Mr. O. S. Thomas
Commissioner for Insurance/CEO
National Insurance Commission
Federal Republic of Nigeria
A total of five insurance firms in Nigeria are currently under investigation over alleged under-selling of Third-Party Motor Insurance policies below the N15, 000 official rate approved by the industry regulator, National Insurance Commission (NAICOM) effective January 1, 2023.
Agents at motor licensing offices in Lagos alleged they were selling the policies between N5, 000 and N8, 000 on behalf of the said insurers.
Business Journal initiated the investigation following the May 24, 2023 circular on the issue by the Nigerian Insurers Association (NIA).
The NIA circular (Ref: NIA. MTPC/YI23), which was signed by Mrs. Yetunde IIori, Director-General/CEO, Nigerian Insurers Association (NIA) read in full:
ADHERENCE TO THE APPROVED RATES FOR MOTOR INSURANCE
Following the decision reached at the 2023 CEOs retreat in respect of the need to implement the new premium rates on Motor Insurance, it has become pertinent for the Association to reiterate the need for companies to sell motor insurance policies at the approved rate.
The Secretariat has received reports that some companies are selling below the approved rates, and this does not augur well for the growth of the market even as it brings serious reputational issues to the insurance business.
Also, the Governing Council is displeased with the activities of agents within licensing offices engaged by member companies to sell third-party motor insurance at reduced rates and other such arrangements.
The Association will not hesitate to report defaulting companies to the National Insurance Commission (NAICOM).
Companies are therefore enjoined to ensure compliance to avoid regulatory sanction.
Lamenting the situation, the CEO of a major player in the market, who spoke to Business Journal on the condition of anonymity said:
“It is disheartening that some of us are sabotaging a policy that is designed to increase our revenue base and ensure sustainable growth of our business.
Even before the May 24 circular by NIA, some of us were already aware of such unprofessional misconduct at various licensing offices across Lagos.
Today, petroleum subsidy has been removed, creating escalating operational cost for operators and food inflation, which puts immense pressure on insurance companies to increase the salary of workers in view of the present economic situation in the country. So, why should any right-thinking insurer sell third party motor insurance policy below the N15, 000 rate approved by NAICOM? It’s unfortunate.”
Commenting on the development, the Publisher/Editor-in-Chief of Business Journal, Prince Cookey stated:
“We are working with 12 motor licensing agents to verify and ascertain the credibility of the allegation against the named five insurance companies. We shall follow the facts wherever they lead to.
The exercise is our little contribution towards the enthronement of professionalism and sanity in the Nigerian insurance industry.
Once the investigation is completed, the report would be published across our media spectrum: online, magazine, newspaper and official social media handles.”
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