NECA backs NAICOM on adjustment in Third Party vehicle insurance
Nigeria Employers’ Consultative Association (NECA) has backed the recent decision by the National Insurance Commission (NAICOM) to raise the current premium rate for motor insurance, describing the decision as ‘necessary to grow the economy.’
NECA’S Director General, Mr Adewale-Smatt Oyerinde, while speaking, also described the adjustment as ‘desirable,’ even as he explained that the commission reserved the right, as provided in the extant law, in reviewing the rate.
“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”.
He, however, said it was imperative for NAICOM to always carry stakeholders along in such review, especially with the timing.
“It is worthy of note that the current rate has been in existence for over five years, while the cost of motor vehicles has increased exponentially.
“Coupled with the general price increase of goods and services, the commission can be justified if there are guarantees for improved service delivery and a higher response rate from insurance companies,” he said.
Oyerinde decried the low rate of insurance awareness in the country and urged NAICOM to deepen engagement with critical stakeholders in order to promote the insurance culture in Nigeria and get buy-ins for its Policy actions.
“In developed climes, the insurance industry plays a major role in National Development as it serves as risk off-takers in cases of accidents and other mishaps,” he said.
It would be recalled that NAICOM had increased Third Party insurance cover for motorists from N5,000 to N15,000 yearly with effect from January 2023.
The approval is contained in a circular: NAICOM/DPR/CIR/46/2022 addressed to insurance companies and dated December 22, 2022.
It was titled: New Premium Rate for Motor Insurance and signed by the Director, Policy and Regulation, NAICOM, Leo Akah, for the Commissioner for Insurance.
“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 Jan. 1, 2023,’’ it stated.
The commission also stated that the Third Party Property Damage (TPPD) which is the limit of claims an insured vehicle can enjoy on a policy for private vehicle will now be N3 million for the new premium of N15,000.
It stated that the limit for own goods would be N5 million, with a new premium of N20,000.
Insurance premium rate payable on staff buses is now N20,000 and its TPPD would be N3 million.
