Auto Owners to Get Higher  Claims on New Premium for Motor Policy

Ebere Nwoji

Vehicle owners in Nigeria can now enjoy higher claim amounts in the event of accident for self and third party damage liabilities, as well as in event of loss of vehicle following review of the premium rate for motor insurance in the country.

This was contained in a circular issued December 22, 2023  by the National Insurance Commission (NAICOM) signed on behalf of the Commissioner for Insurance, by the Director, Policy and Regulation at the commission, Leonard Akah and sent to all insurance institutions.

The circular reads, “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 issues this circular on the new Motor Insurance Premium rates effective from 1st January 2023.”

The federal government, through NAICOM had in December 2022 reviewed the premium rate for motor insurance in Nigeria effect from 1st January  2023.

In the new directive, private vehicles that were paying N5,000 premium  for N1 million Third Party Property Damage (TPPD) limit, are now to pay N15,000 premium for N3 million TPPD, while owner good vehicles are to pay N20, 000 premium for N5 million claims limit, and  staff busses are to pay N20,000 premium for N3 million claims limit.

For commercial trucks and general carriage, they are to pay N100,000 premium for N5 million TPPD limit; Tricycles N5,000 for N2 million TPPD limit, and Motor Cycles N3,000 for N1 million TPPD limit.

It added that comprehensive motor insurance policy, premium rate shall not be less than 5 per cent of the sum insured after all rebates and discount.

Beyond this, the review also offers motorists plying the ECOWAS Region the benefits of third party liability protection under the ECOWAS Brown Card Scheme.

The card provides  motorist complete guarantee for a prompt, fair and immediate compensation for any accident that may occur outside his habitual residence country.

NAICOM said the ECOWAS Brown card used by motorists plying within West Africa sub-region had been captured in the revised premium for third party motor insurance.

This means that  a registered Nigerian vehicle with third-party motor insurance automatically purchased ECOWAS brown card and is covered when in and around any of the West African countries. While motorist from other West African countries into Nigeria will get third party compensation in event of accident with a Nigerian vehicle.

Industry analysts who responded to the concerns raised by some Nigerians on the timing of the review noted that there was no any particular good time to raise a fee, adding that the focus of most commentators on the premium increase has been the hike rather than the attendant benefits.

Speaking on the issue, a Regional Manager at Linkage Assurance Plc, Mr. Muyiwa Awodire, said the premium hike came after 19 years.

“The last time we had an increase in premium for third party motor insurance was in 2004. Now, if you consider the rate of inflation over the past 19 years, you will realise that the increase is long overdue.

“But beyond the hike, let us also consider the benefits. Until December 2022, the highest claim any one could make on third party motor insurance was N1 million because that was the limit. But that has changed now, ”Awodire said.

Similarly, the Nigeria Employers’ Consultative Association (NECA) has said that the premium increase would be beneficial to the economy.

The Director General, NECA, Adewale-Smatt Oyerinde, in an interview said, “In order to grow the economy, develop the industry and provide effective risk-mitigating services to the generality of Nigerians, it is our belief that a marginal adjustment in the current rate is desirable.”

While emphasising the need for NAICOM to carry all stakeholders along in the implementation of the new policy, NECA said given that the just changed rate had been operated for about 19 years while the cost of motor vehicles had increased exponentially, the rate adjustment was not out of order.

Also speaking, NAICOM’s Head of Corporate Communications and Market Development, Mr Rasaaq Salami, noted that the ECOWAS Brown card had been captured in the new premium for third party motor insurance.

According to him, motorists driving within the West Africa sub-region would not need to get the ECOWAS Brown Card again once they had the third party insurance cover issued by Nigerian companies.

He stated that the brown card provides motorists complete guarantee for a prompt, fair and immediate compensation for any accident that may be caused by them outside their country of residence.