By Abdul Olalekan
The 16 million motorists on Nigerian roads are in for a tough time as plans are ongoing to increase the Third Party Motor Insurance policy from the current N5,000 premium to N20,000, Business 247 News Online exclusively learnt.
This is coming at a time Nigerians are still battling with recession that has led to drastic cut in disposable income of people, as they struggle to cope with double-digit inflation and Naira devaluation that have made some cut down their insurance budget.
Umaru Kurfi, a Senator from Katsina Central, had earlier proposed a bill in the National Assembly (NASS) seeking to increase third party insurance premium to N20,000, while the bill has undergone the first and second reading and has been referred to Senate Committee on Banking, Insurance and Other Financial Institutions.
When the proposed premium is finally passed into law, vehicle owners would be made to pay 300 per cent higher than what they are paying now, a development motorists frown at.
Business 247 News Online went around some garage within the Lagos and Ogun metropolis at the weekend to interview motorists on the proposed premium increase.
All motorists, especially, the commercial bus drivers, were furious with government for such agenda, stating that this is a plan taken without the interest of Nigerians at heart.
Although insurance operators are excited about the new move, their would-be customers (motorists) slammed this proposed move and are therefore, calling on the appropriate authority to come to their rescue.
Mr. Gbolagade Onadiya, a transporter who shuttles between Lagos and Abeokuta, Ogun State, said most of his colleagues are complaining of the current premium of N5,000 for third party policy, noting that some of them are now going for cheap (fake) insurance paper, saying, this latest step is a further burden on commercial transporters.
“The problem with government is that they just take a unilateral decision without even consulting the people such policies will affect. We voted them in so that they can represent us. I think, as our representatives, they should be able to dish out policies that will favour the masses, not the one that will compound our woes,” he said.
Mr. Uche Kalu, a commercial bus driver, said to get a driver’s license now, one must have up to N15,000, adding that another proposed increase on insurance have shown that this government wants to milk Nigerians dry.
To him, “Well, it only shows that government is irresponsible, if a senator could come up with this idea and all other senators supported him. The drivers have no option than to transfer this cost on the poor passengers, and this will lead to a slight hike in price of transport fare.”
He believes government is pushing Nigerians to the wall, and that when the frustration is getting too much, Nigerians will have no option than to react in a negative way either through protest or other means.
Mr. Gideon Omoyibo, who owns a car said this development will only lead to rapid increase in fake insurance as motorists will want to ignore the genuine cover for a cheap fake insurance papers. He wonders while the National Assembly will consent to such bill at this critical time in the country, when income levels of the people have deteriorated.
“It’s a fraud because people will not be able to meet up to that premium and everybody will go for fake insurance paper. At a time everybody is complaining of financial hardship, N20, 000 is crazy in this recession. Some people will now get fake insurance and eventually bribe their way if police stop them. Government tends to pretend to be ignorance of what people are going through, “he stressed.
He, however, believes that the senator was not acting unilaterally, but must have the backing of some insurance stakeholders or the insurance industry.
Meanwhile, insurance operators have thrown their weight behind the proposed bill, believing it is the best move for the insurance industry.
Spokesperson for the Nigerian Insurers Association (NIA), Mr. Davis Iyesere, said the bill was in order and that the entire insurance industry fully supports it.
‘It’s (the bill) in order, we supports the initiative, it is welcome and commendable,’ he said.
When told that motorists were complaining of the proposed premium hike, he said: ‘If motorists are complaining, lets them also go to the National Assembly and argue it out.’
In the same vein, the President, Association of Registered Insurance Agents of Nigeria (ARIAN), Mr. Gbadebo Olameru, believes the proposed premium increase on third party insurance is a good initiative, but in a wrong time. This, he said, is because insurance premium has always been underpriced, noting that the proposed N20,000 is a reasonable premium for 3rd party motor insurance, even as he urged Nigerians to reason with the insurance industry.
He, however, advised the National Assembly (NASS) to put in place proper enforcement scheme, so that if it eventually becomes law, the new price can be enforced.
“NASS should put into consideration, the proper enforcement scheme, in the course of approving this new premium. If there is an enforcement scheme in place, this will ensure all cars plying Nigerian roads have genuine insurance. With this, enforcement of the new premium can be effective, but without this, it will increase access to fake insurance,” he advised.
Insurance industry, he pointed out, is in full support of this bill, as it will not only ensure that underwriters serve their customers better, it will also give the industry some level of credibility.
Earlier, Kurfi had sought to amend the Third Party Motor Insurance Act 2003 to ensure the accomplishment of objectives of the compulsory third party insurance cover.
According to him, increasing the premium from N5,000 to N20,000, shall ensure effective settlement of claims. He also proposed the setting up of a fund by taxing motor underwriters, stressing that the fund should be used to settle victims of accident who could not obtain compensation or where an insurance company becomes insolvent or goes into liquidation before judgment was obtained by the victim.