Poor expansion causes insurance sector N240b from uninsured cycles

…Cycles also captured under third party insurance

Low awareness of the benefits, poor expansion and penetration may have cost the insurance sector the loss of about N240 billion on premium incomes from the non-insurance of an estimated eight million tricycles and motorcycles, according the National Motorcycle and Tricycles Association.

The figure comprises what would have been earned from the number of registered commercial, cycles, which ply Nigerian roads in the last 16 years, from 2000 to 2016, The Guardian has learnt.
   
According to findings, the amount is only N10 billion less than the total premium income generated by insurance companies in 2016, which is put at N250 billion, following a drop in insurance renewals, with lower levels new covers recorded due to the preference for quarterly and monthly premiums as a result of the current economic recession.
   
Investigation also revealed that on account of lack of appreciation of the value of insurance on the larger populace, the sector losses about N40 billion yearly to uninsured cycles, as virtually all of them have no third party insurance cover. However, these figures could not be confirmed by the association, as a reliable source told The Guardian that the Nigerian Insurers Association (NIA), does not capture cycles in its data base.

But the law demands that cycles whether as a means of transport or for private use should have the minimum Third Party Motor Insurance.

The third party policy, which is used to reimburse a victim that suffers a loss on account of an incidence from the policyholder, is sold for N5,000.

Section 38 of the National Insurance Act 2003, currently in use, states that 3rd Party Motor Insurance is required as part of the minimum amount of auto cover one must carry as a road user. Penalties for non-compliance can include a fine of up to N250, 000 and/or one-year imprisonment.

Since 2000, there has been an influx of tricycles, popularly known as Keke NAPEP, and motorcycles, commonly called Okada, as means of transportation in most urban and rural areas across the federation.

This is because cycles have become the most accessible means of transportation, especially in the urban centres that are faced with heavy traffic, daily, and for the hinterlands where commercial vehicles find it difficult to access.

Furthermore, increasing unemployment on account of the economic downturn, has forced many, old and young, to take to riding cycles to make a living.

Despite this influx, insurance companies are not able to sell their products and services to these classes of transporters, as the owners refuse to buy insurance covers, as this is considered as another levy or tax on their already meager income.

This is possibly buoyed by the fact that the law enforcement agencies do not bother with them, but rather focus more on vehicle drivers. Even the few tricycles and motorcycles that have such a cover, findings show, have fake insurance papers.

With no enforcement, the riders do not care about having an insurance cover, especially as they are unaware of the benefits of insurance.

A commercial tricycle operator, Matthew Festus, who shuttles between Oshodi to Cele Express, in Lagos, revealed to The Guardian that he and his colleagues do not bother about insurance papers because they had never been disturbed by any official over it.

A check carried out within the Lagos metropolis especially in Okota and Ikotun areas revealed that the Vehicle Inspection Officers (VIOs) only stopped vehicles to inspect their documents, insurance inclusive, but did not stop the cycle riders, who passed through their checkpoints.

The National Insurance Commission (NAICOM), the industry regulator, blamed the law enforcement agents for not implementing the law, as the Insurance Act 2003, notes that cycle riders are also part of road users, and should have a third party motor insurance cover.

Head, Corporate Affairs, NAICOM, Rasaaq Salami, who spoke on the development in a telephone conversation, said the Commission is planning a programme in collaboration with all the law enforcement agencies for the first quarter of 2017, to ensure that all insurance laws are properly observed by the agencies.

In an interview with The Guardian, the Director-General, NIA, the umbrella for all insurance companies in the country, Sunday Thomas, attributed the development to low insurance awareness in the country, pointing out that lack of enforcement is a major problem, just as he confirmed that cycles were covered in the Insurance Act.

He said: “On the motor vehicles, we still have the majority not having genuine insurance, not to talk of millions of Keke NAPEP and Okada across the country. They are all motor vehicles under the 3rd Party Motor Vehicle Insurance Act.”

Thomas urged the law enforcement agencies, comprising the Federal Road Safety Corps (FRSC), and Vehicle Inspection Officers (VIOs), to implement the law, as the insurance industry cannot enforce it on its own.

“It’s about sensitisation and creating the awareness. First and foremost, start with the awareness before you start to enforce by making someone a scape goat,” he pointed out.

Corroborating, a former Managing Director, LASACO Assurance Plc, OlusolaLadipo-Ajayi, opined that the inability of law enforcement agents to enforce the law by cycle owners had continued to deny insurance operators billions of Naira yearly.

He noted that insurance companies parade good products for cycle riders, but that the lack of enforcement made them not to patronise these products.

He urged the government to support the insurance industry by enforcing the procurement of compulsory insurance cover, arguing that insurance operators cannot sell the products and at the same time carry out enforcement.

When asked whether he was aware that most cycles have no insurance cover at all, the VIO Spokesperson in Lagos State, GbolahanToriola, said his inspectorate would conduct an investigation into the matter to ascertain the veracity of this claim, promising to address the matter if found to be true.

“They (cycle riders) are equally covered by law. We will do our investigation on this,” he said.The President, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, on his part, urged insurers to reach out to cycle riders by encouraging them to buy insurance covers, as this would enhance the premium income of the industry, and by extension, shareholders fortunes.

According to a text message to the Nigerian Insurers Association (NIA), the umbrella of all insurance companies in the country, the questions “ How many Okada and Keke NAPEP have third party and how much do they attract yearly? This was sent to the head of corporate Affair and human resource, said in response to the text message that “NIA do not have any such information in their data base”