Insurers lose N58bn in 3rd party policy to quacks

The nation’s insurance industry may be losing an estimated N58 billion premium annually from the over N70 billion expected from compulsory motor third-party insurance, BusinessDay investigations have shown.

The implication is that only N12 billion is collected as revenue from the few motorists who patronise genuine operators for the licence which is usually demanded by the police and other vehicle inspectors at checkpoints.

“The insurance industry no doubt is losing a lot of revenue on motor third-party insurance. Think of the number of vehicles in Nigeria, even if it is only minimum third party, it’s a huge amount of money,” said Kola Ahmed, director general, Chartered Insurance Institute of Nigeria (CIIN), in an interview with BusinessDay.

Motor third-party insurance is a cover made compulsory under the 2003 Insurance Act against third-party damage or loss for all vehicles plying Nigerian roads. The policy, which sells for N5,000 for cars and N7,000 for trucks, provides cover for third-party damage up to N1 million for property and no limit to life.

Incidentally, the potential of this policy is currently being threatened by the growing presence of quack operators at local government vehicle licensing offices across the nation.

Also, the inability of the police to discern genuine papers in many cases, and lack of aggressive marketing and monitoring on the part of genuine insurance operators have left the major part of the business to quacks.

As at the middle of July 2014, only about 2.4 million motor insurance policies had been uploaded on the Nigerian Insurance Industry Database (NIID), a technology platform established three years ago by the Nigerian Insurance Association (NIA) to keep record of motor policies issued by the industry and ward off fake operators. Meanwhile, there are an estimated 14 million motor vehicles registered in Nigeria.

This therefore means that only about N12 billion has been generated by the industry from motor business this year, including third-party and comprehensive policies, whereas third-party insurance alone can generate N70 billion if the estimated 14 million vehicles registered in Nigeria were insured at the minimum N5,000.00 each.

Ahmed said the issue of fake insurance certificate paraded everywhere was a major concern for the industry because a lot of revenue was being lost, adding that it required the collaboration of every stakeholder to ensure compliance, especially in the state and local governments which are in control of motor licensing offices in all the states.

“The industry needs to go to the grassroots to get the support of the local government authorities all over the federation so that they can go down to the licensing offices in their localities where these touts play their act,” he said, noting that since licensing offices were housed by the local governments, their support was needed to stop the fake people issuing insurance certificates.

He said that at the CIIN, they were doing their best to unite every arm of the industry so that they could all pursue common goals, adding further that there had been an improvement in their efforts towards collaboration in information dissemination, human capital development and training.

“We are sensitising the different arms of the industry to imbibe the spirit of collaboration and interdependence to ensure we leverage on the opportunities we have as an industry,” he said.

Bola Omole, IT manager, NIA, said the industry instituted the NIID to help the public discern between fake and genuine insurance cover.

“Except you want to be deceived or you want some people to feed fat on your ignorance, you have got no reason to pay for fake documents in the name of motor third-party insurance. So if your policy document is not captured in the Nigerian Insurance Industry Database (NIID), then that policy document is fake and worth nothing,” Omole said.

“You can actually verify it yourself right away from where you are. This has not only brought a check to fake documents, it has now empowered you to make claims on all third-party liabilities,” he added.

MODESTUS ANAESORONYE