Car owners to pay more, as NAICOM raises motor insurance premium by 200%

The National Insurance Commission (NAICOM) has raised the claims and cost of insurance on all classes of motor insurance including motorcycles.

According to NAICOM, third party premium insurance rate for motorists will now go for N15,000 from N5000.

NAICOM also raised claims for motorists to N3 million in the event of an accident.

Buyers of comprehensive motor insurance, shall not pay less than five percent of the sum insured or the price of the vehicle after all rebates and discounts.

The new development was stated in a circular dated December 22, 2022, signed by Director, Policy & Regulation, Leonard Akah with the number ‘NAICOM/DPR/CIR/46/2022’, and issued to all insurance companies on Friday

The highest cost in the new rates is N100,000 for a commercial truck/general cartage which also fetches the policy holders N5 million claims in the event of an accident.

The implication of this to the industry is an improved premium income in the class of business from the Year 2023. Until recently, the motor insurance class has been the major earner of income for some insurance underwriters and this new development will swell their income.

The industry earned a total of N77.7 billion from motor insurance in a period of six months covering April to September 2022. The class of business fetched the industry N32.4 billion between April and June and also, N45.3 billion between July and September.

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Consequently, premium income from motor insurance is expected to improve the earnings of the industry operators by 200 percent following the addition of N10,000 to the cheapest third party which currently stands at N5,000.

The commission according to the circular stated that it was empowered to approve the new rates for motor insurance premiums by Section 7 of the NAICOM Act 1997 and other extant laws, noting that the new motor insurance premium rates become effective from January 1, 2023.

It warns that failure to comply with the circular shall attract appropriate regulatory sanction.

NAICOM in the new rates which states that third-party insurance policies are inclusive of the Ecowas Brown Card also approved an N20,000 premium for Own goods motor insurance while the policyholders will collect N5 million claims in the event of an accident. The new development fixed the premium rate on a staff bus at N20,000 while the insured can collect N3 million claims in the case of an accident.

For commercial vehicles, trucks/general cartage has a claims limit of N5 million while the new premium is N100,000; special types of insurance have a claims limit of N3 million while the new premium is N20,000, and owners of tricycles will pay N5,000 for insurance of each to enjoy N2 million claims.

For motorcycle insurance, the new premium is N3,000 while the claims limit is now N1 million.

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