Insurance loses N50b to fake third motor yearly ~ welcome to Hotideas

The insurance sector is losing over N50 billion to fake Third Party Motor Insurance annually, investigation by The Nation has revealed.

This is going by the Federal Road Safety Commission's (FRSC's) recent report that 12 million registered vehicles, including private and commercial, ply the roads.

Also, latest report from the Nigeria Insurers Association (NIA) showed that only three million vehicles are insured.

Third Party Motor policy costs N5,000 for private saloons, sport utility vehiles and Jeeps, while commercial vehicles owners pay N7,500.

NIA Director-General Sunday Thomas said it was mandatory for motorists to have the policy before hiting the road.

He said Section 38 of the National Insurance Act 2003 states that Third Party Motor Insurance was required as part of the minimum amount of auto cover one must have to carry on as a car owner. Penalties for non-compliance include a fine of up to N250,000 and, or one-year imprisonment.

He disclosed that only three million vehicles were insured in the country.

''Over 12 million are without valid insurance. Their lack of valid insurance is a huge loss to the industry. We are losing premium income annually,'' he said.

On the importance of Third Party Motor Insurance, chairman, Boff & Company Insurance Brokers Limited, Mr Babajide Olatunde-Agbeja, said: "If you have third party motor insurance, immediately you are involved in an accident, your insurer will pay third party claims to the tune of N1 million for a N5,000 premium.

"So, if you hit somebody's car from the rare, you need not to worry. Just say 'I am sorry, it's a mistake' to the driver. Tell him, 'this is my insurance cov er, my insurance broker will call you and fix it,' simple and within a week, the damaged car will be repaired.

"The massive loss incurred by the industry on yearly basis is saddening. This is because motorists have refused to obtain genuine insurance, but if the industry can get this huge fund, it will increase its contribution to GDP, have more funds to increase insurance awareness, engage in more CSR projects, among other beneficial projects," he added.