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Increase in vehicle insurance rates key to economic growth – NECA DG

THE Nigeria Employers’ Consultative Association (NECA) has said that the upward adjustment in the premium rate for motor insurance is desirable to grow the economy.

The National Insurance Commission (NAICOM) had announced a new policy in a circular, titled, ‘New Premium Rate for Motor Insurance’, signed by its Director, Policy and Regulation, Leo Akah.

With the new policy, third party motor insurance policy will be increased from N5,000 to N15,000, with effect from January 1, 2023.

This is among other increases in rates as contained in the circular.

Many Nigerians had expressed worry on the hike, describing it as a mere avenue for the government to get more money from car users to boost its revenue as it seeks funds to implement the 2023 budget.

But NECA’s Director-General, Adewale-Smatt Oyerinde, reacting today to the increase in an interview, said, “In order to grow the economy, develop the industry and provide effective risk-mitigating services to the generality of Nigerians, it is our belief that a marginal adjustment in the current rate is desirable.”

Oyerinde noted that the Commission reserved the right, as provided in the extant law, in reviewing the rate.

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He, however, said it was imperative for NAICOM to always carry stakeholders along in such review exercises, especially with the timing.

“It is worthy of note that the current rate has been in existence for over five years, while the cost of motor vehicles has increased exponentially.

“Coupled with the general price increase of goods and services, the Commission can be justified if there are guarantees for improved service delivery and a higher response rate from insurance companies,” he said.

Decrying the low rate of insurance awareness in the country, Oyerinde urged NAICOM to deepen engagement with critical stakeholders in order to promote the insurance culture in Nigeria,  and also get buy-ins for its policy actions.

“In developed climes, the insurance industry plays a major role in national development as it serves as risk off-takers in cases of accidents and other mishaps,” he said.

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