By Rosemary Onuoha

There are fears that motor insurance premium income in the Insurance sector for 2018 may not exceed the 2017 figure as many companies have crashed rates for fleet motor insurance.

Although the industry’s 2018 financial performance is still being awaited, some stakeholders are of the opinion that the abuse of fleet motor insurance premium rates occasioned by cut-throat competition could hamper growth in premium income.

Fleet motor insurance covers multiple vehicles with a single policy and can be registered in the name of a company. Generally, the minimum amount is two, while maximum can be over a thousand.

Third party motor insurance premium rate is fixed at N5,000, while 10 per cent of vehicle value is charged for comprehensive insurance.

But some insurance companies are flouting the law to grant huge discounts on fleet motor insurance.

A Managing Director of an insurance company told Vanguard Insurance how he gave a client a business proposal for fleet cover with total premium rate of N50 million. Unfortunately, another firm sent a proposal to cover the same fleet at N15 million. Sadly, the other firm got the business.

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Analysis of figures released by the Nigerian Insurers Association, NIA, show that motor insurance premium fell by 2.8 per cent to N39.3 billion in 2017 against N40.4 billion recorded in 2016.

A breakdown of the figures shows that Nem Insurance posted the highest motor insurance premium income of N4.4 billion while it paid claims of N1.9 billion. Axa Mansard recorded premium income of N3.08 billion while it paid claims of N2.2 billion.

Leadway Assurance made premium income of N3.07 billion and paid claims of N1.9 billion, Mutual Benefits posted premium income of N2.7 billion with claims paid at N755 million, while Custodian and Allied Insurance posted premium income of N2.4 billion each and paid claims of N1.2 billion each.

Speaking to Vanguard Insurance on the development, Executive Director of Leadway Assurance Company Limited, Ms. Adetola Adegbayi, said that fleet side premium of motor insurance has crashed; hence total premium income on that class of business could be affected.

Adegbayi said: “The crash in the premium rate of fleet motor insurance is worrisome as this could affect overall premium income in the 2018 financial year.”

Also speaking, Managing Director of Boof Insurance Brokers, Mr. Olumide Fatogun, said that insurers crashed the premium rate for fleet motor insurance in the hope that the loss will not crystallise.

Fatogun said: “The crash in rates is for purposes of marketing and  desire  to outsmart one another.”

Also speaking to Vanguard Insurance on the development, Deputy Commissioner for Insurance, Technical, Mr. Sunday Thomas, said that it is sad that insurers are inventing diverse means to grant discounts to clients.

Thomas said: “It is so sad to hear that operators, in their ingenious ways, are beginning to grant discounts to premium rates, even on the minimum rates. It beats my imagination because I don’t know why anyone will want to cut himself.

“However, we need the cooperation of the operators if a higher premium income is to be realised.  NAICOM is not a law enforcement agency; it is a regulatory body.

“Third party motor premium is fixed at N5,000 and the market was recording over N40 billion in premium income. If operators now decide to charge N1,000 in the guise of giving discounts, what will the market record as premium income?” Thomas asked.

Disclaimer

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