NAICOM to announce new rate for third party motor insurance by January 1, 2022

The Insurers Committee has revealed that plans are at the concluding stage to empower the National Insurance Commission (NAICOM) to announce a new rate for third party motor insurance policy by January 1, 2022.

The new rate which will be an upward review of the current N5,000 premium paid by motorists, is the outcome of the discussion between the body set up by the committee and insurance operators including other stakeholders. This was made known by the Chairman of its Sub-Committee, Publicity and Communication, Mrs Ebelechukwu Nwachukwu, at a media briefing on the outcome of the Insurers Committee meeting held in Lagos.

According to the News Agency of Nigeria, Nwachukwu, who is also the Managing Director of NSIA Insurance Ltd said that the committee working on the review on the part of the Nigeria Insurers Association (NIA) would conclude and submit its report to the regulator by November.

What the Spokesperson of the Insurance Committee is saying

Nwachukwu said, “By January 1, 2022, the regulator should be able to announce a scientific new price for the third party insurance policy that will also include the ECOWAS Brown Card.’’

She said that the committee had an interaction with representatives from ECOWAS on how to process and issue the ECOWAS brown card with a motor insurance and how it will work in the Nigerian market in addition to highlighting some key buckets of risks that it would be using to measure insurance firms when it visits for the Risk Based Supervision (RBS).

She listed the risks as: Credit risk, Liquidity risk, Market risk, Insurance risk, Operational risk, Legal regulatory risk, Compliance risk and Strategic risk.

She said, “NAICOM did a test run of the RBS in five insurance companies, and following the outcome of the assessment from the firms, the regulator came up with highlights of the risks. Highlighting the risk is good for the underwriters, so that we can go back in-house to ensure that our reports are standard when it comes to reporting RBS to the regulator.’’

On the International Financial Reporting Standard (IFRS) 17 expected to kick-start by January 1, 2023, for financial institutions, Nwachukwu said that the regulator and operators were working closely on the implementation.

She said, “NAICOM has been having discussions with lots of insurance companies on the implementation of IFRS – 17, mostly on the part of the NIA. A working group of policy and methodology was created to come up with a guidance note on the implementation.’’

What you should know

The Insurers Committee, like the Bankers Committee, comprises NAICOM and Chief Executive Officers (CEO) of Insurance companies in Nigeria and was inaugurated on November 19, 2015, by the then Minister of Finance, Kemi Adeosun. It operates under a mandate to activate the insurance industry change agenda and strategically reposition the sector.

Recall that in July 2021, NAICOM and insurance operators decided to review upward the current insurance premium paid by motorists to obtain compulsory third party insurance after a stakeholders meeting in Lagos, the first after the Covid-19 lockdown

The Chairperson, Publicity Committee of the Insurers’ Committee, Mrs. Ebelechukwu Nwachukwu, said the committee had set up a body to discuss with operators and come up with a new rate to be paid by motorists on the policy.

She said the Commissioner for Insurance, Mr Sunday Thomas, following a reactivation of the Insurers Committee, directed the insurers to determine the adequacy of the current premium for the Motor Third Party insurance policy

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