Insurers are breaching their policy on the new Third-Party Motor Insurance rate.
The policy was increased from N5,000 premium rate to N15,000 on January 1, 2023.
While the new rate was agreed upon between the regulatory authority, the National Insurance Commission (NAICOM) and Chief Executive Officers of insurance companies, NAICOM was meant to enforce it as the regulator.
But it appears that the commission is not able to do it as some companies have been indicted to have been breaching the agreement not to cut rate by selling below N15,000.
Last week, the Nigerian Insurers Association (NIA) threatened to drag insurers before NAICOM.
The association is kicking against the underselling of motor rates. But some stakeholders believe the NIA should do more to put its members under check.
A memo by the NIA and signed by the Director-General, Mrs. Yetunde Ilori, to insurance companies that are members of the association, read, “Following the decision reached at the 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 memo further read: “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.
Read Also: Insurers to settle backlog of unclaimed claims
“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 NAICOM companies, which are, therefore, enjoined to ensure compliance to avoid regulatory sanction”, she warned.
But one of the CEOs who pleaded anonymity said: “This is like a warning. I do not think we should be warning ourselves of this new directive. This is not what we need.
“There was a circular to this effect that came out in December and it is enough warning for every operator. So how many warnings are we looking at before we start sanctions.’’
A top source also said: “I am of the opinion that this letter should have come with the names of such underwriting firms that have flouted the new premium directive, rather than warning.
“But can NIA sanction their members? Can they report their members to NAICOM?”
Another CEO of one of the insurance companies when asked why operators are breaching the agreement and if the regulator is finding it difficult to enforce said: “It’s easier said than done,” he added.