Daily Independent Online.
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Monday, July 26, 2004.
Motor insurance premium to hit N24b
By Bethel Obioma
Insurance Correspondent, Lagos
Premium income from motor insurance business is
likely to hit N24 billion at the end of the current financial year, insurance
operators have predicted.
The underwriters said the sum would be about twice of
last year’s figure, which stood at N12.65 billion, accounting for nearly
a quarter of the industry's total gross premium income for the year ended
December 31, 2003.The industry's projected gross income for last year was N50.2
billion.
Daily Independent gathered that the prediction is
hinged on the recent approval of new motor insurance premium rates by the
National Insurance Commission (NAICOM).
The new maximum rates include N5,000, or 10 per cent
of the limit of liabilities for private cars, N7,500 or 0.75 per cent of the
limit of liabilities for own goods and buses and N10,000, or one per cent of
the limit of liabilities for commercial trucks.
Although regarded as the most lucrative sector of
insurance open to all players in the industry, the fortunes of motor insurance
has been marred by uneconomical rates, activities of fake practitioners, huge
operational and claims costs. These motivated the resolve of insurance
operators under the aegis of the Nigerian Insurers Association (NIA) to pursue
an upward review of the rates with NAICOM.
According to Mr. Oluwole Oshin, Managing Director,
Custodian and Allied Insurance Company Limited, insurers had, over the years,
been carrying the burden of an under-performing motor arm despite the huge
opportunities provided by the law that requires all motorists to have, at
least, a third party cover for their motor vehicles.
Oshin added that the need for the review of the rates
finally dawned on the industry, following the increase of insurers' liability
on third party motor insurance covers from N250,000 to N1 million. "The
need for an appropriate premium price regime for motor insurance cannot be
overlooked under the prevailing circumstances, characterised by unending
operational costs and heavy claims payout," he said.
Meanwhile, NAICOM has said the new rates were in recognition
of the present economic realities and aimed at empowering insurers to meet all
their obligations.
The commission said the insuring public should report
any case, involving any insurance company that charges rates above those
approved or defaults in claims payment. NAICOM has also assured the insuring
public that with the introduction of the Vehicle Insurance Stickers (VISER),
the commission would be in the position to monitor the issue of payment of claims by insurers in the event of
claims.
The commission added that VISER would also ensure the
protection of victims of vehicular accidents, a feature that has been absent as
a result of motorists carrying dud insurance certificates of unexisiting
insurance companies.
