Insurance loses billions of naira on non-enforcement of third-party motor cover
by admin on Jul.19, 2011, under Car insurance
The continuous delay in the enforcement of compliance on third-party motor insurance in Nigeria is costing the industry billions of naira, and creating easy fund for fake operators who do not meet claims obligations.
Majority of motorists across the country parade fake insurance certificates, assessed from vehicle licensing offices around the country, further justifying a survey report that 91 percent of vehicles on Nigerian roads are not properly insured.
The survey, conducted by One Stop Claims Shop for Motor Vehicle Insurance (OSCAR), stated that majority of the vehicle insurance policies possessed by vehicle owners are fake.
OSCAR noted that all vehicles are required to have, at least, third party insurance to provide for damage to life and property of other road users, adding that commercial vehicles are required to have a cover for their passengers and that the penalty for not being properly insured includes fine of N250,000 or one year imprisonment.
It said vehicle insurance provides security for road users and that every road user is a potential victim.
“In case of bodily injury or death, the liability of the insurance company is unlimited. In case of hit and run, up to N20, 000 compensation is paid and in case of uninsured driver, up to N50, 000 is paid,” it added.
Sunday Thomas, director general, Nigerian Insurers Association (NIA), had said fake paper insurance certificate will soon be replaced with digitalised card device. Thomas noted that insurers would soon commence the issuance of the digitalised certificates, adding that the device will enable the industry develop data that will help to ascertain the level of business underwritten by operators and aid research. Thomas noted that it is worrisome that the industry has no data of businesses undertaken by the operators, adding that it is difficult for the industry to ascertain what is losing annually to fake insurance operations.
He said: “The data base of the insurance industry is in the front of the NIA, before the first quarter of next year, we are going to do away with all the paper documents. A lot is being done, by the NIA and the regulator is interested in the project and we are doing all we can to reposition the industry.”
Fola Daniel, commissioner for insurance, told journalists that the decision to introduce the electronic system was taken to stamp out paper certificates which are easily counterfeited by syndicates, adding that NAICOM adopted the initiative as a panacea to curb the menace of fake certificates and increase the industry’s premium income.
“Across the globe paper certificates are no longer relevant, this is while we shall soon introduce electronic cards that will be easily identified by security agents. The card will make it difficult for those counterfeiting insurance to remain in operation,” he said.
Speaking in tandem, Yemi Soladoye, a Technical consultant to NAICOM, said NAICOM is not just using administrative procedures to wipe off fake insurance, but looking at technological procedures under which all the motor certificates issued by old insurance companies would go to a central data.
He said NAICOM is putting in place card writers and card readers which will write the names of the insurance companies and show them at a central portal.
Soladoye noted that with the device, motor policy holders would have their policies like the driver’s licence.
“By the time the Nigerian police or Federal Road Safety Commission are doing their routine check, all you need to give them is the card, they will slot the card into the machine with them, if it is genuine it will show, if it is fake, it will show,” he added.
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