The trucks are not insurable — Operators

By Rosemary Onuoha

INSURANCE industry operators may have abandoned a huge transport sector business segment holding annual premium income estimated at N30 billion in the articulated haulage vehicles (trailers and tankers) due to incongruent operations risk structure.

Key operational headaches, according to the operators, include poor state of most trucks in the fleet of the transport companies, lack of government policy on the road worthiness, poor state of road infrastructure as well as non-adherence to standard operational safety measures by the transport companies and the truck operators.

Some insurance industry executives also sighted unavailability of any plan for private sector or government led initiative for mobilizing long term fund from the insurance industry to address the issue of re-fleeting the companies while creating acceptable road infrastructure in the country.

Consequently, the insurers told Vanguard Insurance that most trucks on Nigerian roads do not have valid insurance cover despite daily road accidents destroying large numbers of life and property.

“All vehicles plying Nigerian roads, by law, must have insurance cover; however, most articulated vehicles don’t carry any insurance because many of them are uninsurable,” one of the insurance industry executives who do not want to be quoted told  Vanguard Insurance.

He explained further: “To be insurable, all articulated vehicles must be in good shape, must have two drivers as obtained in developed countries and must have experienced drivers.

“In Nigeria however, most articulated vehicles are in poor condition, with inexperienced drivers that don’t understand and observe road signs; at times, some drive under the influence of alcohol and are reckless, and some fall asleep while driving and lose control of the vehicles. Tankers are also badly maintained and they lack soundness in basic parts like tyres, brakes and other important aids.

“All these contribute to make articulated vehicles in Nigeria uninsurable. And when these accidents happen, and lives are lost with property destroyed, there is no compensation whatsoever from any source, except when government decides to compensate the victims.”

Data obtained from the Federal Road Safety Corps, FRSC, show that no fewer than 62 road crashes involving 65 tankers were recorded in the first quarter of 2017 with several lives lost. The country lost N3.2 billion to these road crashes.

Incessant accidents

In 2016, reports from the FRSC indicate that petrol tanker/trailers were involved in at least 338 cases of road traffic crashes, consisting of 306 death and 750 others with various degrees of injuries.

According to the FRSC, tanker drivers are to blame for these incessant accidents. “All over the world, there are supposed to be two drivers driving a tanker if the vehicle is embarking on a long trip. They are supposed to be equally proficient, and are also supposed to rest for 40 minutes after driving for four hours, while they switch roles every eight hours. In Nigeria, you only have a driver taking the tanker through the whole hog and when fatigue sets in, they sleep off, thereby losing control of their vehicles. These have resulted to many accidents and loss of lives and properties,” FRSC said.

Insurance operators speak

Managing Director of FBN Insurance, Mr. Val Ojumah said that if articulated vehicles especially tankers were to meet the minimum risk management requirement from insurance companies and pay proper pricing, they will be covered.

He stated: “The trucks you see on the roads are in very poor conditions. Should insurers put their money into fire? Because just one tanker accident can clean up ten years premium of an insurance company and these accidents are happening so often on our roads.

“It is not the responsibility of the insurance industry to deal with the situation. If the standard of operation of these tankers is modified and upgraded, there will be insurance cover and they must be prepared to pay the adequate premium. Today even if you charge them, N100,000, you will run the business at a loss, that is even if they are going to pay.”

Managing Director of Standard Alliance Insurance, Mr. Bode Akinboye said that insurers insure uncertainty, but with the state and amount of accidents by articulated vehicles on the roads, the risks are not insurable.

He stated: “When you travel from Lagos to Benin for instance, you could see about four trucks belonging to one organization alone involved in accidents or veered off the road.

“As a result, insurers carry terrible claims experience with articulated vehicles. The industry suffers so much loss because of these articulated vehicles, so that is why some underwriters avoid them.

“Abroad, insurers jack up premium rate for articulated vehicles to make it commensurate with the level of the risk, but in Nigeria, they are resistant to such things. In Nigeria, if you jack up your rate, the trucks will not insure with you again. So the industry just avoids the risk.

“The drivers are not helping matters because they behave as if they are on the road to cause accident. Some of them drive all day and all night without rest which is even part of the reason why you have very high accidents.

“So these are some of the damages that some underwriters have had. As such, no insurer will insure an articulated vehicle that is supposed to have 12 tires, having only 10.”

The way forward

On the way forward, Ojumah said that first, these trucks should not be on the roads because they are dead trucks and no insurer will insure a dead truck because it is only an accident waiting to happen.

He added: “The authorities that are registering these articulated vehicles must sit up with their regulatory responsibilities and ensure that all vehicles that ply Nigerian roads are insurable. Otherwise, let the government insure the articulated vehicles. The government that is registering them to do the businesses should insure them.

“From an insurance point of view they are uninsurable, and that is why they don’t have insurance covers.

“Are the authorities not aware of the poor conditions of the trucks? They are. Should we shift the responsibilities to insurance companies? No. If you invest your money in an insurance company, and you don’t get dividend and the share price does not increase, how will you feel?,” Ojuma queried.

On his part Akinboye stated: “On the way forward, insurers should jack up the premium rate for articulated vehicles. However, many of them are not insurable in the first place. The best that many of them can get is third party to take care of third party liabilities because before you put your vehicle on the road, you must have minimum of third party. So the best is to fulfill that legal obligation for them to have third party insurance to take care of liabilities.

“Importantly, the owners of the vehicles need to do their own work. They need to improve the risks. Also, the drivers need reorientation in the way they drive because they drive like, ‘size is might’ which is wrong as you cannot be on the road and become a threat and danger to other road users. With such attitude, what the drivers are inviting is accidents and claims and no insurer wants that.”

Akinboye said that one of the reasons why government instituted compulsory insurance is to encourage long term savings. And any economy that is not encouraging long term savings will never survive.

“Compulsory insurance can be leveraged on to create more funding for infrastructure development. But compulsory insurance should be sold at the price instituted by government and it should be strictly monitored. If we do that, we will generate quite a lot of revenue in investment fund for the industry and the economy generally,” Akinboye said.

Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.