Universal Insurance Plc on Thursday said the new third party motor insurance premium rate of N15,000 affected its total premium income for the first half of year 2023.
Dr Benedict Ujaotuonu, Managing Director of the insurance company said this to our correspondent on the sidelines of a conference with journalists covering the insurance and pension sectors in Lagos.
Ujaotuonu said that Universal Insurance insisted to abide by the directive of the regulator, the National Insurance Commission (NAICOM), and not involve in any form of rate cutting.
“Universal insisted that we are not going to cut corners. We must sell at the approved rate,” he said.
According to him, if all underwriting companies resolve to sell the policy at the approved rate, it will ultimately help the industry in the long-run in growing its income.
Ujaotuonu expressed hope that the insurance firm would bounce back, in terms of the revenue generated from the third party motor insurance policy.
It was reported that NAICOM had on Dec. 22, 2022, approved increment on the Third Party Motor insurance policy, among other various classes, from the former N5,000 to N15,000, with effect from Jan. 1.
The regulator announced this in a circular titled New Premium Rate for Motor Insurance with number: NAICOM/DPR/CIR/46/2022.
It was signed by the Director, Policy and Regulation, NAICOM, Mr Leo Akah, on behalf of the Commissioner for Insurance, to all insurance companies.
“Pursuant to the exercise of its function of approving rates of insurance premium under Section 7 of NAICOM Act 1997 and other extant laws, the commission hereby issues this circular on the new motor insurance premium rates effective from Jan. 1.
“The Third Party Property Damage (TPPD), which is the limit of claims an insured can enjoy on a policy for private motor, will now be N3 million for the new premium of N15,000.
“The limit for own goods would be N5 million, with a new premium of N20,000, premium rate for staff bus is now N20,000 and its TPPD would be N3 million,” the commission said.
According to the regulator, commercial vehicles, trucks and general cartage now has a TPPD limit of N5 million with N100,000 premium rate, special types now has a TPPD limit of N3 million and premium of N20,000.
The commission stated that Tricycle now had a TPPD limit of N2 million and premium N5000 while motorcycle now has a TPPD limit N1 million and premium of N3,000.
NAICOM noted that the comprehensive motor insurance policy premium rate shall not be less than five per cent of the sum insured after all rebates or discounts.
The commission, however, warned insurers to be guided by the new policy, as failure to comply with the circular shall attract appropriate regulatory sanction.
Meanwhile, Universal Insurance recorded a total premium income of N5.1 billion at the end of the second quarter of 2023, which is almost the total premium of its overall income generated in 2022.
The insurer, which announced to be targeting N10 billion total premium income at the end of the current year, also recorded a premium income of N3.7 billion and a Profit After Tax (PAT) of N825 million in the first quater of the year.
The underwriter also said its target for 2024 would be derived from its performance at the end of 2023, but with a premium income target of between N15 billion and N18 billion in 2024.