Police enforcement of 3rd-party motor insurance would lead to significant increase in uptake – NIA Chairman

The stricter enforcement of Third-Party Motor Insurance by the Nigeria Police Force, which commenced on February 1, 2025, is now generating significant effects on both the insurance industry and policyholders in Nigeria.

The Nigerian Insurers Association(NIA) Chairman, Mr. Kunle Ahmed made the assertion during a media briefing with members of Nigerian Association of Insurance Pension Editors (NAIPE) in Lagos, adding that the most immediate and significant impact is the substantial increase in the purchase of third-party motor insurance policies.

He stated that the surge in demand directly translates to higher premium income and overall revenue growth for insurance companies. Citing available reports, the Chairman said there has been a significant increase in the uptake, and believed that the trend would be amplified by continued enforcement in 2025 and beyond.

However, he expressed the belief that increase in uptake could also imply increase in the volume of claims and overall potential liabilities of insurance companies. This, according to him, will necessitate that insurance companies enhance their claims processing efficiency and customer service capabilities to handle the increased workload and ensure policyholder satisfaction.

The NIA boss further stated that stricter checks by the police would make the use of fake or invalid insurance certificates riskier. Said he, ‘’this enforcement, coupled with the use of the Nigeria Insurance Industry Database (NIID), is expected to reduce the prevalence of fraudulent policies.

‘‘As more genuine policies are purchased and recorded in the NIID, the overall quality and reliability of insurance industry data will likely improve. This can aid in better risk assessment and management for insurers. More importantly, the enforcement drive raises public awareness about the mandatory nature and benefits of third-party insurance.

‘‘Timely and efficient payment of claim obligations will gradually lead to increased public trust in the insurance sector. Interestingly, the increased awareness and enforcement can create opportunities for insurers to develop more attractive and user-friendly third-party insurance products and leverage technology to improve service delivery.

‘‘For policyholders, the primary impact is a higher rate of compliance with the mandatory third-party motor insurance law to avoid potential penalties. Stricter enforcement ensures that more victims of road accidents involving insured vehicles can receive the legally mandated financial compensation for bodily injury, death, or property damage (up to N3 million for property damage).’’

Mr. Ahmed further informed that genuine third-party insurance policies in Nigeria now include coverage under the ECOWAS Brown Card scheme, offering protection when driving in other West African countries.

He stated that compliant policyholders could now avoid the risk of facing fines up to N250,000, vehicle impoundment, and potential imprisonment for driving without valid third-party insurance, adding that having valid insurance and adhering to the law can provide vehicle owners with a greater sense of security and peace of mind while driving.

For previously uninsured vehicle owners, the Chairman argued that purchasing third-party insurance could represent a new mandatory expense, which can be a financial strain for some, especially given the prevailing economic conditions, but however, state that the financial strain of meeting potential liabilities arising from road accidents coupled with the legal implications of non-compliance would be more severe.

He warned Policyholders on the need to be well-informed about the scope and benefits of their third-party insurance policies and how to verify their authenticity to avoid purchasing fake policies.

Overall, Ahmed affirmed that the stricter enforcement of third-party motor insurance in Nigeria is a crucial step towards ensuring financial protection for road accident victims and improving legal compliance.

‘‘While it offers significant opportunities for the insurance industry in terms of growth and credibility, it also presents challenges related to claims processing and the need for enhanced customer service. We are committed to a timely processing and payment of all valid claims, the Chairman concluded.

 

 

 

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