By Business A.M.
Nigerian insurers have increasingly come under scrutiny over long standing accusations of violating tariff rules when they undercut competition by lowering premium rates.
Now, they have been warned by their mother body, the Nigerian Insurers Association (NIA) not to do anything that would jeopardise the implementation of the country’s new motor vehicle insurance premium rates.
Yetunde Ilori, the director-general of the NIA, expressed this in a circular sent to all general insurers, and titled “Adherence To The Approved Rates For Motor Insurance”.
Ahead of the dawn of 2023, National Insurance Commission (NAICOM), the industry regulator in Nigeria, on 22nd December 2022 raised the third-party motor insurance premiums by between 200 and 400 percent.
The premium rate for private cars went up from N5,000 to N15,000 ($32.50), jumping three times the previous premium. The regulators had set January 1, 2023 as the effective date for the take off of the new tariff. But it had elicited some objections and protests following its announcement.
The umbrella body for insurance companies, the NIA, has now raised concerns that some insurance companies, along with their intermediaries, are selling third-party motor liability insurance policies below the approved N15,000 premium and has threatened to report defaulters to NAICOM, noting that this pricing violations are taking place largely in rural areas.
Ilori noted that the growth of the market in Nigeria is severely hampered by such gross violation of NAICOM’s circular on tariffs.
Rasaaq Salami, NAICOM’s head of corporate communications, had explained that inflation had forced the premium hikes. Besides, the new terms for private cars offer improved benefits to policyholders with the third-party property damage (TPPD) limit increased from N1 million to N3 million, while also having an unlimited benefit in the case of death.
Also, it is now the case that insurance coverage, when taken, also extends to vehicles that travel across West Africa states.
