Insurers move to find common rate for motor third party cover

Efforts to bring an end to rate cutting, unhealthy scramble for business, as well as guarantee adequate protection for consumers of motor third party insurance in Nigeria are underway, as insurers have commenced moves to have a common rate (price) for the policy.

The move, which is to be technology supported, through the Nigerian Insurance Industry Portal (NIIP) will ensure that all the insurance companies in Nigeria offer motor third policy at the same rate of N5,000.00 across the board.

By this process, all the insurance companies will share from premiums generated from any single consumer within the NIIP platform and as well share in payment of claims as they arise, in a structure being designed by the players.
The implication is that the consumer is adequately protected and guaranteed of the policy cover and its benefits.

As provided in the Insurance Act 2003, motor third party insurance policy protects against third party damage. This means that in the event of an accident occurring, the policy holder has a third party property damage limit up to N1 million and no limit to life, in the case of death or permanent disability.
Eddie Efekoha, chairman, Nigerian Insurers Association (NIA) said the association, after its recent CEO’s Retreat, has agreed to bring an end to rate disparity and unhealthy competition among its members, in selling motor third party insurance.
“All the chief executive officers (CEO’s) of the insurance companies have signed to this agreement and we are about to present it to the National Insurance Commission (NAICOM) for endorsement”.
Efekoha, who is also the managing director/CEO, Consolidated Hallmark Insurance Plc, observed that in the new arrangement, the lead insurer who brings in the customer will take 40 percent of the premium, while the remaining 60 percent will be distributed among other co-insurers.
But in a situation, where the cover is extended beyond motor third party, the lead company will take care of the excess after the agreed limit.
“By this effort, I believe we will be able to achieve common rates, discourage de-marketing, encourage deeper penetration, build capacity to meet claims obligation and also ensure that premium lost to fake operators are stopped.
Mohammed Kari, commissioner for Insurance, said it behoves on the NIA to address issues around rating because it is their business and it is also their place to make sure all claims are paid promptly.
“The Commission decided to allow the association deal with it, but if you cannot, we will do it because we have the power to fix rates”.
Kari however challenged the operators to deal with the problems confronting them, while referring them to the statement of the Minister of Industry Trade and Investment, Okechukwu Enelama, at the National Insurance Conference in Abuja, that “the operators should take responsibility for their industry and make it grow, and look not on the government or the regulator to do it for them.
Pius Apere, managing director/CEO, Linkage Assurance Plc, who was so passionate about resolving issues around rate cutting in the insurance industry, said this can be adequately monitored by NAICOM and the NIA, by requesting for the sales records of each company from time to time.
Motor insurance is the largest source of premium in the Nigerian insurance industry after oil and gas business.
At the end of 2015, motor insurance contributed N39.84 billion to total gross premium income put at N178.49 billion, after oil and gas which contributed N51.12 billion.
Industry analysts are optimistic that if the industry harnesses all the potential in motor business by checking fake insurance policies, expanding to areas in the country where insurance accessibility is poor, the sector could generate over N50 billion annual premiums from motor business.

 

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