In a sweeping move to enforce Nigeria’s Insurance Act 2003 and the Motor Vehicle (Third-Party Insurance) Act, 1950, the police launched a nationwide crackdown on February 1 to ensure compliance with mandatory third-party insurance. This move has sparked mixed reactions, with many motorists becoming more aware of the legal protections the policy provides. In this special report, Assistant News Editor/Head, Security Desk, PRECIOUS IGBONWELUNDU examines the complexities of enforcement and explores the ongoing debate about its effectiveness in improving road safety and protecting accident victims
There was chaos at the busy Cele Bus Stop in Okota yesterday morning after a commercial bus grazed a Sports Utility Vehicle (SUV). Without hesitation, the driver of the SUV rushed out of his vehicle, causing a major traffic disruption. He stormed toward the danfo, yanked the commercial driver from his seat, and in a matter of moments, both men were locked in a heated argument that nearly escalated into physical confrontation. Thankfully, nearby law enforcement officers intervened, calming the situation and instructing that both vehicles be removed from the road to clear the way for other motorists.
Scenes like this are all too familiar across the country. Road traffic accidents, whether serious or minor, often trigger intense reactions from drivers, regardless of time or location. In some cases, disputes escalate into fistfights, resulting in injuries. In others, the offending driver may apologize, only to be met with either acceptance or a demand for damage repairs from the victim. Despite being in place since 1950, many Nigerians are unaware that the N5,000 they pay annually for Third Party Insurance is not just a legal requirement or a bureaucratic formality. For many, it’s merely a way to avoid hefty penalties—such as a fine of N250,000, a year in prison, or both. While car owners dutifully pay the insurance premium each year to remain roadworthy, the financial burden of accidents still falls on their shoulders, with insurance companies raking in millions of naira in profits.
However, a significant shift occurred in December 2022, when the National Insurance Commission (NAICOM) raised the cost of third-party insurance for private vehicles from N5,000 to N15,000. Commercial vehicles, staff buses, general-purpose vehicles, and articulated trucks now face higher premiums, with coverage extended up to N5 million. Tricycles, motorcycles, and bicycles are also included under the scheme, with premiums adjusted to reflect the different levels of risk associated with these vehicles. In addition, the commission increased the third-party claims cap from N1 million to N3 million, aiming to better align with current economic realities. The hike to N15,000, however, sparked a wave of public outrage, with many Nigerians accusing the commission of insensitivity to the struggles of ordinary citizens.
It was only a few weeks ago that most of the motoring public, through the vigorous enforcement of the law by the police, became aware that their third-party insurance certificate provides coverage for such situations. They learned that, in the event of an accident, there was no need to resort to fighting or causing a scene, as the insurance company, by law, is obligated to cover the financial burden up to N3 million. This realization has been a turning point for many drivers, who now understand that the insurance is designed to protect them from the costs associated with accidents, making the often chaotic and confrontational aftermath avoidable.
Third-party insurance policy and why the police took up its nationwide enforcement
Compulsory Third-Party (CTP) motor vehicle insurance, also known as mandatory liability insurance, is a legal requirement in many countries around the world. This type of insurance provides coverage for injury or death caused to third parties in accidents, but typically does not cover damage to the insured vehicle.
In Africa, countries like Nigeria, Kenya, South Africa, and Egypt have implemented third-party insurance policies. Globally, numerous other nations have also adopted mandatory third-party insurance, including France, the United Kingdom, Germany, Canada, Italy, Spain, India, China, Japan, Indonesia, Malaysia, Thailand, the Philippines, Pakistan, the Netherlands, Sweden, Norway, Poland, Russia, the United States, Mexico, Brazil, Argentina, Chile, Colombia, Peru, Australia, and New Zealand.
Though the names and regulations surrounding third-party insurance can vary from country to country, the core objective remains the same: to provide coverage for third-party vehicle damage, as well as bodily injury or death resulting from accidents. This universal approach ensures that the financial burden of accidents is shifted away from individuals and placed on insurers, offering a level of protection to those who are affected by accidents, regardless of fault.
Following a meeting with the Director General of NAICOM, who visited him at the Force Headquarters in Abuja, the Inspector General of Police (IGP), Kayode Egbetokun, announced to Nigerians that the vigorous enforcement of third-party insurance would begin on February 1. The police emphasized that the purpose of this enforcement was to enhance the safety of Nigerians and their property, particularly as road traffic accidents continue to be the leading cause of death and injury in the country.
Data released last year by the National Bureau of Statistics (NBS) and the Federal Road Safety Commission (FRSC) revealed that at least 21,509 people lost their lives in road accidents across Nigeria between 2021 and September 2024. The families of these victims, many of whom were left impoverished by the sudden loss of breadwinners, should have been entitled to compensation from the insurance company of the vehicle(s) responsible for the fatalities, if the vehicles were covered by valid third-party or comprehensive insurance policies.
In addition to the tragic loss of life, thousands of others sustained various injuries in road accidents, with many facing hefty medical bills that should have been covered by the insurance of the vehicle responsible for their injuries. In the event of a road accident, the law requires that the parties involved promptly invite traffic officers from the police or the FRSC to document the incident. Typically, photos and videos are taken of the damaged vehicles, properties, and any injured or deceased persons. The traffic officers also carry out investigations to determine which party was at fault, while emergency responders attend to the victims. All these steps are vital, as a police report is necessary to process an insurance claim. Without this official documentation, it becomes difficult, if not impossible, to seek compensation for the damages or injuries sustained in the accident.
Aside from ensuring public order and safety during accidents, the process of involving the police also serves a crucial role in verifying vehicle documentation. This verification can help authorities identify stolen vehicles, track down criminals on the run, or uncover vehicles involved in illegal activities. Such checks enhance security by linking vehicles to their rightful owners and ensuring they are being used for lawful purposes.
The proper enforcement of insurance laws also contributes to a more orderly road system. It not only strengthens public confidence in the police as effective enforcers of the law but also alleviates the financial burden on government resources. By making insurers responsible for covering the costs of accidents, the financial responsibility of victim compensation is shifted from the state to the insurance providers, thus relieving taxpayers from the heavy costs associated with road traffic incidents.
Speaking on the matter, Police Spokesman ACP Olumuyiwa Adejobi emphasised the gravity of the situation, stating, “It’s high time the government and everyone took traffic management seriously, to save lives and property. Road traffic accidents kill more people than terrorism and insurgency.” He further clarified the police’s role in enforcing third-party insurance compliance, noting, “It’s a slap on the face of the police to say we are busybodies for enforcing third-party insurance compliance. It is the duty of the police, as the lead agency in internal security, to enforce all laws.” Adejobi made it clear that there was no room for debate on the issue, pointing out, “The Insurance Act is very clear. Why do we have the Motor Traffic Department (MTD) and maintain the traffic training school in Ikeja?”
Data obtained from the police indicated that a total of 4,434 vehicles have been contraband since the commencement of the enforcement. Of the total contravened, 441 were charged to court, 3,225 released after compliance while 531 vehicles were under investigation. According to the police, the enforcement drive also seeks to address the issue of fake or fraudulent insurance certificates. Many people, the police noted, are unaware that only insurance companies registered and approved by NAICOM (National Insurance Commission) are recognized by law. These licensed insurers are the ones held liable in the event of an accident, ensuring that victims can receive compensation for their injuries or losses. By verifying the authenticity of insurance certificates, the enforcement helps protect the rights of accident victims, reducing the economic hardships and losses they would otherwise face, and ensuring that the financial burden of accidents is properly addressed through legitimate insurance channels.
Read Also: Mixed feelings greet third-party insurance policy in Kogi, Nasarawa, Niger
Legal framework and matters arising
The legal framework surrounding third-party insurance in Nigeria is supported by several critical laws and regulations aimed at ensuring road safety and providing compensation to accident victims. At the core of these regulations is the Motor Vehicles (Third-Party Insurance) Act, which mandates that all motorists must maintain a minimum level of insurance coverage to protect against potential liabilities to third parties. This law serves as the primary legal requirement for third-party insurance in the country, ensuring that individuals involved in accidents can be compensated for damages or injuries caused by other drivers.
In addition to this, Section 68 of the Insurance Act 2003 reiterates the compulsory nature of third-party motor insurance, imposing penalties on those who fail to comply. This section ensures that all motorists meet the necessary insurance requirements, and it provides a mechanism for holding defaulters accountable. The NAICOM Regulations further enhance this framework by assigning the National Insurance Commission (NAICOM) the responsibility of overseeing and enforcing compliance with insurance laws. NAICOM ensures that only registered and licensed insurers operate within the country, and it works to uphold industry best practices, ensuring that insurers meet the standards required to provide compensation to accident victims.
The FRSC Act, 2007 also plays a significant role in enforcing traffic laws, granting the Federal Road Safety Corps (FRSC) the authority to ensure compliance with road safety regulations, including the third-party insurance requirement, on federal highways. This act empowers the FRSC to maintain order on the roads and ensure that drivers are adhering to the law. Lastly, the Police Act, Criminal Laws, and the Constitution grant the police the authority to enforce all laws in Nigeria, including those related to third-party insurance. As the lead agency in internal security, the police play a crucial role in ensuring that motorists comply with these laws, which are fundamental to road safety and providing compensation for accident victims. Together, these legal instruments create a comprehensive system for enforcing third-party insurance in Nigeria, ensuring that the financial responsibility for accidents is properly addressed, protecting the rights of accident victims, and promoting overall road safety.
The media has been flooded with videos and images of enforcement teams carrying out stop-and-search operations, demanding evidence of compliance with the mandatory third-party insurance requirement. In many instances, vehicles without valid insurance were impounded, with their owners instructed to obtain the policy before they could retrieve their vehicles. However, the police’s involvement in this enforcement has sparked controversy, particularly among some activists who feel that the police are overstepping their bounds by taking on responsibilities that traditionally belong to the Federal Road Safety Corps (FRSC). These critics argue that the police should be focusing on more pressing security challenges rather than getting involved in traffic enforcement.
Additionally, there have been accusations that police officers deployed for the mission were using the opportunity to extort money, harass motorists, and demand bribes, further straining the already fragile relationship between the police and the public. Some citizens also expressed concerns that the officers may not have the proper training or tools to accurately verify insurance certificates in real time, potentially rendering the enforcement ineffective.
Despite these concerns, the enforcement exercise has largely proceeded without major issues. While there were some isolated incidents of misconduct and overzealousness—especially in states like Enugu and Akwa Ibom—the operation has generally been smooth. To quell fears of a potential rivalry between the police and the FRSC, Police Spokesman ACP Olumuyiwa Adejobi addressed these concerns, stating that both agencies were not in competition but were, in fact, working together toward a common goal. This collaboration, he assured, would ensure that the enforcement of third-party insurance is carried out effectively, contributing to improved road safety and better protection for accident victims.
“Not at all. They will rather work with the police on the enforcement. The law specifically empowers the police on the enforcement. The Police Act, Constitution and Traffic Laws also give the police such powers. The police have wide and enormous duties generally, that is why it is called the lead agency in internal security,” Adejobi said.
On the issue of extortion, harassment and corruption, Adejobi said the enforcement teams had already been warned to eschew such practices, embrace professionalism and ethical law enforcement practices, which they have complied with to a large extent. Asked who enforces compliance on the part of the insurance companies notorious for always saying away from paying claims, Adejobi said that is the responsibility of NAICOM. “We can hold NAICOM accountable. We should not forget that we have a commission in charge of other processes not the NPF. The only thing the police can do is to make sure you have your police report when and where necessary.”
Prospects and recommendations for effective enforcement
To address the ongoing issue of fake insurance policies, experts suggest that the police integrate their enforcement efforts with the Nigerian Insurance Industry Database (NIID). This integration would enable real-time verification of insurance certificates, reducing the reliance on paper documents that are easily forged. By leveraging modern technology, this move could significantly enhance the integrity of the enforcement process and help ensure that only legitimate insurance policies are in circulation.
There is also a strong call for collaboration between NAICOM, the FRSC, and the police to launch a nationwide public awareness campaign about the importance and benefits of third-party insurance. This education campaign would help motorists better understand the value of insurance, not just as a legal requirement, but as a critical safety net for themselves and others on the road. Increased awareness could also reduce resistance to compliance and increase overall insurance coverage among motorists.
To avoid duplication of efforts and potential conflicts between agencies, experts recommend the establishment of a clear framework that defines the specific roles and responsibilities of the police, FRSC, Vehicle Inspection Officers (VIO), and NAICOM in enforcing third-party insurance regulations. This would ensure coordinated and efficient enforcement, eliminating overlaps and confusion in the execution of duties. Furthermore, it is essential that the police authorities implement strict anti-corruption measures to prevent officers from abusing their enforcement powers. Ensuring that the enforcement process is free from bribery and harassment is crucial to maintaining public trust. Transparent procedures should also be put in place to allow motorists to easily challenge any wrongful actions or unfair treatment by enforcement officers.
Finally, to address the root cause of the widespread sale of fake policies, it is recommended that the government and NAICOM work closely with insurance companies to ensure that third-party insurance remains both affordable and accessible to the general public. By making genuine insurance policies more affordable, the incentive for motorists to purchase fake policies from roadside vendors would be significantly reduced. Incorporating these recommendations could lead to a more effective and transparent enforcement of third-party insurance laws in Nigeria, ultimately improving road safety and ensuring that accident victims receive the compensation they deserve.
Sharing her views on the matter, Bola Odukale, the Director General of the National Insurers Association (NIA), expressed her support for the enforcement of third-party insurance, calling it a welcome development. She highlighted that the initiative represents a renewed hope in ensuring vehicle owners comply with the required insurance standards, ultimately protecting both themselves and other road users. Odukale emphasised the importance of the policy, stating, “It will protect accident victims against the costs of recovering from an accident that someone else, such as another driver, has caused and make compensation available for innocent victims.” Her statement underscores the significant role third-party insurance plays in providing financial security for those who suffer from road traffic accidents, ensuring they are not left to bear the burden of costs and injuries caused by others.
Odukale listed low public awareness/limited understanding of insurance benefits; difficulty in reaching rural areas and underserved communities with insurance products; cultural and religious factors; perception of financial burden; fragmentation of the market and inadequate access to information technology as significant obstacles with getting the people to embrace insurance culture. “Some Nigerians view insurance as contradicting their cultural or religious practices, leading to resistance to adopting insurance as a financial instrument. Many Nigerians perceive insurance as an additional financial burden rather than a protective measure. With limited disposable income and numerous financial priorities, insurance is often considered a luxury rather than a necessity. Other issues include inadequate access to information technology, high inflation, security concerns, and persistent unemployment,” she said.
Odukale recommended the expansion of distribution channels, adding that agent networks, microfinance institutions and retail outlets should be utilized to reach rural areas. “Leverage digital platforms for online policy purchase and customer service and claims processing. Partner with government agencies, cooperative societies and trade unions to reach the informal sector. Build trust and confidence. Improve customer service and complaints. resolution mechanisms. Collaborate with regulatory bodies to enforce consumer protection standards
“Lagos is often called a pacesetter because it sets an example for other states in Nigeria in many areas, including Automatic Number Plate Recognition (ANPR) Camera and every state should embrace such technology. Please note that all over the world, deployment of law enforcement agents and technology are best solution to enforcement of compulsory insurances
“Enforcement agencies in Nigeria are important because they protect citizens, maintain law and order, and prevent and detect crime. The Nigeria Police Force (NPF) serves as the primary law enforcement agency in Nigeria, responsible for maintaining law and order, preventing and detecting crime, and ensuring the safety and security of citizens.
“Third-party insurance is quite popular in car insurance purchases because it is legally mandatory. However, due to the extent of many myths surrounding it, many car owners fail to make educated decisions,” she said.
To foster a culture of insurance in Nigeria, Odukale emphasised the need to improve public awareness, expand distribution channels, and build trust and confidence in the system. She pointed out that educating the public, especially young adults, about the importance of early insurance planning is crucial. Odukale also suggested implementing policy regulatory interventions to create a more robust framework for the industry. Furthermore, she highlighted the role of technology in minimising fraud, as well as the use of data-driven insights to better understand customer needs and market trends. By leveraging modern technology, insurance processes can be streamlined, fraud reduced, and the overall experience made more efficient for both insurers and consumers.
Odukale also called for stronger inter-agency coordination, advocating for a system that is not only efficient but also transparent. She believes that such collaboration would benefit motorists, accident victims, and the broader society. Ultimately, she sees the proper enforcement of third-party insurance as aligning with the police’s mandate to maintain law and order, contributing to both road safety and internal security. By taking these steps, Nigeria can develop a system that ensures greater protection for all road users while promoting a safer, more reliable insurance landscape.