Group Life Insurance and Motor Third Party policy have enjoyed the benefit of contributing more positively to insurance companies’ growth since the regulator enforcement of rating guide for the compulsory insurances. While group life has key in properly to the rating guide, motor is still have a lot of gaps particularly from the faking of the product.
The other compulsory insurance like the Occupiers Liability; Professional Indemnity Insurance and Builder’s Liability Insurance, have yet not picked up , calling for effective enforcement.
The National Insurance Commission (NAICOM) had in 2017 released a price guide for compulsory insurances, in a bid to end rate cutting, unhealthy competition and inability of operating companies to meet claims obligation to policy holders.
NAICOM, whose core responsibility is to protect insurance consumers that pass their risks to insurance companies, warned operators of strict compliance, assuring that the Commission was going to monitor it.
Affected policies include statutory Group Life Insurance, Builder’s Liability Insurance, Occupier’s Liability (public building) Insurance, Healthcare Professional Indemnity Insurance and motor third party.
In a circular signed by Leonard Akah, at that time on behalf of the Commissioner for Insurance reads “Insurance operators are directed to henceforth adhere and comply with existing approved premium rates for all Compulsory classes of Insurance.”
According to the circular, Statutory Group Life Insurance, which is a fallout of the Pension Reform Act 2004 as amended in 2014, shall be 6.8 per mile.
Section 4 (5) of the Pension Reform Act 2014 stipulates that every employer to which the Act applies, shall maintain a group life insurance policy in favour of the employees for a minimum of three times the annual total emolument of the employee.
Also Occupiers Liability, which is a provision of Section 64 of the Insurance Act 2003, according to NAICOM will be – sum assured between 10-50 million naira will be charged 0.30 percent for federal and private buildings, 0.35 percent for state and federal capital territory and 0.40 percent for local governments, among others.
The policy provides that “No person shall cause to be constructed any building of more than two floors without insuring with a registered insurer his liability in respect of construction risks caused by his negligence or the negligence of his servants, agents or consultants which may result in bodily injury or loss of life to or damage to property of any workman on the site or of any member of the public.
For Professional Indemnity Insurance according to the circular, rate for less than 20 bed spaces of N10 million sum assured will be N50,000.00; while 21 to 50 bed spaces of N15 million sum assured shall be N60,000; while 51 to 100 bed spaces of N40 million sum assured shall be 120,000.00, among others.
This is a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.
Rate for Motor Third Party, which incidentally has been the most abused shall be for private motors N5,000.00; Commercial motor (own goods) N7,500.00; commercial motor (staff bus) N7,500.00; commercial Motor (Trucks/general cartage) N25,000.00.; motor trade(road/premises risks) N5,000.00; special types (Ambulance/Hearses) N5,000.00; Motor Cycle (power bike) N1,500; and official ride N1,500.00.
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.
Some operators who reacted to the release of the circular though preferred not to be mentioned hopes this effort we will help the industry achieve common rates, discourage de-marketing, build capacity to meet claims obligation, make profit, increase shareholder value and also ward off fake operators.
Modestus Anaesoronye
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
