Professional Insurance Brokers hail new premium rate on Motor Insurance

By Grace Audu (ABUJA) –

The National Insurance Commission (NAICOM), has been commended for its recent decision to introduce a new policy regarding the rate of third party premium on motor insurance in Nigeria.

NAICOM, which is the body charged with the responsibility of regulating insurance business in Nigeria, announced last month an increase in the premium of compulsory Motor Vehicle Third Party Insurance cover for motorists from N5,000 to N15,000 with effect from January 2023.

Although decision by the Commission has elicited mixed reactions from stakeholders in the insurance industry, the Association of Practicing & Professional Insurance Brokers of Nigeria (APPIBON), has risen in support of the hike, which it described as long over due.

President of APPIBON, Samuel T. Nyagba and the Secretary, Abu Eboetse, who made the position of the Association known in a letter addressed to the Commissioner for Insurance, said they were in total agreement on the increase in third party premium and also on third party property damage limit.    

In the letter dated 17th January, 2023 and jointly signed by Nyagbe and Eboetse, the Practicing & Professional Insurance Brokers said, “it is clear to us that the Commission has acted in line with the NAICOM Act and other extant laws that conferred absolute regulatory powers on NAICOM to fix premium rates in the Industry; precisely Section 7 of the NAICOM Act 2003 is unambiguous in this provision.”

APPIBON also noted that the recent directive by NAICOM was even coming late “considering the present economic realities. Replacement/reinstatement cost has quadruple over the years due to inflation and depreciation of the medium of exchange (Naira).”

“In comparism with other services like power whose tariff has been increased almost annually, the insurance cost cannot remain static. Consumers of other products like fuel energy will agree that prices have increased significantly over 100% in years past. Therefore, from the economic point of view, increase in premium rate of motor and other insurance products is justified,” said the Association.

The Association further expressed the belief that the level of awareness would increase with this directive, saying, “consumers will be compelled to seek performance when they pay more for insurance services. “

Continuing, APPIBON said: “We suggest that NAICOM should put in place a programmed automatic increase in premium that takes into consideration the economic trend.

“Our Association therefore calls on all relevant stakeholders to rise in support of NAICOM on the worthwhile reform in the industry.

“In conclusion, APPIBON stands unequivocally on this matter to state that NAICOM is on the right path and should not look back but to ensure full compliance with the directive.”

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