Third party motor insurance: So much abused, yet very essential

• Insurance industry loses N60bn yearly on it
• Motorists ignorant of its benefits

Nigeria’s insurance industry is losing N60 billion on a yearly basis as only 25 per cent of vehicles on Nigerian roads have genuine 3rd party motor insurance policy, Business247 News Online has learnt.

This is aside hundreds of billions of Naira the industry is equally losing on comprehensive motor insurance, which demands that 10 per cent of the cost of a vehicle be paid as annual premium.

A data sourced from the Nigerian Insurers Association (NIA) show that there are about 16 million vehicles on roads across the country, with only four million of them having 3rd party insurance cover. This, however, leaves 12 million vehicles uninsured or parading fake insurance papers.

Third Party Vehicle Insurance comes at a fixed price of N5,000 for privately used saloons, SUVs and Jeeps while commercially used vehicles are charged N7,500.

Further investigation shows that most of the motorists carrying fake insurance papers do obtain them at some vehicle licensing offices, an agency that is under the purview of Vehicle Inspection Offices (VIO), even as there are racketeers who market fake insurance to, especially, commercial vehicle drivers at their parks, garage and bus-stops.

The fake insurance paper, it was learnt, is being sold for N300 to N1000, while the paper carries names of insurance firms that do not exist. Most drivers go for fake insurance because it is cheap as well as to avoid the wrath of the law enforcement agents, as they have little or no knowledge of the benefits of buying original insurance cover.

Other uninsured motorists, it was learnt, prefer to settle their way out with law enforcement agents  on the roads.

A Lagos driver, who spoke to Business247 News Online over the weekend said he got insurance paper(fake) at the old licensing office in Ikeja, Lagos, during renewal of his vehicle documents, pointing out that he and most of his colleagues do get it at a price of between N300 to N1000.

When asked the name of his insurer, he said: ‘The name on my insurance certificate is Pacific Insurance.’ In the course of investigation, our findings revealed that there was no such name on the list of the registered 58 insurance companies in the country.

When questioned on the allegation that fake insurance papers are being issued in some licensing offices, the VIO Spokesperson, Lagos State, Mr. Gbolahan Toriola, said, the VIOs in Lagos State do not condone such act, and that any of its staff found marketing and selling fake insurance is immediately penalised, although, he cannot vouch for other licensing offices outside Lagos.

“So, if anybody has issues with a policy that he obtained in any of our licensing offices, he should go back to that office and identify the staff. In Lagos state, we don’t condone that. What we want is for people to obey the law. The staff caught will face disciplinary action and will be dismissed,” he pointed out.

To reduce the number of fake insurance on Nigerian roads, he said the agency in Lagos has partnered NIA, to access its Nigerian Insurance Industry Database(NIID), adding that, through the database, motorists can confirm whether the insurance they obtain is a fake or original one.

Through this, he stressed that the number of genuine insurance among motorists has increased. “Before now, when you stopped 100 vehicles, you hardly see 10 out of them having genuine insurance certificates, but now, I can tell you that when you stop 20 vehicles, you can see 10 to 15 of them having genuine insurance because of our enforcement and enlightenment exercise which we have done with NIA.”

He disclosed that the state government has partnered seven insurance companies to issue Auto Insure, a 3rd party motor insurance product, to motorists, stating that ‘with this, you are very sure you are purchasing genuine cover.’

He urged other vehicle inspection offices across the federation to sanction any of its staff found culpable in the act of marketing fake insurance, noting that such sanction will serve as deterrent to others who might be planning to engage in this unholy act.

In the same vein, Director General, NIA, Mr. Sunday Thomas disclosed that NIA, in a bid to increase genuine insurance adoption among motorists, had partnered with Federal Roads Safety Corps(FRSC) and VIOs in some states, such as Ogun and Lagos States, with plans to extend it to all the states as time goes on.

Thomas said, the insured vehicles captured on association’s database is still between 3.5 to 4 million, advising motorists to stop patronising fake insurers, who will only give them worthless paper that cannot be used to process claims, when the need arises.

He said the physical combat being witnessed on Nigerian roads because of vehicle accidents, could be avoided if the two parties have third party insurance as they just need to exchange their insurances to repair the damaged car at no cost.

Thomas explained that the NIID was introduced to curb the proliferation of fake motor insurance papers, provide information on the details of vehicles available on Nigerian roads, as well as enhance the verification of certificates in owners’ possession.

According to him, a motorist can check his motor insurance policy status by sending his vehicle details as an SMS to a dedicated NIID number or through the database’s website.

Contributing to the discussion, the Chairman/CEO, Boff & Company Insurance Brokers Limited, Mr. Babajide Olatunde-Agbeja, said: “If you have third party motor insurance, immediately you are involved in an accident, your insurer will pay third party claims to the tune of N1 million for a N5,000 premium.

“So, if you hit somebody’s car from the rare, you need not to worry. Just say ‘I am sorry, it’s a mistake’ to the driver. Tell him, ‘this is my insurance cover, my insurance broker will call you and fix it,’ simple and within a week, the damaged car will be repaired.”

He was unhappy that the insurance industry is losing billion of Naira on a yearly basis, because motorists refused to obtain genuine insurance, stating that if the industry can get this huge fund, it will increase its contribution to GDP, have more funds to increase insurance awareness, engage in more CSR projects, among other beneficial things.

Section 38 of the National Insurance Act 2003, currently in use, states that Third Party motor Insurance is required as part of the minimum amount of auto cover you must carry as a car owner. Penalties for non-compliance can include a fine of up to ₦250,000 and/or 1-year imprisonment.