Motor insurance loses N56bn annually as poor enforcement holds back industry growth

With nearly 12 million vehicles plying Nigerian roads, the insurance industry could generate an estimated N60 billion premium annually from taking a minimum motor third party cover for just N5,000.

But with only 2.7 million vehicles uploaded (insured) so far in the Nigerian Insurance Industry Data Base, the industry is generating paltry N13.5 billion from this compulsory policy.

This means that about N46.5 billion is lost to quakes and fake operators who hide under the cover of local government and state licensing offices to issue fake certificates to unsuspecting public in the name of insurance.

This has been a major loss of premium and big concern for the industry operators and regulators, but the lack of enforcement and support of security agencies have made it extremely difficult to arrest the situation.

In the past, through the support of Police and Road Safety Task Force organised by the National Insurance Commission (NAICOM), some fake operators were arrested during series of compliance enforcement campaigns in Abuja and Lagos, but due to laxity in the country’s security system no one was prosecuted.

So, this has continued unabated as these fakes continue to operate in their locations unchallenged and with protection of their state and local government landlords.

Unfortunately, the unsuspecting publics who patronise them by buying insurance certificates from them are neither compensated in the event of loss or get any form of value, except to get police and road safety clearance at check points.

Motor third party cover is a compulsory insurance for all vehicles plying Nigerian roads, and is sold for N5,000 for cars and N7,000 for commercial vehicles and has a liability cover of up to N1 million for third party damages, and no limit to life in the event of death of third party.

This means that in the event of an accident, the policy holder has a third party property damage limit up to N1 million and no limit to life in case of death or permanent disability.

According to the Nigeria Bureau of Statistics (NBS), estimated vehicle population in Nigeria as at fourth quarter 2018 was 11,826,033, with total population estimate of the country puts at 198,000,000, making Nigeria vehicle per population ratio 0.06 percent.

Tope Smart, former chairman, Nigerian Insurers Association (NIA), says the Nigerian Insurance Industry database (NIID) and the Nigerian Insurance Industry Platform (NIIP) are two flagship projects of the Association committed to ensure fake certificates are eradicated in the business.

Smart says the Association during his tenure carried out a campaign tagged: “Wetin You Carry” to promote Third Party Motor Insurance uptake among motorists in Lagos.

The Association also participated actively in the Workshop of Vehicle Insurance Officers (VIOs) from the 36 states of the Federation and the Federal Capital Territory, which was held in Lagos, and the event provided ample opportunity for the Association to make a presentation to provide more insight on the Nigerian Insurance Industry database and the Nigerian Insurance Industry Platform (NIIP).

Smart expresses optimism that these engagements and many others with the various stakeholders have helped the Association build the needed synergy with the various partners including the state VIOs in the enforcement of Third Party Motor Vehicle Insurance in Nigeria.
Yetunde Ilori, director-general, NIA, states that any insurance policy document that is not captured in the NIID is fake and worth nothing.

She therefore urges motorists and car owners to verify the certificate they are carrying, by simply applying this code into your GSM handset, and in seconds the status of your insurance is displayed on your screen. (SMS: policy number*plate number to 33125).This is compliant with all networks, she says.

“If the resultant message says, “not available on NIID date base, then know that what you are parading as insurance is fake. But if it’s there, it tells you immediately the name in which your vehicle is registered; the make and model of the vehicle; the colour of the vehicle; name of the insurance company and date of expiration of the policy.

“Verifying the authenticity of your vehicle insurance policy on the NIID gives you peace of mind and assurance that your claim will be paid,” she says.