A non governmental organisation, Transparent Protection Limited/Gte (TPL) has called on the public to support the recent hike in Motor Vehicle Third Party Insurance cover for motorists from ₦5,000 to ₦15,000, insisting that it remains the only criteria for insurance companies to pay indemnity to accident victims in the country.
Speaking at a press conference in Abuja on Thursday, 12 January, 2023, the Director, Transparent Protection Ltd/Gte, Dr. Sam Onyeka said the recent decision by the National Insurance Commission (NAICOM) was in the best interest of all stakeholders, insisting that there was no way insurer would pay the required indemnity when the cost of insurance was as low as N5,000.
He said: “TPL is aware that in December 2022, The National Insurance Commission (NAICOM) released a circular where it announced a raise in the premium of compulsory Motor Vehicle Third Party Insurance cover for motorists from ₦5,000 to ₦15,000 with effect from January 2023.
Consequently, from January 1st 2023, the Third-Party Property Damage (TPPD) which is the limit of claims an insured can enjoy on a policy for private vehicle has now been increased to ₦3 million for the new premium of N15,000. While the limit for own goods has been increased to ₦5 million, with a new premium of ₦20,000. Insurance premium rate payable on staff buses is now ₦20,000 and its TPPD would be ₦3 million.
“Commercial vehicles, trucks and general cartage now has a TPPD limit of ₦5 million with ₦100,000 premium rate; “special types’’ now has a TPPD limit of ₦3 million and premium of ₦20,000. Tricycles now have a TPPD limit of ₦2 million and premium of ₦5000 while motorcycles now have a TPPD limit of ₦1 million and premium of ₦3000.
“At the same time, we have also observed calls from members of the public against the increment and demands that the increment be reversed due to the current dire state of the Nigerian economy and inflation.
Onyeka while noting that the N5,000 was fixed as rate for private third-party motor insurance and ₦10,000 for commercial vehicles sometime in 2000, said the increment was long overdue 20 years after
He noted that having regard to inflation and other considerations including the need to ensure settlement of claims, NAICOM in 2022 announced an increase in the premium of compulsory Motor Vehicle Third Party Insurance cover for motorists from ₦5,000 to ₦15,000, insisting that it was in order.
Rationale for the Increase
He explained other rationale for the increment to include the increment in limit of Third-Party Property Damage (TPPD) for private vehicle increasing by 200%, from N1million to N3 million, while liability relating to death and bodily injury remains unlimited.
He also said the new rates include automatic ECOWAS Brown-Card cover, which covers the liabilities of motorist not only in Nigeria but also in West African states; noting that this increment will help to put an end to fake Motor Vehicle Third Party Insurance which has plagued the insurance sector for decades.
He said: “It is no longer news that over 70% of Motor Vehicle Third Party Insurance certificates in Nigeria are fake. This has in part been made possible by the very low purchase price of the policy because the money realized by insurance companies from Motor Vehicle Third Party Insurance premiums has been too small for the companies to adequately settle Motor Vehicle Third Party Insurance claims.”
He however said: “With this increment, insurance companies will earn more money from Motor Vehicle Third Party Insurance premiums which improves their ability to settle claims thereby reducing the attractiveness of cheaper fake insurance certificates.”