Brokers back NAICOM on new rate for motor insurance

The Association of Practicing and Professional Insurance Brokers of Nigeria (APPIBON) has commended the recent increase in third-party premium on motor insurance as announced by the National Insurance Commission (NAICOM).

In December, 2022, NAICOM issued a circular in which it announced a hike in the premium of compulsory Motor Vehicle Third Party Insurance cover for motorists from N5,000 to N15,000 with effect from January, 2023.

The announcement by the insurance regulatory body has continued to generate mixed feelings among stakeholders in the country.

But in a letter dated January 17, 2023, and addressed to the Commissioner for Insurance, the brokers said they were in total agreement on the increase in third-party premium and also on third-party property damage limit.

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The letter jointly signed by its President, Samuel T. Nyagba, and Secretary, Abu Eboetse, APPIBON said, “It is clear to us that the commission has acted in line with the NAICOM Act and other extant laws that conferred absolute regulatory powers on NAICOM to fix premium rates in the Industry; precisely Section 7 of the NAICOM Act 2003 is unambiguous in this provision.”

It noted that the recent directive by NAICOM was even coming late “considering the present economic realities. Replacement/reinstatement cost has quadrupled over the years due to inflation and depreciation of the medium of exchange (naira).

“In comparison with other services like power whose tariff has been increased almost annually, the insurance cost cannot remain static. Consumers of other products like fuel energy will agree that prices have increased significantly over 100 per cent in years past. Therefore, from the economic point of view, an increase in the premium rate of motor and other insurance products is justified.”