Insurers upbeat on positive impact of N15,000 third party motor premium

Insurance companies in Nigeria are optimistic that the newly introduced pricing regime for third party motor insurance will culminate in the provision of more effective service delivery where policy holders will enjoy expanded cover.

Chairman of the umbrella body of insurance companies in Niger, the Nigerian Insurers Association (NIA) Mr Segun Omosehin who made the disclosure in Lagos said that the new price regime for motor insurance has created the platform for insurance companies to raise the standard of the services they provide in view of the improved liquidity which companies will be exposed to.

The assurance came on the heels of the revelation that insurance brokers contributed as much as 60 per cent of insurance business in Nigeria in 2021 thus affirming the Nigerian insurance market as dominated by brokers.

Giving this disclosure, the Director General of the Nigerian Insurers Association (NIA), Mrs. Yetunde Ilori stated that out of the 60 per cent, 80 per cent of it was for Non-Life Insurance business while 40 per cent was contributed for Life.

Ilori who spoke at the management retreat of the Lagos Area Committee of the Nigerian Council of Registered Insurance Brokers (NCRIB) in Lagos, noted that insurance brokers in the Lagos market contributed 60 per cent of the business volume, underscoring the strategic importance of the Brokers located in the axis.

It would be recalled that on December 22, 2022, NAICOM issued a circular titled: “New Premium Rate for Motor Insurance” with reference: NAICOM/DPR/CIR/46/2022, signed by Leo Akah, Director, Policy and Regulation, NAICOM, for Commissioner for Insurance, Olorundare Sunday Thomas, and sent to all insurance Institutions.

The circular approved a review in the private third party motor insurance policy premium from N5,000 to N15,000 with effect from January 1, 2023.

Also approved in the circular was N3 million Third Party Property Damage (TPPD) limit for private motor; N5 million limit for own goods, with premium of N20,000; staff bus premium, N20,000 and TPPD, N3 million.

Besides, commercial vehicles, trucks/general cartage has TPPD limit of N5 million with a premium N100,000; special types, TPPD limit of N3 million, premium of N20,000; tricycle, TPPD limit N2 million, premium N5000 and motorcycle, TPPD limit N1 million; premium N3000.

The circular also stated that comprehensive motor insurance policy premium rate shall not be less than five per cent of the sum insured after all rebates/discounts.

The Nigerian Insurers Association said that it supported the increase in the third-party motor insurance as the gains would propel quantum leap in premium income of insurers and enhance claims settlement to policyholders.

Besides, the ECOWAS Risk (risks arising from travelers within the West African Countries is also covered under the premium rates, as well as strengthen regional integration.

The NIA Chairman who is also the Managing Director and Chief Executive Officer, Old Mutual Limited said during a media parley with members of the Nigerian Association of Insurance and Pension Editors (NAIPE) in Lagos said that NIA was mobilising members to ensure all members support the effort of the regulator for the success of the initiative and the growth of the industry.

According to him, the Association is in full support of the new premium rates released by NAICOM and has indeed taken steps to ensure that members comply and join in the publicity initiatives that will follow.

He said “the Association is embarking on stakeholders engagement as a first layer interface with the critical stakeholders to ensure their support.

“We do not need to restate the issues with enforcement of the old rates, but we are confident that with your usual support and the understanding of the Nigerian public, Nigerians will support the new rates and this will not only lead to increase in premium income for underwriters but also increase in claims payment to the clients.

“It is important at this juncture to point out that ECOWAS Risk (risk arising from travelers from West African countries) is covered under the new premium rates and it is going to strengthen regional integration remarkably.”

Meanwhile, stakeholders in the market have continued to applaud the contributions of insurance brokers who are said to have contributed 60 per cent of insurance business in Nigeria in 2021, affirming the market as broker dominated.

“Though it is affirmed that these businesses come from Lagos, the NIA would soon go granular to determine whether the Brokers that brought in the businesses were domiciled in Lagos or just have their branch offices there”, Ilori stated.

She noted that the high volume of businesses coming from Insurance Brokers behooves on them the responsibility to more creative and ingenious in adding more value to the insurance industry and by so doing increasing the penetration and acceptance of insurance by the populace.

Ilori admonished Brokers and all other insurance operators to be dissatisfied with the status quo and always think of doing things differently in order to record the required changes and progress required in the industry, which she noted still operated below its optimum capability.

Speaking on the theme “Leading for Change”, the CEO of Dapsaderk Consulting Ltd, MrsAdekunle Aderemi told the delegates to imbibe transformational leadership in order to change the narrative of the insurance industry in the country.

She averred that change management was a desirable skill for all managers and leaders of business in the world in order to cope with the changing dynamics of work and professions, stating that the insurance industry required more dynamism on the part of leadership to meet the changing expectations of the populace in risk management and insurance.

The Executive Secretary of the Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Tope Adaramola, who spoke on “Effective Relationship Management”, noted that since all professions and businesses are people based, professionals must deliberated school themselves in the art of people- management, as a way to excel in the changing world.

Adaramola advised professionals to place priority on personal values, good ethics, effective communication and social relationships in order to break even in life and their various professions and avocations.