The federal government has announced a major increase in premium rates payable on the compulsory vehicle third-party insurance by motorists in Nigeria.
Under these new rates that take effect from January 1, 2023, owners of private vehicles will pay N15,000 for Motor Vehicle Third-party Insurance against the current N5,000.
Insurance sector regulator, the National Insurance Commission (NAICOM), announced the new rates in a circular issued to all insurance firms in the country at the weekend.
The new premium rates represent a 200 per cent increase in the compulsory motor vehicle third-party insurance.
Both the commission and insurance chief executives in the country mulled the premium rate increase last year and set up a committee to look into it.
The commission yesterday announced the approval of the new rates and sent the directive to all insurance chief executives in the country for compliance.
The approval, which was contained in a circular titled: ‘New Premium Rate for Motor Insurance,’ was signed by the Director of Policy and Regulation, NAICOM, Leo Akah, for the Commissioner for Insurance.
The circular partly read: “Under 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 January 1, 2023.”
It warned that failure to comply with the circular shall attract appropriate regulatory sanctions.
According to NAICOM, private vehicles carrying their goods will pay N20,000 premium, staff buses will also pay N20,000 premium, trucks and general cartage will pay N100,000, a special type of carriage vehicle also will pay N20,000, while tricycles commonly called Keke Napep will pay N5,000 and motorcycle popularly called Okada will pay N3,000.
NAICOM said claims on Third-party Property Damage (TPPD) limit for the private motor is now N3 million instead of N1million, while claims of N5 million is the limit for own goods, with a premium of N20,000; staff bus which attracts N20,000 premium is entitled to claims payment of N3 million.
For commercial vehicles, trucks/general cartage, the commission said the TPPD claims limit is now N5 million, on the N100,000 premium paid while on special types, the TPPD limit is N3 million, on payment of N20,000 premium.
For tricycles, NAICOM said the TPPD limit is N2 million, on payment of N5,000 premium and for motorcycles, the TPPD limit is N1 million on payment of premium of N3,000.
It added that the comprehensive motor insurance policy premium rate shall not be less than five per cent of the sum insured after all rebates or discounts.
The Motor Vehicles (Third Party) Insurance Act 1950, mandates motor vehicle owners plying Nigerian roads to hold a motor vehicle insurance policy.
In a third-party insurance policy, the policyholder purchases a policy for protection against the claims of another.
These claims are in respect of death and bodily injuries to the third party and third party properties, arising from the use of the vehicle, of which the insured has legal liabilities.
Section 68 of the Insurance Act, 2003 provides: (1) “No person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third parties is insured with an insurer registered under this Act.”
A similar provision is found in the Motor Vehicles (Third Party) Insurance Act.
Section 3 (1) states: “Subject to the provisions of this Act no person shall use, or cause or permit any other person to use a motor vehicle unless there is in force about the user of that motor vehicle by such person or such other person as the case may be such a policy of insurance or such a security in respect of third party risks as complies with the provisions of this Act.”