The Manufacturers Association of Nigeria (MAN) says that the new premium rates for motor insurance is seriously affecting its member companies.

The new premium rates for motor insurance in the country was introduced by the National Insurance Commission (NAICOM) in December 2022, but took effect from January 1,  2023.

NAICOM had  in a circular dated December 22, 2022,  signed by its Director,  Policy and Regulation,  Dr. L.M. Akah,  and addressed to all insurance institutions stated that the upward adjustment of rate was pursuant to the regulator’s exercise of its function of approving rates of insurance premium under the Section 7 of NAICOM Act 1997,  and other extant laws.

Under the new template for motor insurance premium,  third party insurance policies inclusive of ECOWAS brown card (EBC) had been reviewed.

The commission noted that effective January premium on private motor shall be N15, 000,  while Third Party Property Damage (TPPD) which is the limit of claims an insured can enjoy on the policy shall be N3, 000.

Also,  under the private category,  Own Goods shall henceforth  attract a new premium of N20,000 and TPPD of N5, 000 while staff bus will be subjected to a new premium of N20, 000, and TPPD of N3, 000.

For the commercial category, the insurance regulator stated that trucks/general cartage shall attract N100, 000 premium and TPPD of N5, 000.

Also,  special type insurance will attract N20,000 premium and TPPD of N3,000 while tricycle will attract N3,000 premium rate and N2,000 in TPPD. Motorcycle will also pay N2, 000 premium and N1, 000 as TPPD.

The commission further stated that comprehensive motor insurance policy premium rate shall not be less than five per cent of the sum insured after all rebates/discounts.

The commission also warned that failure by insurance firms to comply with the directive shall attract appropriate regulatory sanction.

Seven months down the lane, Segun Ajayi-Kadir, the Director-General of MAN , said that the exorbitant new premium rates for motor insurance is taking a toll on manufacturing companies, especially the operators in Motor Vehicle & Miscellaneous Assembly sectoral group .

He noted that in the second quarter of 2023, the sector recorded  an index score of 46.7, showing that the operators exhibited further loss of confidence as they fell below the 50-point benchmark in the period under review.