Insurance stakeholders and vehicle owners have continued to react to the new premium rates for various classes of motor insurance approved by the National Insurance Commission (NAICOM) on Dec. 22.
With the new policy, third party motor insurance policy will be increased from N5, 000 to N15, 000, with effect from Jan.1, 2023. 
NAICOM announced the new policy in a circular titled: New Premium Rate for Motor Insurance with number: NAICOM/DPR/CIR/46/2022, signed by the Director, Policy and Regulation, NAICOM, Mr Leo Akah.
“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,” NAICOM said.
A vehicle owner, Mr Hakeem Olagunju, on Friday said the decision of NAICOM was unreasonable and ill-timed in view of the prevailing economic situation.
Olagunju stated that insurance firms indirectly owed many vehicle owners in Nigeria claims that were not presented, as many of them were not even aware of the benefits of motor insurance and hardly made claims in the event of accidents.
He noted that most vehicle owners had been paying the reviewed N5, 000 third party motor policy and had not been presenting claims because of the tedious process of claims payment by insurance companies.
“We are not expecting this increment from the insurers because they have been benefitting ‘free N5, 000,’ yearly from millions of vehicle owners for years now without paying us claims.
“This 200 per cent increment on the various classes of motor insurance is not justifiable and should be revisited by NAICOM to prevent more hardship on average Nigerians.
“With the current insurance penetration level and contribution of 0.4 per cent to the Gross Domestic Product (GDP), the focus of NAICOM should be how to improve insurance penetration through prompt claims payment.
“This would boost the level of trust and commitment of Nigerians to insurance,” he said.
His view was corroborated by Mr Adams Isiaka, a commercial bus driver and member of the Nigerian Union of Road Transport Workers (NURTW), who said the 200 per cent increase in the rate of motor insurance would compound the woes of Nigerians. 
Isiaka stated that vehicle owners were already incurring lots of expenses on their cars and as such should not be unduly ripped off by insurance companies.
He lamented that he had never gotten any claim from his insurance company since he had been paying the N5, 000 motor insurance policy rate because he had never presented a claim and was not interested in doing so.
The commercial driver noted that if the commission insisted on implementing the policy, just as other commodities in the market such as vehicle spare parts and cost of repair had been jacked up, it should not be more than between 50 to 75 per cent increase.
He said the government should make motor insurance policy optional for vehicle owners if possible, to prevent insurance companies from making ‘free money’ through the policy.
“Government should make the motor insurance policy optional for us, because we have not been benefiting from it and can’t be paying that much for what we don’t benefit from.
“Those who are interested in processing claims payment can go ahead and buy the policy but for people like us who are not interested, they should leave us to our faith,” he said.
However, Mr Edwin Igbiti, president/chairman, Governing Council, Chartered Insurance Institute of Nigeria (CIIN), said in spite of the current high inflation rate in the country, the review of the policy was long overdue.
Igbiti said although NAICOM and the insurance operators were still holding talks on the reviewed policy, the focus was how insurers would enhance their operations to make the increment worthwhile.
He stated that compared to other African countries, Nigeria’s premium rate remained one of the least in terms of third party motor insurance.
The CIIN president noted that the increment was justifiable because it had enhanced cover, which included the ECOWAS Brown Card.
He explained that the ECOWAS Brown Card covered Nigerian vehicles, within the country and in the ECOWAS region, adding that this was in line with the agreement reached by all Heads of ECOWAS member countries.
“This was factored in to make up the new price, which is good for us all.
“The only snag I observe is the timing of the new policy, which was released in December.
“This is because by December, every company that is serious with insurance must have concluded their plans for renewal in January.
“Having made their budgets ahead of the New Year, it would be inconvenient for them to start adjusting their budgets to accommodate the new price.
“I would have suggested the announcement made was a notification while the effective take off date is April 2023, so that everyone is well prepared for it,” he said.
Igbiti appealed to the public and insurance policy holders to embrace the decision of NAICOM with the understanding that the old price was no longer feasible and the new price included enhanced features.
He urged insurance companies to be more responsive to payment of claims as NAICOM had announced its preparedness to sanction any erring insurer.
The CIIN president said: “If insurance firms are showing evidences that they are paying claims, people will see value and will not question the amount they are paying.”
Igbiti stated that if the new policy was fully embraced by the operators and the public, it would lead to increase in premium generation, sustain claims payment and boost insurance penetration.
In the views of Mr Moses Igbrude, National Coordinator, Independent Shareholders Association, the new price is a welcome development as the reviewed N5, 000 premium rate is no longer realistic.
“To be honest, is the N5,000 premium paid by motorists in a year worth it, to get a N1million cover in the event of accident with the inflation on cost of spare parts and other services?
“The only reason why many Nigerians might be querying the increment is because most of them have been buying the policy just to avoid embarrassment by security personnel and not because they have been taking advantage of the policy.
“Also, many others do not even buy insurance policy at all because they are good at producing fake documents,” he said.
He added that NAICOM had proposed the policy for sometime before now but only recently announced the Jan.1, 2023 date for implementation.
The shareholder said the policy, which was compulsory, if properly implemented would have a positive effect on the insurance industry and the consumers.
Igbrude stated that the new premium rate would make consumers to be more conscious of presenting claims as no average Nigerian would spend N15, 000 on insurance and not make claims in the event of an accident.
“As at today, the insurance companies are the ones benefitting from the third party motor insurance premium because many vehicle owners do not present claims but prefer to fight on the road when accidents occur and settle themselves out-of-pocket.
“But with this new rate, the consciousness of the consumers would be awakened to know that if they can pay as much as N15, 000, they should be able to take advantage of the claims inherent in the policy.
“This will reduce or eradicate incidences of vehicle owners fighting on our roads and encourage them to exchange their insurance policy certificates for the insurance firms to do the needful,” he said.
Igbrude charged NAICOM and insurance companies to begin massive education of consumers on the benefits of the policy.
He said consumers would be happy to pay the premium of any class of motor insurance, once the benefits were clearly spelt out and understood.
He urged NAICOM to rise up to task of monitoring and sanctioning insurance companies involved in premium rate under-cutting.
“To me the N15, 000 is okay compared to the value of our currency presently and inflation in the country, but our insurance operators should practice insurance in line with global standards.
“Unfortunately, some of the insurance companies would charge lower rates than the approved rates just to generate more premium; so the regulator must be awake to its responsibility,” he said.
By the new policy, Third Party Property Damage (TPPD), which is the limit of claims an insured can enjoy on a policy for private motor, will now be N3 million for the new premium rate of N15,000.
The limit for own goods is N5 million, with a new premium of N20, 000, while premium rate for staff bus is now N20, 000 and its TPPD is fixed at N3 million.
Commercial vehicles, trucks and general cartage now have a TPPD limit of N5 million with N100, 000 premium rate; special types now have a TPPD limit of N3 million and premium of N20, 000.
Tricycles now enjoy a TPPD limit of N2 million against a premium of N5, 000, while motorcycles now have a TPPD limit of N1 million and premium of N3, 000.
According to NAICOM, 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 commission warned insurance companies to be guided by the new policy, as failure to comply with the circular shall attract appropriate regulatory sanctions.
The last increment on motor policy before now was implemented by NAICOM in 2004, which raised the policy rate from N1, 000 to N5, 000, a 400 per cent increment, while the country’s inflation rate was 15 per cent as at that time.
The latest 200 per cent increment on the motor insurance policy by the commission is coming at a time the country’s inflation rate stands at 21.47 per cent.
The Nigerian Insurers Association (NIA) noted in a report recently that only about three million vehicles out of 13 million on Nigerian roads were insured as at April 2021, indicating that about 77 per cent of the vehicles on Nigerian roads were not insured.
The association said it was losing about 10 million of its potential clients to insurance racketeers and non-insurance of vehicles, as most of the defaulters used fake motor insurance papers or bribed law enforcement agents to avoid arrest.
It is believed that the insurance industry has the capacity to generate over N50 billion premium annually if all vehicles on Nigeria roads had genuine insurance. That remains a tall task for stakeholders in the insurance sector.