The number of insured vehicles in Nigeria has dropped by 18.97 percent from 3.70 million in 2022 to 3.11 million at the end of 2023, according to data released by the Nigerian Insurers Association (NIA).
Though there was an increase in premium for motor vehicles in the past year to about 300 percent, the drop, according to industry experts, was largely due to falling in car importation following the foreign exchange crisis as well as the high cost of fuelling, which has forced some households to stop using cars.
Insured vehicles in Nigeria are captured by the Nigerian Insurance Database managed by the NIA, with insurance companies uploading sold motor policies on a digital platform.
Segun Omosehim, chairman of the NIA, said following the increase in premiums for motor insurance, the association anticipated that there would be initial resistance from consumers, adding that this would be overcome over time with more awareness creation and enforcement of the law.
He said the increment in premium could have impacted the numbers, but noted that 2023 was a tough year for everyone including those who had to pay for insurance.
“The macroeconomic environment, is it inflation, is it fuel subsidy removal, the high price of petrol, or foreign exchange issues, all of these put together affected uptake of insurance,” Omosehin said.
Yetunde Ilori, director general of NIA, said the sharp increase in petrol prices following the removal of subsidy made some people had to pack some vehicles without renewing their papers, and this affected insurance as well.
“So, no doubt, inflation, high cost of living affected people’s purchasing power and decision to pay what they need including insurance,” Ilori said.
Data from the West African Automotive Show shows that out of 15,507,000 registered vehicles in West Africa, Nigeria accounts for 75 percent or 11,869,800 vehicles.
This then means that out of the 11,869,800, the insurance industry captured 3.11 million in 2023, underscoring however the prevalence of fake insurance certificates and why enforcement should be taken very seriously by the insurance industry and stakeholders involved.
Mayowa Adeduro, managing director/CEO of Tangerine Insurance, said that with the current economic situation, people are reducing the value of their assets in order to stay protected with their insurance, while others are reducing their insurance coverage.
“Some others have resorted to only third-party covers instead of comprehensive insurance; so in one way or the other, the issuance industry has been impacted by the economic trend.”
Adeduro however noted that some other clients have realised that insurance remains almost the only hope they have in case of any incident that happens to their assets, so they know that it is only insurance they can call to get them out.
According to him, some of these clients, particularly the corporates, reviewed their insurance because of inflation. “They probably know that betting under a very high-risk situation and high-risk environment is dangerous without adequate insurance cover,” Adeduro said.
Omosehin, speaking on the high cost of living in Nigeria and the benefits of insurance as a fallback position in the event of unexpected incidents, said the choice to take insurance is about prioritising one’s needs.
He said: “How much is insurance? A lot of people spend N5,000 monthly on recharge cards to talk with friends, but cannot spend the same N5,000 to protect their beloved ones in case of the unexpected.
“If you ask me, the best time to take insurance is now because it protects the future of your children’s education, their health, and everything concerning planning their future.”
According to him, people should understand the benefits of insurance, and imbibe it as part of their financial planning, even in this difficult time.
The Nigerian insurance industry’s total assets rose to N2.8 trillion at the end of the third quarter of 2023, according to the National Insurance Commission (NAICOM).
NAICOM said in a document that total assets for non-life stood at N1.74 trillion, while total assets for life business stood at N1.07 trillion.
This is as the industry paid a total of N365.5 billion as claims to policyholders that suffered losses during the review period, while total assets stood at N2.8 trillion.
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