N5,000 third party motor premium is to curb fake insurance — Ojumah
By Rosemary Onuoha
The Nigerian Insurers Association, NIA, said its decision to peg third party motor policy at N5000 per annum is to forestall issuance of fake motor insurance certificate.
Managing Director of FBN Life, Mr. Val Ojumah, reacting to this position noted that prior to now the police did not have any means of identifying a fake cover from a proper one, hence the NIA established a system to support the police authorities to be able to identify proper cover and ensure that motorists carry proper coverage.
Ojumah stated: “N5,000 premium is still peanuts from what NIA is trying to achieve but first, it is focused on supporting enforcement and compliance. NIA still will lose money at N5,000 but this is a first step to proper pricing.
“Rating is an issue all over the world. Insurance buyers would rather not pay anything if they have the option. But because in Nigeria we have so many companies and each one of them is competing against themselves, so if they are to provide that cover properly as intended by law, the cost must be adequate. For the cost to be adequate, giving the level of irresponsible competition in the industry, there has to be some kind of control. That control is intended to remove the fake operators. So, with ordinary N5,000 in a year, you are buying a liability cover of no less than a million naira with unlimited liability for bodily injury and death.
“Do you think N5,000 is too much money to pay for one year for motor vehicle cover? Then look at the international market. Third party liability covers in most climates in the world are extremely expensive. Yet people are comfortable with using fake covers that they were buying in motor parks, motor sales offices, local government offices and all of that.
“So the operators have come to the realization that if this situation is left unchecked, it will be a total disaster and it will affect insurance consumers, not just operators because the ability for them to recover from their losses will be limited and it will be increasingly limited by the day. So this is actually in support of the consumers and not operators,” Ojumah stated.