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  • Business - Companies
  • Updated: February 26, 2024

NIA says only 25% of vehicles in Nigeria insured

NIA says only 25% of vehicles in Nigeria insured

Data from the Nigerian Insurers Association (NIA) and Federal Roads Safety Corps (FRSC) revealed that there are 12 million vehicles plying roads across the country of which only 3.11 million were insured as of the end of 2023, indicating only 25 per cent of vehicles are currently insured.

The population of insured vehicles dipped from 3.70 million in 2022 to 3.11 million in 2023, showing that about 600,000 vehicles failed to renew their insurance when their previous coverage expired.

The above is due to the tough operating business atmosphere and increasing cost of living that has made Nigerians relegate insurance in their scale of preference.

With the increase in fuel pump price coupled with a hike in the price of vehicle spare parts, some motorists, it was learnt, have either sold their vehicles or parked them at home, hence, see no reason to insure.

The FRSC Act demands that any automobile on Nigerian roads must have at least a third-party motor insurance policy or comprehensive insurance coverage which goes for about 10 per cent of the value of a vehicle.

Third-Party Vehicle Insurance comes at a fixed price of N15,000 after it was increased from N5,000 last year to cater for inflation and increasing price for vehicle spare parts.

To this end, the insurance industry is losing billions of Naira on motor insurance to fake insurance racketeers who sell only papers to motorists.

Confirming this development during a recent press briefing in Lagos the chairman of NIA, Segun Omosehin said aside from the hardship in the country, the over 300 per cent increase in third-party motor insurance certificate from N5,000 to N15,000 premium was equally responsible for a drop in motor insurance last year(2023).

He believes that with increased awareness of the improved benefits of the premium hike, motorists will begin to appreciate the development. Similarly, he stated that the economic scenario last year was tough.

“The macroeconomic environment, is it inflation, is it fuel subsidy removal, the high price of petrol, or foreign exchange issues, all of these put together affected uptake of insurance.

“Insurance perception is critical to policy acceptance and renewal and Insurance is the easiest gift a poor man can give his family. This tough time is the best time to buy insurance with minimal premiums and extremely huge values. The industry should do more financial education,” he said.

Speaking on the apathy for insurance in the country, Omosehin stressed that tough times demand more insurance coverage, especially, because of a hike in replacement values.

He said it makes economic sense to pay a small premium and have the insured assets replaced when disaster occurs rather than having to dip into one’s savings to replace the damaged assets.

“How much is insurance? A lot of people spend N5,000 monthly on recharge cards to talk with friends, but cannot spend the same N5,000 to protect their loved ones in case of the unexpected.

“If you ask me, the best time to take insurance is now because it protects the future of your children’s education, their health, and everything concerning planning their future,” he pointed out.

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