*Demand downward review, says it‘ll impose more hardship on Nigerians
*Lawyer sues commission, seeks reversal
By Victor Young & Henry Ojelu, LAGOS
The Nigeria Employers Consultative Association, NECA, has rejected the recent hike in Third Party Motor insurance by the National Insurance Commission, NAICOM, from N5000 to N15,000, saying it would further impose hardship on suffering Nigerians.
The umbrella body of employers and the voice of business in Nigeria, in a chat with Vanguard, called for a robust engagement with stakeholders and a downward review.
The National Union of Banks, Insurance and Financial Institutions, Employees, NUBIFIE, and Campaign for Democratic Workers’ Rights, CDWR, also faulted the increase because of its socio-economic implications and demanded a downward review.
Speaking with Vanguard, Director-General of NECA, Wale-Smatt Oyerinde, said: “While the commission reserves the right as provided in the extant law in reviewing the rate, the timing in view of current economic realities is of concern.
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”It is worthy of note that the current rate has been in existence for over five years, while the costs of motor vehicles have increased exponentially. Coupled with the general price increase of goods and services, the commission could be justified if there are guarantees for improved service delivery and a higher response rate from insurance companies.
“In developed climes, the insurance industry plays a major role in national development as it serves as risk off-takers in cases of accidents and other mishaps. But with the low rate of insurance awareness in the country, we urge NAICOM to deepen engagement with critical stakeholders in order to promote the insurance culture in Nigeria and also get buy-ins for its policy actions.
“In order to grow the economy, develop the industry and provide effective risk-mitigating services to the generality of Nigerians, it is our belief that a marginal adjustment in the current rate is desirable. It is, however, imperative for NAICOM to review the policy after consultation with all stakeholders.”
NUBIFIE faults increase
Similarly, General Secretary of NUBIFIE, Shiek Muhammed, said: “The issue of insurance itself has not taken grassroots acceptability in Nigeria and if we need to deepen insurance coverage to the grassroots, raising the additional cost of insurance will be a disincentive for people to insure. Convincing people to insure their property and renew same is very difficult, let alone asking them to pay N15,000 for third-party motor insurance.
“NAICOM is creating room for fraud and corruption for motorists and policemen because even at N5,000, people try to circumvent it. We believe the commission should pay more attention to sensitizing Nigerians about insurance.
”There should be more public awareness on the importance of insurance. Government and its agencies should focus their time on creating awareness and public acceptability before monetary issues.
“So, as much as we know that N5,000 may no longer be realistic, we suggest that the commission should reduce it. From N5,000, it should be N7,000 or N7,500. N15,000 is too high and will be a disincentive for people renewing their insurance policy when it expires.
“We are calling for a downward review, there are a lot of issues in the land, and there is a difficulty, the economy is very tough. I can tell you that insurance is the least thing in people’s minds. People are thinking of how to feed their families and survive the hardship in the land.
CDWR wants NLC, TUC to mobilize against hike
On its part, a civil society group, which is in partnership with the Nigeria Labour Congress, NLC, the CDWR, through its National Chairman, Rufus, Olusesan, said: “The recent increase in the third party motor insurance premium from N5,000 to N15,000 by NAICOM, which is 200 per cent increment, shows the insensitivity, senselessness and self-serving interest of the government.
“Many vehicle owners are not keen or bother to purchase the third-party insurance because they considered payment of N5,000 too high and in most cases, they find it pretty difficult to get claims when the need arises.
”Of course, the increase shows how government doesn’t care about the plight of drivers, commuters and other road users.
“For instance, prices of spare parts have gone up by 70 per cent, petrol price has gone up by 80 per cent. Most roads in the country are in deplorable conditions, which lead to frequent breakdowns, and repairs of vehicles, with inflation at 23.4 per cent, the highest in the last 17 years, according to the National Bureau of Statistics, NBS, a government agency.
“For those in transport business, they will push the increment to commuters, mostly workers, artisans, market men and women, etc., who will bear the fang by paying transport fares through their noses without a commensurate increase in salary to cater for this harsh and needless increase.
“We are calling on NAICOM to jettison this obnoxious policy before it causes civil unrest in the country. We have had enough crises for the working masses. Therefore, we call on Nigeria Labour Congress, NLC, Trade Union Congress of Nigeria, TUC and Joint Action Front, JAF, to mobilize against this move. At CDWR, we shall organize a mass protest against this anti-people policy.
Law firm files a pre-action notice, demands reversal
Meanwhile, the Chamber of Evans Ufeli has given the chairman of NAICOM five days to reverse the 200 per cent motor insurance increment or face legal action.
In a pre-action notice dated December 29, 2022, and addressed to the commission, the law firm said the new NAICOM policy amounted to economic torture, targeted at putting Nigerians under dehumanizing conditions and that the constitution forbade the same.
The notice, signed by Evans Ufeli, read: “We are Public Interest Solicitors and advocates for good governance. We stumbled on a circular from your commission dated December 22, 2022, and signed by the Director, Policy & Regulation, Mr. Leonard Akah, with reference number NAICOM/DPR/CIR/46/2022, released to the public by your office, wherein the commission stated that the cost of insurance on all classes of motor insurance, including motorcycles, have been reviewed upwards.
“According to your commission, the third-party premium insurance rate for motorists will now be N15, 000 as against the N5,000 it was before your new policy. Sequel to the above, you have also raised claims for motorists to N3m in the event of an accident and that for commercial truck/general cartage will now give the policyholders N5m claims in the event of an accident.
“In view of the foregoing, the new policy by implication will mean that the industry operators have increased the cost of the policy under reference by 200 per cent, following the addition of N10, 000 to the cheapest third party which currently stands at N5,000.
“Furthermore, according to the aforementioned circular, you alluded to the fact that you are empowered to approve the new rates for motor insurance premiums by Section 7 of the NAICOM Act 1997 and other extant laws, noting that the new motor insurance premium rates become effective from January 1, 2023. Be that as it may, we wish to respond as follows:
“That the law that established your commission did not empower you to be insensitive to the plight of the masses, to take such outrageous decisions in times of economic depression like we have today. It is therefore not a well-thought-out policy as the same is riddled with avarice and gross display of ambivalence.
“That by the provisions of the 1999 constitution as amended (which is superior legislation to the law establishing the commission), ‘sovereignty belongs to the people and their rights, not to be subjected to torture and undue socio-economic hardship is guaranteed and protected by the law under reference. Your policy, therefore, amounts to economic torture, targeted at putting Nigerians under dehumanizing conditions and the constitution forbids same.
“We reject the increments just made by the commission, and affirm that the NAICOM Act did not empower the commission to fix rates for insurance premiums in isolation of the socio-economic condition of the Nigerian state. You must reappraise the law in your own interest, knowing that every policy must conform to socio-economic variables before the same can pass the test of time.
“That it is against public policy to ambush Nigerians with such policy at a time when the same government has grounded the nation’s economy and has failed to restart it for the benefit of the masses.
“That on behalf of Nigerians, we call for a total reversal of the policy to the status quo and we hereby give you five (5) working days to do that, failing which we shall have no other option than to proceed against you in the court of law for redress.
Take notice that this letter is served on you as a Pre-action Notice and same shall be enforced in due course.”