In spite of the series of reforms and innovations by stakeholders to sanitise this segment of the industry, motor vehicle registration and insurance in Nigeria is still fraught with corruption and irregularities
Insurance companies as risk bearers and a signifi – cant pool of fund for development plays critical role in economic growth and sustainability.
Insurance business, particularly motor vehicle registration and insurance in advanced economies, also makes significant contributions to the Gross Domestic Product (GDP) of those nations.
However, the situation in Nigeria is unlike what obtains in other climes where insurance takes the lead in national economic development. According to industry experts, the insurance sector in the country contributes not only a mere less than one per cent to annual GDP while still grappling with enormous challenges, but is also struggling with the scourge of fraud, ineffi ciency and corruption, particularly the counterfeiting of policy certifi cates in the areas of motor vehicle registration and insurance.
Unsurprisingly, many insurance practitioners and registered brokers say that close to 90 per cent of vehicle insurance licences in the country presently are not only fake, but that countless shady activities that produces huge revenues from undocumented transactions in motor vehicle insurance fi nd their ways into private pockets; a situation they noted has successfully made the sector and the economy to consistently lose over N20bn on an annual basis.
Pointing out the appalling situation in the motor vehicle insurance subsector of the insurance industry in Nigeria, the Managing Director of City Insurance Brokers Limited, Lucky Igunbor, told our correspondent that insurance businesses contributes 0.5 per cent to the nation's GDP despite its key role in the economy, and that multifarious challenges such as rate cutting, counterfeiting of certifi cates by fakes and quacks, poor knowledge of its (motor vehicle insurance) operations due to lack of adequate awareness have all combined to ensure that the industry is weak and motor vehicle insurance fraught with alarming and mind boggling corruption.
Of all these aches and challenges surrounding vehicle insurance and registration in the country, Igunbor said the counterfeiting of vehicle insurance certifi cates has remained the greatest challenge, saying for instance that over 90 per cent of vehicle insurance and registration certifi cates obtained by motorists are fake.
"This (activities of fake vehicle insurance) results into a loss of about N20bn annually. The industry, last year wrote businesses of over N137bn, out of which 24 per cent came from motor insurance", he explained.
To him, Nigerian insurance operators will have to resolve to review motor insurance tariff before the end of the current year, a move, he said may lead to an increase in the premium being paid by motorists to arrange their respective insurance covers. He said this could be a way of enabling operators make money being lost and encouraging motorists to get genuine certifi cates for their vehicle insurance.
Chairperson of Motor Technical Committee of the Nigerian Insurers Association (NIA), Omolara Posi-Adedayo, speaking in the same vein, said there was the urgent need to take a critical and tough stance against the activities affecting motor vehicle insurance in the country, in order to enhance the revenues due to stakeholders. The industry regulators, the operators and the insuring public, she said, form the core of stakeholders in question.
She explained that her committee having reviewed various motor insurance proposal forms, has made recommendations on the standardised versions to the governing council of the NIA, adding plans are on to organise motor training, and review Nigeria motor tariff soon.
Owners of private cars, which are used for social, domestic and pleasure purposes, as well as owners of commercial vehicles such as taxies, buses and hire cars, according to her, are not left out of the motor vehicle insurance challenge, as many of them deliberately choose to go for fake and uncertifi ed insurance, instead of going for genuine ones.
Posi-Adedayo added that the committee is also working on provision of third party insurance cover for yellow taxi/ fare paying vehicles in the country as part of efforts to provide the needed security and genuineness for the motor vehicle populace.
"Motor Insurance which is the most common of all the known classes of insurance is designed to protect the insured for loss of or damage to his vehicle, damage to third party property including bodily injury and death to third parties caused by accident", she explained, adding as things stand, that more still needed to be done.
Throwing light on the two basic types of motor insurance covers; which are the Third Party and Comprehensive, Sector Analyst, Basil Ngwuta, said while the premium rate being charged for third party motor insurance cover at present is about N5,000, that the premium payable for comprehensive motor insurance cover is 10 percent of the cost price of the vehicle being presented for insurance.
According to him, the highest ratio of fraudulent activities in motor vehicle insurance is heavily domiciled in the Third Party insurance. Even the little premium of about N5,000 is evaded at all cost by many present and potential motorists, due largely to lax monitoring by regulators and the operators.
He explained lax monitoring has led to the situation where all manner of characters masquerading as brokers and insurance experts has taken over the registration and insurance offi ces of most operators and agencies including those of governments, where the fakes and frauds in connivance with some operators and unscrupulous individuals and groups, offer motor insurance cover at ridiculous prices, which usually are not documented with the appropriate authorities, including the National Insurance Commission (NAICOM).
Ngwuta said for a motorist to drive on Nigeria's roads that it is a legal requirement to have at least a Third Party car insurance which ensure that third parties involved in an incident are protected. He said the mandatory nature of that requirement has made many desperate and criminally minded motorists to secure ant form of motor vehicle insurance paperwork, even if they, the motorists are fully aware what they are getting is fake and of short term value.
Bemoaning what he described as the deplorable situation, he explained that Third Party Risk only covers bodily injury including death to third parties caused by accidents occurring on public roads, while pointing out the claimants' costs and other costs incurred with the insurer's written consent are also recoverable. Third party property damage, he said, is covered in addition to bodily injury.
Putting the challenges associated with motor vehicle insurance in perspective and attributing the situation partly to the problem of poor information dissemination by operators, Commissioner for Insurance, Fola Daniel, told Business Courage that available statistics from the commission show that 90 per cent of all motor insurances been carried about are fake, meaning in his views, that 90 per cent of motor vehicle insurance market is still yet to be tapped into by operators and investors.
Daniel said part of the commission's effort to redress the situation is commitment to ensuring prompt claims settlement by operators, which the commission believes has seriously harmed the public perception about the industry.
He explained the failure or undue delay by operators in claims settlement regarding motor insurance is a factor encouraging many motorists to patronise fakes, saying failure or inability to fully address claims settlement is viewed as a serious aberration by NAICOM.
"This is why NAICOM advises (motor vehicle insurance) policy holders to ensure that they obtain their policies from NAICOM-registered insurance companies only. A policy obtained from a fake insurance institution has no liabilities attached and no compensation can be received if such complaints are made to the commission.
"However, the campaign against fake vehicle insurance institutions is on. NAICOM's awareness creation jingles have made its debut. We are also working with the Police, the Road Safety, VIO, and all motor vehicle law enforcement agencies to stamp out fake insurance operators," he said.
On his part, Chairman, Accident Offi ces Committee of the NIA, Dele Akande, lamented that the faking of vehicle insurance certifi cates to great extent has affected the industry negatively, pointing out a genuine motor vehicle insurance policy, going by the recommendation of NAICOM, should be about N5000. Any one less than that amount, he said, is either not genuine or that the Third Party liability cover is less than N1m. If it is up to N1m, the premium should not be less N5000, he added.
"Unfortunately, most people get these certifi cates from the licensing offi ces. You would observe, however, that majority of them are fake because when you check the addresses stated on them you would discover that they do not exist. This, therefore, prevents the premium that would have accrued to the companies.
"One can say that about 60 per cent of the vehicles on the roads have third party, except corporate bodies that use comprehensive. With this you can get clear picture of the magnitude of premium that would have accrue to the industry.
"If the money lost to this menace were to the industry, there would have been great improvement as the industry would have more money to invest and compensate victims of accidents, hence stem the idea of blackmailing the industry on claims settlement."
On what the industry losses annually to the menace he said the industry in the last two years has lost aggregate premium in the region of N100bn and out of that, about 60 per cent is from third party insurance, hence, on the average N10bn to N20bn was lost to peddlers of fake certificates.
He said that, in a bid to stem the activities of those who engage in the nefarious act at the licensing offi ces, that the NIA in collaboration with the Nigerian Police and the Federal Road Safety Commission would embark on aggressive awareness campaign to educate the masses on the danger of fake certificates.
The Nigerian Council for Registered Insurance Brokers (NCRIB), said on its part that counterfeiting of insurance certifi cates was an illwind that had done no one any good.
Corporate Communications Manager of NCRIB, Tope Ademola, told Business Courage the act had greatly reduced the solvency of insurance practitioners.
"If there is no incidence of counterfeiting, the industry would be able to realise adequate revenue in terms of premium from the insurances people place with them. But with counterfeiting the operators are being short- changed.
"The act kills creativity, even when we talk of products evolutions, which I believe is one thing any insurance company would not look down on now. Imagine how painful it is to for you to evolve a product and for somebody to be in a licensing offi ce or an obscured place and be counterfeiting it. It is discouraging and killing in terms of what should accrue to insurers," he said.
He charged insurers to move from the realm of rhetoric about public awareness, adding that it was a pity that the agency entrusted with the duty to checkmate faking of insurance licences, did not even know much about insurance operations.
"I am not sure, that an average Nigerian police man would be able to identify a fake or genuine insurance certifi cate when he sees them. He does not know how many insurance companies operate in the country, and I would not be surprised, if when you present a fake insurance certifi cate to a police man or a law enforcement agent, he would think it's a genuine certifi cate. That is to paint the level of ignorance."
On how to eliminate menace posed by fake motor insurance in the country, Managing Director of Courteville Business Solutions Plc, Adebola Akindele, told our correspondent his company has already pioneered the use of technology to dismantle the bottleneck surrounding motor vehicle registration in Nigeria through the AutoReg innovation, saying it is very possible for Nigeria to start exporting technology and business solutions like other developed nations.
He said his company recently deployed the Nigerian Insurance Industry Database (NIID) solution which is an initiative of the NIA to create a central insurance database wherein details of all vehicle insurance policies issued by insurance companies are updated. This, according to him, is to create an authentic and verifi able database of motor vehicle insurance in Nigeria.
He said the NIID solution is designed to help Insurers and the NIA monitor and authenticate all insurance policies issued in Nigeria toward reducing the incidence of fraudulent transactions and the loss of business by the insurance companies.
Insisting patronizing touts for motor vehicle insurance is no longer viable in the immediate and long term, Akindele said it is clear from all indications within the next few months that any motor vehicle with an insurance policy that the information is not stored on the NIID platform and cannot be verifi ed by law enforcement offi cers will be running afoul of the law.
According to the courteville business solutions managing director, the development by the company is a web-based business solution for motor vehicle documentation developed and patented for 20 years to address the ineffi ciencies of motor vehicle administration system.
"It is the fi rst of its kind anywhere in the world. The innovation is now in operation in more than 22 states in the country is currently deployed in over 5,000 processing points. The innovation has created the best online, real-time records, for government and its agencies thereby eliminating cases of duplicated registration of motor vehicle number plates.
"We have also created the largest and most authentic database of motor vehicles and motor vehicle owners in sub- Sahara Africa consisting of over 9million records. The AutoReg solution now cover all other motor vehicle documentation service such as Roadworthiness certifi cation, Hackney Permit and in fact third party insurance issuance, while revenue from motor vehicle administration activities have increased by over 250% within the fi rst 2 months and revenue continues to increase in states where we are operational.
"We have provided the Federal Road Safety Commission (FRSC) and other law enforcement agencies with handheld devices, which they currently use for the verifi cation of motor vehicle documentation and driver's Licenses from anywhere on Nigerian roads", he explained.
0 comments:
Post a Comment