant stakeholders. Nigerian motorists need to be enlightened on the benefits of insurance. He also advised that people carry out their insurance through brokers. The president stated brokers possess the needed expertise to enlighten them on the necessary policies that befit them.

Insurance operators in collaboration with the Nigerian Insurers Association (NIA) launched a campaign in 2019 tagged ‘Wetin U Carry’. Vehicle owners could verify the authenticity of their insurance papers by dialing 56511# on their phones.

The problem with Nigeria is not with the law, but the implementation.’ Mr. Pius disclosed. Eddie Efekoha, managing director of Consolidated Hallmark Insurance PLC called on the government and law enforcement agencies to support insurers. He stated that this could be made possible by enforcing the procurement of compulsory insurance policies. Efekoha stated that operators cannot be selling and at the same time perform the work of enforcement.

Mr. Fatai Adegbenro, executive secretary, Nigerian Council of Registered Insurance Brokers (NCRIB) expressed sore displeasure that even with the rising rate of road accidents, most vehicle owners continue to ignore the issue insurance.

‘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, that is, if they have one, to get their cars fixed. Third party covers repair to the tune of N1 million when in actual sense, you paid N5,000 premium,’ he remarked.

He further stated that enforcement of insurance policies will not only increase premium income but also increase the contribution of the insurance industry to the nation’s Gross Domestic Product (GDP).

Peace Omenka

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