The Nigerian Police recently commenced the enforcement of third-party vehicle insurance, with defaulters likely to pay up to N250,000 if caught.
This enforcement seems to be more effective in Lagos, Akwa Ibom and Edo states, while the Federal Road Safety Corps (FRSC) and the Nigeria Police in Anambra, Ebonyi and Enugu states have urged motorists to ensure compliance with the Third Party Vehicle Insurance or face the wrath of the law.
In December 2022, the National Insurance Commission (NAICOM) raised third-party premium insurance rates for motorists from N5,000 to N15,000.
In an exclusive interview with Nairametrics, Insurance Expert, Kemi Adeyeye, explains what could be the reason some vehicle owners appear to be uninterested in renewing their vehicle insurance among other interesting perspectives.
Nairametrics: What should Nigerians know about insurance?
Kemi Adeyeye: Insurance is a financial protection that helps to manage risk and uncertainty. Insurance also provides maximum protection and safety against any unexpected events such as accidents, theft, natural disasters or even death.
We have so many types of insurance. We have auto insurance which is motor insurance, and it is divided into two. We have the normal insurance which we call ‘third party’ that allows people to move around. It is an important insurance that you should have.
But if you want to give your car a cover, and maximum protection, you will need to get a comprehensive package for your car. So, in case of an accident, accidental injury on the road or damage to your car, you are well covered.
If you even cause damage to a third party, by the time you have this package of comprehensive cover, the insurance company will cater for the expenses. Either damages to the car, theft or loss or even bodily injury to a third party. So, you have a lot of cover to enjoy by the time you subscribe to the comprehensive package.
The third-party also has a cover too. But it will not be in your car. It will be for the third party if there’s any damage caused by your car to the other car.
Nairametrics: We know that most people do third-party car insurance more than the comprehensive. Speak to us more about the third party car insurance.
Kemi Adeyeye: Normally, you know it is compulsory for you to have a third party on your car, which is compulsory for every vehicle owner in Nigeria. You are meant to renew it annually, but the claim on it will not be for your own car.
The third party benefits from the cover. In my own company, if you do a third party with us, you are to enjoy a minimum of one million naira yearly.
Just one N1 million on third party car, not on yours. If you hit the other person’s car, my company is meant to repair the person’s car, not your own car.
And if such incidents occur, you are meant to take pictures of your car and the other person’s car.
Nairametrics: This third party insurance, are people really claiming it?
Kemi Adeyeye: Yes it is really working. But people will think, ‘Oh, I would not like to disturb myself, I would not like to stress myself’. They believe the insurance company will not pay. That is their mindset. But I want to tell you that the mindset is wrong, my own company will pay for third party in case of any damages, or any unforeseen occurrences if it happen.
If you do your third party at the right place, you can call for a claim anytime. Once you know the agent that renews your car insurance, fine. Even if you don’t know the agent that renews your car insurance, you can equally walk into the office, and then call for your claim. It is your right.
Nairametrics: Since the government commenced enforcement, Is there a surge in the number of third party insurance registration?
Kemi Adeyeye: Not really a surge, but many people are now renewing their expired insurance policy, they’re afraid of falling victim. But many people are still finding it difficult to pay that N15,000.
Nairametrics: Is there any difference between the third-party insurance of today compared to the one that has always been?
Kemi Adeyeye: There is no difference, it is still the same third-party insurance. The only thing that changed is the increase in the money which rose to about 200% from N5,000 to N15,000
Nairametrics: The government is now clamping down on defaulters, with a likely fine of about N250k, is that fair?
Kemi Adeyeye: You know most Nigerians, if they are not put under pressure, they won’t do the right thing. If government don’t enforce this thing, many people will just overlook it. I can tell you there are hundreds of thousands of cars on Nigerian roads daily without insurance coverage, and that is not good for anyone including other road users. So the government has to do what it has to do.
Nairametrics: Why do you think some vehicle owners refused to renew their vehicle insurance?
Kemi Adeyeye: I think there are two major reasons in my opinion. The first may be as a result of the huge increase from N5k to N15k. You know the economic situation of the country is already tough. The second reason may be because most Nigerians are complacent, they don’t see the need for it as they see it as a waste of money. But we are doing our best to educate them and things are improving gradually.
Nairametrics: How long does it take to process a third-party insurance claim?
Kemi Adeyeye: At least, let me say two weeks, between one to two weeks you are getting your claim done. In my own company, when you submit your claim to us, and we are able to make our findings and are sure that this thing truly happened, my own company does not take time, we respond to the claim asap.
Nairametrics: How many times in a year can you request a claim? You said third-party insurance covers up to N1 million per year right?
Kemi Adeyeye: On third party, yes. So if that particular damaged car takes N400k to fix, then the person still has N600k for that year before the end of the policy.
Nairametrics: As an insurance expert, what is the major challenge you face in your day-to-day work?
Kemi Adeyeye: We have a lot of people in Nigeria as of today that are still yet to believe that insurance is good, this is also one of the reasons the government is now enforcing it. But from time to time, we keep on telling them that no, insurance is actually working.
I have met with someone at a VIO office. I actually wanted to market the man, but he told me he doesn’t do third-party insurance. He does comprehensive. I was like, ah, wow.
But what we face daily is people will still tell you insurance is not working in Nigeria. ‘Ah, no, I cannot insure my car. I can only do this third party of it, you know, and that’s all.
Nairametrics: So we have talked a lot about third party insurance. I want you to explain the difference between that and comprehensive car insurance.
Kemi Adeyeye: Comprehensive insurance is a very good plan to have on your car. It will actually give you peace of mind. Unlike a third party that does not have a cover on tax, In the case of a comprehensive package, we have what we call tax.
If anything happens to your car that is worth N5 million, for instance, you are paying just 5% of the worth of the car. Let’s assume the car is stolen or something, the insurance company comes in to give you the cover for the damage.
If the car is stolen, the insurance company will replace it either in cash or if you want us to get you the car. So, comprehensive covers both my car and the third party’s car.
Nairametrics: Is there an extent of damage a car should get to before somebody can say, I want my insurance company to fix this? Either third party or comprehensive.
Kemi Adeyeye: Anything you think of. You have paid for your service. So, anytime, any day you are welcome. Even if it’s a scratch of N10,000, It is money. So, you just take the picture of that part, send it to me or you take it to the insurance company that insured your car for you, and then the bill will be sorted.
Nairametrics: We have been talking about car insurance, aside from that, what other insurance are there in Nigeria?
Kemi Adeyeye: Property insurance, people do that. We also do fire and burglary. A lot of insurance. We also have health insurance. That one is even mandatory for people traveling outside the country.
Then we also have the savings plan that will help one to plan for the future either a pension for yourself or for your children for their future purpose.
