The impending nationwide enforcement of third-party motor insurance in Nigeria, slated for February 1, 2025, has sparked discussions about the policy’s effectiveness and attractiveness to motorists. International Energy Insurance (IEI) has emphasized the need for operators to make the third-party motor insurance policy more appealing to vehicle owners, ensuring compliance with the law and fostering a culture of insurance uptake beyond mere enforcement. The enforcement, announced by Inspector-General of Police Kayode Egbetokun, is backed by the Insurance Act and the Motor Vehicle (Third Party Insurance) Act, which mandate all vehicle owners to possess valid third-party insurance before operating their vehicles on public roads. While the enforcement is seen as a positive step towards improving insurance adoption, IEI’s Managing Director/CEO, Olasupo Sogelola, argues that the industry needs a more sustainable approach to ensure long-term compliance and customer satisfaction.
Sogelola commended the police chief for enforcing the policy, acknowledging its potential to boost insurance acceptance and penetration. He stressed, however, that the industry shouldn’t solely rely on law enforcement to drive policy uptake. Instead, operators should focus on developing strategies that intrinsically motivate motorists to purchase third-party insurance. This includes enhancing the value proposition of the policy beyond just claim payment and exploring innovative distribution models for wider accessibility. He advocated for the development of diverse policy options, coupled with incentives, to attract and retain customers. The focus should shift from a reactive approach driven by enforcement to a proactive one that anticipates and caters to the needs of motorists, fostering a genuine demand for third-party insurance.
Sogelola emphasized the importance of a robust claims process, urging policyholders to familiarize themselves with the procedures outlined in their policy documents. He encouraged honesty in claim submissions, cautioning against inflated or fictitious claims that could undermine the integrity of the system. Highlighting the efficiency of IEI’s claims processing, Sogelola stated that genuine claims under N200,000 are typically settled within 24 hours. He reinforced the company’s commitment to prompt claim settlement, emphasizing it as a core aspect of their business operations. He urged other insurance providers to adopt similar practices, ensuring that prompt and fair claim settlements become the industry norm, thereby building trust and encouraging voluntary policy adoption.
Beyond merely complying with legal requirements, enhancing the attractiveness of third-party motor insurance hinges on several key factors. Simplified policy options, tailored to different needs and budgets, would make the product more accessible and appealing. Incentives, such as discounts on premiums for safe driving records or bundled services like roadside assistance, could further incentivize policy uptake. Furthermore, transparent and efficient claim processing, exemplified by IEI’s 24-hour settlement policy, is crucial for building trust and fostering customer satisfaction. By focusing on delivering value beyond the basic legal requirement, insurers can transform third-party insurance from a mandatory obligation to a valued service.
Effective distribution models are also critical for expanding the reach of third-party motor insurance. Leveraging technology, such as online platforms and mobile applications, can streamline the purchase process and make it more convenient for motorists. Collaborations with vehicle dealerships, garages, and other relevant businesses can further expand the distribution network, ensuring greater accessibility. Moreover, targeted awareness campaigns can educate the public about the benefits of third-party insurance, emphasizing its protective role and the potential financial repercussions of not having coverage. By adopting a customer-centric approach, the industry can create a more sustainable demand for third-party insurance.
The long-term success of third-party motor insurance in Nigeria depends on a concerted effort from both the industry and regulatory bodies. While enforcement plays a crucial role in initial adoption, it is not a sustainable long-term solution. The focus should be on creating a system that encourages voluntary uptake by offering valuable products and services, streamlined processes, and efficient claims settlements. By embracing innovation, enhancing customer experience, and fostering trust, the industry can ensure that third-party motor insurance becomes a valued asset for all motorists, contributing to a safer and more secure road environment. The goal is not just compliance, but a cultural shift towards recognizing the importance and value of insurance.
