Motor insurance premiums have improved in the second quarter, supported by improved economic activities even as fake policies remain an impediment to the growth of the sub-class.
The relaxation of social distancing measures by the government paved the way for drivers to be back on the road, and there has been an increase in renewals, but there are concerns that claims will deteriorate because vehicles were parked in garages during the lockdown period.
The largest listed insurers saw motor vehicles increase by 25 percent to N11.72 billion in June 2021 from N9.37 billion the previous year, according to data gathered by MoneyCentral.
A breakdown of the figures shows NEM Insurance’s motor segment rose by 12.37 percent to N4.49 billion in June 2021 from N4 billion the previous year.
Coronation Insurance realized N1.28 billion from revenue from motor, which represents a 130.36 percent surge from 2020’s N725.58 million.
Lasaco Insurance’s motor insurance premiums spiked by 249.06 percent to N1.11 billion in June 2021 from N318.15 million as at June 2020.
Consolidated Hallmark’s motor insurance premiums were up 11.54 percent to N1.25 billion in the period under review from N1.12 billion the previous year.
Sovereign Trust Insurance revenue from vehicle segment increased by 22.45 percent to N1.18 billion in June 2021 from N967.10 million as at June 2020.
Linkage Assurance’s motor insurance premium grew by 44.17 percent to N1.27 billion in the period under review from N887.21 million the previous year.
Despite the upsurge in motor vehicle premium, the majority of car owners in Nigeria do not have a valid driver’s license. They prefer to cut corners by opting for fake certificates.
There have been stringent measures to curb these illegal practices by the regulator through the Nigerian Insurance database, but the numbers of fake policy certificates are rising.
The ratio of insured vehicles to total number of vehicles of 21.2 percent clearly reflects this challenge, with total vehicle count of 11.8 million as at the fourth quarter (Q4:2018) and insured vehicles at 2.5 million, according to data from the National Bureau of Statistics (NBS).
Stakeholders have bemoaned the loss of significant revenue from the illicit act, and they added that sector players need steadily improving income to deliver a higher return to their owners.
The Insurance Act 2003 mandates all motorists to have a minimum of third party motor insurance policy in place.
Section 68 of the 2003 Insurance Act says, “No person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third parties is insured with an insurer registered under this Act.”
It further explains that the insurance of this section covers liability of not less than N1m. According to the Act, a person who contravenes the provisions of this section commits an offence and is liable on conviction to a fine of N250,000 or imprisonment for one year or both.