New Telegraph

Third Party Motor Insurance: Checkmating The Police Advantage

The issuance of a licence to the Nigeria Police Force to own and operate insurance business appears to have distabilised the conventional operators as the deed becomes a cutting edge for the law enforcement officers to corner a number of the policies to themselves through sheer intimidation, especially the most rewarding Third Party Motor Insurance cover, Sunday Ojeme reports

 

 

Over the last couple of years, the Nigerian insurance sector has struggled against so many odds. Fuelled by both internal and external misadventures, the sector has basically struggled endlessly to find its footing.

While its recent efforts to defeat public apathy that held it down for long was becoming obvious, it again appeared to have moved some steps backwards by making what observers see as a major policy error, which is the licence issuance to the Nigeria Police Force to have its own insurance firm.

Through reforms and intensified campaigns, the industry had recently started regaining its steam to the extent of being identified as a major contributor to the country’s Gross Domestic Product (GDP).

On November 29, 2024, the National Insurance Commission (NAICOM) granted an operational licence to the Nigeria Police Force (NPF) Insurance Company Limited.

The licence allows the company to begin general insurance operations in the country and it was presented to NPF Insurance by the Commissioner for Insurance, Olusegun Omosehin, at a ceremony in Abuja.

Operational scope

For the records, the licence permits the Federal Government’s major security outfit to operate freely with others. While it may appear petty to string controversy around the issue if the law permits it, the fear in the industry, however, is the conviction that the law enforcement agency would obviously have an upper hand being the one that enforces the law, especially with regard to the Third Party Motor Insurance cover.

From the look of things, industry watchers believe the effect of this decision amounts to unconsciously ceding over 80 per cent of the Third Party Motor Insurance Policy to the security agency, except some rules are put in place to guard against intimidation of motorists to their advantage.

Ex-regulator’s view

Besides the recent outcry over what some industry watchers described as an anomally, a former Commissioner for Insurance, Mohammed Kari, in a letter to the commission, had advised that if the NPF Insurance Company Limited is granted an operational licence, there could be a compromise in the management and enforcement of compulsory insurance policies.

Kari noted that the authoritative nature of the police and their potential representation on the Board of Directors of the insurance firm could lead to undue interference in the management of the insurance company, compromising its independence and effectiveness.

The ex-insurance practitioner said the core operations of the NPF are fundamentally at odds with commercial activities, adding that the primary mandate of the Police is to maintain law and order, not to engage in business ventures.

He said: “The Police are a regulator of sorts; they cannot enforce the law on compulsory insurance and be a provider of insurance. The temptation to force motorists to take their company’s policy will be irresistible.’’

Kari said the structure and own ership requirements stipulated by Nigerian insurance laws and the Financial Reporting Council (FRC), necessitated a level of expertise that is currently lacking in the nominated Board of Directors of the proposed insurer.

He added: “Another requirement is a spread in ownership to avoid undue influence on the company by one shareholder.

The NPF Investments have a history of mismanagement, as evidenced by the numerous issues surrounding the Nigeria Police Pension Scheme.

This history raises significant doubts about the ability of the Police to effectively manage an insurance company, which requires a high level of expertise and know-how.’’

Like most people who are opposed to the development, he said the entry of the Nigeria Police into the insurance market could disrupt the existing ecosystem, leading to inefficiencies and potential data loss that could harm the overall industry.

Apprehension

Specifically, the Third Party Motor Insurance policy, which is considered one of the cash cows for the general segment, is predictably going to be hijacked by the security agency.

Little wonder the Inspector General of Police, Mr. Kayode Egbetokun, has recently become upbeat over the implementation of the Third Party Motor insurance cover.

During a meeting with the Commissioner of Insurance, Mr. Olusegun Omosehin, the IGP affirmed that the enforcement of Third Party Motor insurance would commence on February 1, after the agency had failed to collaborate with insurance operators on its enforcement for years.

Consolidation

To give a bite to the enforcement, NAICOM and the Nigeria Police swiftly inaugurated a joint committee for that purpose. The inauguration held in Abuja was with the Commissioner for In

The licence permits the Federal Government’s major security outfit to operate freely with others

surance, represented by Ekerete Ola Gam-Ikon, Deputy Commissioner for Insurance, Finance and Administration, while the Police Force team was led by DCP Mallum Maina.

Task of the Joint Committee will be to develop and implement strategies for enforcing compulsory insurances in Nigeria; Ensure compliance with compulsory insurance policies as mandated by the Insurance Act and other related laws;

Foster synergy and collaboration between NAICOM and NPF; Provide training and capacity-building programs for personnel of both organizations on compulsory insurances.

Scope of work of the committee will be to Evaluate existing challenges in enforcing compulsory insurances and propose solutions; Develop protocols for joint enforcement operations of compulsory insurances; Recommend policy reforms to strengthen insurance compliance;

Undertake public sensitization programs on compulsory insurances, and Develop training programs for personnel of both organisations on compulsory insurances.

The joint committee’s inauguration marks a significant step towards ensuring that all vehicle owners comply with compulsory insurance laws.

This collaboration aims to promote a safer and more secure environment for all road users, NAICOM said.

To ensure seamless enforcement and as part of the inauguration, Gam-Ikon referred the Committee to some key tools, including the Insurance Act 2003, the Inspector General’s speech on Third-Party Motor Insurance enforcement, list of licensed insurance companies authorided to conduct motor business and NAICOM USSD *7292# for verification of insurance policy, or visit www.askiid.org and www.niip.ng to verify any motor insurance certificate and to purchase genuine Third-Party Motor insurance, respectively.

With this joint committee in place, NAICOM and the NPF are poised to make a significant impact on insurance compliance in Nigeria.

Nigeria’s motor insurance struggle

Over the years, the industry regulator had done everything within its power to ensure that the public patronise insurance, especially the compulsory ones under which motor policy falls into.

NAICOM and the operators’ supervising body, Nigerian Insurers’ Association (NIA), have continued to consolidate on a mission that members of the public are well covered in this regard.

The fixation on motor vehicle insurance is essential as it remains the highest point where fake insurance certificates are brazenly displayed to law enforcement operatives.

For NAICOM, collaboration has become the most effective tool to ensure more people are brought into the third party insurance net.

This would have been enough for the industry than issuing a licence to a government security outfit that can easily corner government assets by whatever means and also deploy its official status to intimidate the insuring public to its advantage.

The Third Party scenario

Throughout his tenure, the immediate past Commissioner for Insurance, Mr. Sunday Thomas, had engaged relevant stakeholders all in a bid to ensure that Nigerians from all walks of life are properly insured and qualified to earn their claims in the event of mishaps.

For the fact that motorists have been discovered to be among the most evasive, the commitment to get more of them into the circle remains unwavering.

From available records, out of about 12 million vehicles or more plying Nigerian roads, only about three million are said to have genuine insurance documents, thus the industry losing over N50 billion from that policy alone.

Despite all that has been done to convince the public of the benefits of having genuine insurance, most Nigerian motor vehicle owners still prefer the cheaper, easier and more dangerous route to prepare their insurance certificates.

To emphasise the seriousness placed on the third party issue, the NIA launched the Unified Nigerian Insurance Industry Portal (NIIP), an innovative digital platform, aimed at easing and streamline the process of purchasing Third-Party Motor Insurance cover while also addressing fake insurance certificates issued by unscrupulous elements in the market.

For enhancement and benefit to the public, the Commission in 2023 increased its premium from N5,000 to N15,000 and also its benefits from N1,000,000 to N3,000,000 covers respectively for the protection of road users.

Unified NIIP platform

Much as the industry regulator is handling the campaign at a higher lever, NIA also described CONTINUE FROM PAGE 23 the Unified NIIP as an enhanced version of the existing NIIP, designed to enable members of the public to purchase Third-Party Motor insurance nationwide.

The platform offers unparalleled convenience and security to both insurers and the insuring public, with a myriad of benefits poised to reshape the industry.

One of the key advantages of the Unified NIIP is its ability to empower individuals to buy, renew and report claims on their respective Third-Party Motor Insurance policies from the comfort of their homes, offices, or any other location 24/7 using the internet.

This user-friendly portal not only enhances accessibility, but also significantly reduces the incidence of fake insurance papers circulating in the country.

Among its array of benefits is that the portal is poised to eliminate or substantially reduce complaints from the public across different states of the federation.

Addressing common queries regarding the Unified NIIP, the NIA emphasises its inclusivity and ease of use. Individuals can purchase Third-Party Motor Insurance covers for themselves or on behalf of others.

Insurance brokers and agents duly registered and licensed by the National Insurance Commission (NAICOM) can also use this portal to sell insurance to their clients.

Prior to that, the industry had created a digital system where motor insurance policyholders could verify genuineness of their policies online real-time, using a dedicated platform or code such as askniid.org or the USSD code *565*11#.

The introduction of the Nigerian Insurance Industry Database (NIID) has been very useful to motorists in this regard.

The www.askniid.org is where all insurance companies and agents are expected to upload the details of any motor insurance policy issued for record keeping and authentication.

Therefore, any motor insurance policy that you buy and cannot be verified on the NIID portal is not authentic – even if it was bought from an insurance company

We are still waiting and watching to know what the government as represented by NAICOM would do to provide a level playing ground

The reason policyholders must ensure the authenticity of their policies is that when claims occur, they can be compensated adequately.

Claims compensation cannot be paid to those with fake motor insurance certificate whose status cannot be ascertained on the NIID platform.

With the recent upward review of the premium rates for motor insurance by the National Insurance Commission (NAICOM), which took effect January 1, 2023, vehicle owners were entitled to enhanced compensations and, thereby cannot afford to miss out from this because of obtaining fake insurance policy.

For instance, the third party insurance premium rate for private motors is now N15,000 while the claims limit is N3 million; Own goods third party premium is N20,000 with N5 million compensation; Staff bus attracted N20,000 premium with N3 million compensation; Commercial (trucks, general cartage) N100,000 premium with N5 million compensation; Special types attracted N20,000 premium with N3 million compensation; Tricycle attracted N5,000 with N2 million compensation; Motorcycle N3,000 premium with N1m compensation.

According to a former Director General, NIA, Mrs. Yetunde Ilori, “verifying the authenticity of your vehicle insurance policy on the NIID gives you peace of mind and assurance that your claim will be paid.”

NAICOM said NIID, which is a product of the NIA, had recorded tremendous success over the years leading the Commission’s collaborative initiative with the Federal Road Safety Commission, the Nigeria Police Force and the Vehicle Inspection Office on ways to curb fraudulent motor insurance schemes.

The Commission believes that the NIID is helping to reduce the number of fraudulent activities. Every genuine motor insurance policy issued by any insurer in the country is uploaded onto the NIID, which is available to all security agencies.

Motorists can validate the authenticity of their insurance policies with text messages to the NIID. Speaking on the latest development, some of the operators, who spoke on the condition of anonymity for fear of being victimised, wondered how the route taken would benefit the industry.

According to one of the sources, the ultimate beneficiaries in the whole arrangement would be the regulator and the Federal Government. He said: “From the look of things, it is going to be a tall order for us.

If you take the motor insurance cover, for instance, it is left for the police to find out in traffic whether, first, if the driver has the certificate, and, secondly, if it is genuine.

“In case, it is discovered to be fake, the solution is as simple as cornering the the motorist to the nearest police station where I believe they are going to set up desks for that purpose to get the right certificate.

“And again, whether the certificate is genuine or not, because of where we are as a country, it will be easier for the police to intimidate some of them, especially the commercial vehicle drivers, who are either illiterate or barely literate, to go for the certificate from the police.

“However, we are still waiting and watching to know what the government as represented by NAICOM would do to provide a level playing ground for all the operators.”

Last line

As the security agency sets out to commence the business of insurance alongside the conventional operators, a lot would be unveiled in the coming days, weeks, months and years.

In all of this, one thing is certain; in order not to be caught napping and taken unawares, the operators who have always been there are definitely going to get more serious with their business, totally different from their years of laying back while the industry suffers.

Moreover, it is also very important for the regulator to set the rules that will not give the police institution undue advantage over other operators and while also ensuring that culprits from both sides are properly prosecuted whenever they err.

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