The recent increase in the price of third-party motor insurance from N5,000 to N15,000 by the National Insurance Commission (NAICOM) has drawn anger from some motorists, saying, “why must the organization join in afflicting pains on Nigerians at this point in time.”
The NAICOM, according to a circular, noted that it was empowered to approve the new rates for motor insurance premiums by Section 7 of the NAICOM Act 1997 and other extant laws, as the new motor insurance premium rates become effective from January 1, 2023.
A motorist in Benin City, Mrs Imuwahen Oghosa, said this is coming when most Nigerians are even struggling to buy petrol, noting that the implications of this will be that some car owners will either sell their vehicles in the new year or completely ignore insuring them.
Some other motorists believe also that the new year may record more vehicles on Nigerians roads without insurance, especially the commercial vehicles.
The NAICOM had on Thursday raised the claims and cost of insurance on all classes of motor insurance, including motorcycles, noting the third-party premium insurance rate for motorists will now go for N15,000 from the old rate of N5,000.
NAICOM also raised claims for motorists to N3 million in the event of an accident while motorists on comprehensive motor insurance will not pay less than 5 percent of the sum insured or the price of the vehicle after all rebates and discounts.
The new development was stated in a circular dated December 22, 2022, signed by Leonard Akah, Director, Policy and Regulation, with the number ‘NAICOM/DPR/CIR/46/2022’, and issued to all insurance companies at the weekend.
The highest cost in the new rates is N100,000 for a commercial truck/general cartage, which also fetches the policyholders N5 million claims in the event of an accident.
Following the policy, premium income from motor insurance is expected to improve the earnings of the industry operators by 200 percent following the addition of N10, 000 to the cheapest third party.
Although the motorists are complaining but the implication of this to the industry is an improved premium income in the class of business from the 2023.
Until recently, the motor insurance class has been the major earner of income for some insurance underwriters and this new development will swell their income.
According to reports, the industry earned a total of N77.7 billion from motor insurance in a period of six months covering April to September 2022.
The class of business also fetched the industry N32.4 billion between April and June and also, N45.3 billion between July and September.
