The Insurance Consumers Association of Nigeria (INSCAN), an affiliate of the Federal Competition and Consumers Protection Commission of Nigeria (FCCPC), has called on the National Insurance Commission (NAICOM) to reverse its directive on increasing third-party motor insurance premiums in Nigeria from N5,000 to N15,000, a 200 percent increase.
The association demanded that the increment be reversed, claiming it was a willful violation of the fundamental principle of utmost good faith and other decent regulatory rules governing insurance practice.
“We demand the reversal of the directive as it amounts to a deliberate breach of the Fundamental Principle of Utmost Good Faith and other decent regulatory principles that guide insurance practice,” INSCAN said.
NAICOM raised the premium for third-party motor insurance premium from N5,000 to N15,000 effective January 1, 2023.
“Pursuant to the exercise of its function of approving rates of insurance premium under Section 7 of NAICOM Act 1997 and other extant laws, the commission hereby issue this circular on the new motor insurance premium rates effective from 1 January 2023,” the circular read.
According to the association, NAICOM did not fully comprehend the implications of its mandate, claiming that individuals on the receiving end were insurance consumers who provided the accrued income to the entire insurance industry.
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It stated that NAICOM’s policy directive was not subject to civilised trade practices, professionally accepted insurance principles, transparent customer-oriented regulations and humane attention to the economic situation of most Nigerians.
INSCAN noted that the public was given adequate time for feedback and adjustment to make improvements to the CBN’s recent cases of currency redesign and cash withdrawal limits.
It said the almost 20 million motor insurance consumers in Nigeria deserved more than a week’s notice for compliance.
“How much has your commission paid out to victims and customers of proscribed insurance companies over the past 20 years as required under section 78 of the Insurance Act 2003 to justify the astronomical increase in premium amount? Where is the report of an ad hoc committee required to be set up under section 52 of the Insurance Act 2003, stating the imperative of increasing Insurance Premium by a whopping 200 per cent We also know that the referred Sec. 52 of that Insurance Law does not confer arbitrary powers on you because insurance is a business affected by public policy and otherwise it becomes legalised robbery,” INSCAN said.
The association added that the directive’s predictable outcome would be a substantial increase in the number of fake insurance underwriters in Nigeria.
It further explained that the directive would garner more money to the pockets of NAICOM and insurance operators, forcing more Nigerians into hardship.
“To what extent have the interests of the policyholders of the insurance underwriters, whose licences you revoked in the past year, been protected? How much have you paid to the various fire brigades in Nigeria as Fire Service Maintenance Fund as prescribed under section 65 of the Insurance Act 2003? But still, you are quick to increase the Premium burden on the largely dissatisfied Insurance Customers in Nigeria,” it said.
The association said failure to reverse the hike would put NAICOM on record as the regulator with the highest impunity and insensitivity in Nigeria.
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