As economic challenges persist for many Nigerians, the number of uninsured vehicles on Nigerian roads has surged to approximately 9 million, according to data obtained by LEADERSHIP.
Information from both the Federal Roads Safety Corps (FRSC) and the Nigerian Insurers Association (NIA) reveals that out of the 12 million vehicles traversing the country, only 3.11 million were insured by the end of 2023, indicating that merely 25 percent of vehicles currently carry insurance.
The population of insured vehicles experienced a decline from 3.70 million in 2022 to 3.11 million in 2023, signifying that around 600,000 vehicles did not renew their insurance coverage due to a challenging business environment and the rising cost of living, causing Nigerians to deprioritize insurance.
With escalating fuel prices and increased costs of vehicle spare parts, some motorists have either sold their vehicles or left them parked at home, finding little incentive to invest in insurance.
Investigation by LEADERSHIP suggests that a portion of these 9 million uninsured vehicles may possess counterfeit motor insurance documents, while others lack any insurance coverage. Some motorists who initially had valid insurance have failed to renew their policies.
The FRSC Act mandates that every vehicle on Nigerian roads must have at least third-party motor insurance or comprehensive insurance coverage, typically costing around 10 percent of the vehicle’s value.
Third-party vehicle insurance, previously priced at N5,000, was fixed at N15,000 last year to account for inflation and rising costs of spare parts. Consequently, the insurance industry is grappling with substantial losses due to fake insurance activities, with drivers opting for counterfeit papers to avoid law enforcement penalties.
LEADERSHIP’s investigation reveals that drivers often choose fake insurance for its affordability and to evade law enforcement, as many lack awareness of the benefits of genuine insurance. Additionally, some uninsured motorists resort to bribing law enforcement officials if confronted on the roads.
While concerns persist that the number of uninsured vehicles may continue to rise without an immediate economic turnaround, there are indications that some motorists may not renew their policies given the harsh economic climate.
Confirming this trend, the Chairman of NIA, Segun Omosehin, noted that besides the prevailing hardship in the country, the over 300 percent increase in the premium for third-party motor insurance certificates from N5,000 to N15,000 also contributed to the decline in motor insurance in 2023.
Despite the challenges, Omosehin believes that heightened awareness of the improved benefits resulting from the premium hike will lead motorists to appreciate the change. He stressed the importance of financial education to enhance understanding of the benefits of insurance, especially during tough economic times.
Yetunde Ilori, the Director General of NIA, attributed the drop in insurance subscription to various macroeconomic policies in 2023, including currency redesign, subsidy removal, inflation, low disposable income, among others. She emphasized that inflation and the high cost of living affected people’s purchasing power and decisions to invest in necessities such as insurance.
