Business

Curbing The NAICOM Cartel And Its Cut-Throat Motor Insurance

Published

2 years ago

April 26, 2023

Sahara Weekly

Curbing The NAICOM Cartel And Its Cut-Throat Motor Insurance

By

Felix Oboagwina

As last year drew to a close, the 58 insurance firms in Nigeria under the umbrella of the National Insurance Commission (NAICOM) served notice that minimum Third-Party subscription for motor vehicles would no longer cost N5,000 but N15,000 beginning from this New Year. Some years ago, they charged N1,000 as minimum payable on motor insurance.

Contrast with the current debate on the social media about MultiChoice serving a notice of increase on GOtv and DSTV subscribers. The increase ranges from 16 percent to 22 percent. Despite this, people are shouting BLUE MURDER! Subscribers are calling for the cable TV firm to be skinned or beheaded, saying MultiChoice would not dare such in its home headquarters, South Africa. Last time MultiChoice tried it, the matter went as far as the National Assembly.

This same National Assembly now looks the other way with the new insurance premiums. What is the cable TV’s 22 percent increment, compared to 200 percent by NAICOM? What insurers have done is brazen and indecent! To increase the minimum Third-Party motor insurance to 300 percent is not only unreasonable it is draconian. It is an act of impunity. It is extortionist, insensitive, inconsiderate, untimely, ill-advised, selfish and self-serving. It panders to the unbridled greed of industry operators. The brazenness is insulting. In short, the hike is highly inconsiderate, especially in this era of scarce and expensive fuel and an economy still reeling from the effects of the COVID-19 pandemic.

Yet insurers blame the N10,000 increment on “current economic realities.” Not acceptable!

There are an estimated 13 million vehicles in Nigeria, of which only some 3 million have been captured in the insurance net. Instead of seeking ways to lure the noncompliant 10 million vehicle-owners to buy into insurance, insurers want to milk conformists to death. Where will patrons accommodate this increase, in a country with a minimum wage of N30,000?

Of course, those earning minimum wage do not own vehicles. However, they use transportation. When the prices of vehicle inputs like fuel, tolls and spare parts become costlier, vehicle owners simply transfer them to commuters through higher fares. Adding a costlier insurance to the motor value chain amounts to subjecting vehicle owners to double, nay multiple, jeopardy, with the spiral effect translating to higher transport fares and costlier freighting fees.

Imagine if other elements in the motor driving particulars too decide to follow suit. It means that drivers and owners would pay three times on:

1. Vehicle Licence

2. Road Worthiness

3. Hackney Permit

4. Drivers Licence

5. Customs Papers

6. Tinted Glass Permits (which the Police Force deserves kudos for waiving) and other council and business locations tickets.

Someone said, “Insurance is the sale of promises. The ‘customer’ pays money now; the insurer promises to pay money in the future if certain events occur. Sometimes, the promise will not be tested for decades.” Sometimes the promise will not be even tested forever! In fact, only about 15 percent insurance subscribers ever bother to make accident claims. The greater proportion of claimants comes from corporate policyholders. Thus, the insurance firm is the greater beneficiary in the relationship because the individual motor policyholder would just lick his wound and settle the bills jejely.

Everyone knows that the Third-Party insurance on vehicles is just to fulfil all righteousness –a legal requirement with which transport owners must comply. In Nigeria here, they refer to it as, “Let-My-People-Go Insurance,” or “Let-Me-Pass Insurance.” Third-Party is the paper drivers obtain just to satisfy the police. That’s all!

In case of accident or damage to Third-Party vehicles, insurance customers hardly bother to engage themselves in the stress of filing claims. The red tape and bureaucracy is so organised as to be stressful and time-wasting. Therefore, claimants simply pay from their pockets. Commercial bus and employed drivers are a common sight, kneeling and prostrating on the ground for the mercy of those whose cars they bash. Hence, the insurance firm reaps from doing NOTHING!

Since owning personal cars for over two decades now, I have been involved in accidents. Not once have I made a single claim! In fact, apart from an Insurance Broker in my church, no one I know has EVER made a claim. Not one! In fact, late last year, someone in my neighbourhood had his SUV crushed by a falling container. The owner of the offending trailer came privately to plead for the victim to accept N7 million for a vehicle worth N12 million. Family members told the victim to thank God for surviving the ordeal and accept the money. That is how we roll.

As of 2019, the Nigerian industry ranked 62nd in the world with $1.64 billion premium. That makes it an industry worth some N1.2 trillion. In 2021, the unaudited Insurance Industry performance in Nigeria showed that insurance firms made a gross income of N630 billion, and posted N238.05 billion as net expenditure. Talk about a fertile cash cow.

Insurers benefit colossally from the statutory laws making vehicle insurance cover mandatory for cars, trucks and motorcycles. The Insurance Act 2003 mandates all motorists to carry the minimum of a Third-Party Motor Insurance Policy. Section 68 of the 2003 Insurance Act stipulates:

“No person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third parties is insured with an insurer registered under this Act.”

The law varies in the US, where most states, require vehicles to carry motor insurance. However, there are two US states where it is not mandatory –Virginia and New Hampshire. Countries like New Zealand, Saudi Arabia and Manila do not require a compulsory insurance for vehicles to ply the roads.

It is compulsory in Britain too, hence, we see that mandatory insurance is part of our colonial heritage. This colonial heritage must go now. As our colonial hangover, motor insurance is being weaponised for inordinate extortion, unbridled greed and excessive profiteering by insurers operating under a NAICOM cartel.

Time has come to break up this cartel. With NAICOM calling the shots, it amounts to a monopoly, which should not hold in a free enterprise and deregulated economy. NAICOM is operating like a cartel. We consumers reject being milked by this privileged cartel. Nigeria should make insurance OPTIONAL. This Ninth National Assembly or the coming Tenth National Assembly should make this a matter of urgent public importance. Legislators should change the law to deregulate insurance or scrap this motor insurance law. The NASS should tweak the Insurance Act. Expunge, reframe, rephrase, rewrite restructure or remove that part of the law that makes it compulsory for vehicles to carry an insurance paper to travel the roads. If vehicles MUST be insured, the law should permit no more than a marginal increase, going forward. Motor insurance premium should take a cue from MultiChoice –no increment should be over 20 percent.

Legislators need to make a law to make motor insurance deregulated, optional or non-exploitative. They would be writing their name in gold.

(OBOAGWINA IS AN AUTHOR AND JOURNALIST, AND MAY BE REACHED VIA: [email protected])

Business

Oil marketers counter Dangote

Published

10 hours ago

November 5, 2024

Sahara Weekly

Oil marketers counter Dangote over allegation of substandard product importation

The Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has countered the claim by Dangote Refinery that any oil importers landing petrol at a price cheaper than what the refinery is selling are importing substandard products and conniving with international traders to dump low quality products into Nigeria.

The refinery had made the claim on Sunday.

In a statement yesterday, DAPPMAN’s Executive Secretary, Olufemi Adewole, said none of its members was engaging in activities that could shortchange Nigerian fuel users by conniving with anyone to bring in low quality product into the country.

“We’ve said this for the umpteenth time, and it bears repeating, those in the downstream sector business of petroleum products trade are patriotic Nigerians who will not shortchange Nigerian citizens for filthy lucre. Our members are in this business to add value to the businesses of their fellow Nigerians and not to defraud them.

“Prices of products in the international market are dynamic as they’re dictated by prevailing circumstances at every given situation. We calculate our landing costs based on the dynamics of market forces, and the templates are always in the public domain. To claim that if the landing cost of imported product happens to be lower than that of the refinery indicates importation of low quality product is not only preposterous, but also fallacious. In any case, the management of the refinery has, until now, kept its cost and prices close to its chest and put it away from public scrutiny. “

“This type of submission, targeted at projecting our members negatively before the public, cannot help the management’s desire to have oil marketers patronise its products. What will ensure such patronage is transparency, fair play, and readiness to compete with others, including foreign refineries, on an even keel and on a level playing field.”

Adewole said the disclosure by the refinery’s management that the facility has a huge stock of 500 million litres fuel reserve came to its members as news.

“We were surprised because we believe that if the refinery has such huge stock, it’s the marketers that should be put in the know first.

‘Secondly, it was even more surprising given that the news came about the time the refinery was working on rationing what each marketer could pick from the refinery. If they had such huge stock, how is it then that they’re rationing what marketers could buy?

“On all these developments in the industry, the position of our members is very clear: we’ve always played by the rules, and we’ll continue to play by the rules. We’ll not be tired of advocating for a level playing field and a highly competitive and transparent sector that’s devoid of arm twisting and devoid of any form of dominant tendencies,” he said.

Similarly, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) said it had concluded plans to import the best quality petroleum product and sell at far cheaper prices.

The association said it was awaiting the NMDPRA to grant it import licence, saying it “has successfully incorporated a strategic business unit called PETROL.”

Its spokesman, Joseph Obele, said PETROAN had concluded plans with her foreign refinery counterparts and financial partners to import the best quality of PMS and “then sell far less than the present selling rate of PMS in Nigeria.”

He said the allegations that PETROAN would import inferior products and that an international company was trying to establish a PMS blending plant in Lagos “are all strategies for Dangote Refinery to push others out of the market…”

Also, Pinnacle Oil and Gas Limited, in a statement by its Chief Executive Officer, Bob Dickerman, denied blending substandard petroleum products.

Business

Why Protesters demanded Kyari’s resignation

Published

10 hours ago

November 5, 2024

Sahara Weekly

Why Protesters demanded Kyari’s resignation

Scores of youths stormed the headquarters of the Nigerian National Petroleum Company Limited on Monday, demanding the immediate resignation of the Group Chief Executive Officer of the company, Mele Kyari.

The protesters, led by some Civil Society Organisations, described Kyari’s leadership as incompetent, citing skyrocketing fuel prices, endless fuel queues, and economic hardship in Nigeria.

The protesters carrying placards with different inscriptions such as “we demand the immediate resignation of Kyari”, among others, said the leadership of the NNPCL boss has failed.

The aggrieved youths led by Abdullahi Bilal of the (Two Million Man March Against Oil Scam Cabal) and Barrister Napoleon Otache and Olayemi Isaac from Citizens and Economic Freedom Rights Activists in Nigeria demanded immediate action to address what they described as failed leadership in managing the country’s oil sector.

Central to the protests were grievances over skyrocketing fuel prices and the never-ending queues, which they argued have driven inflation and plunged millions of Nigerians into poverty.

They also decried the importation of adulterated fuel, which they said is a corrupt practice that harms citizens by damaging vehicles and businesses.

They demanded an immediate halt to these imports and accountability for those responsible, questioning how substandard fuel continues to enter the country despite quality control assurances.

Additionally, the group criticized the unfulfilled promise of the Dangote refinery to resolve Nigeria’s fuel crisis, expressing frustration over the billions of dollars spent on refinery development and refurbishing existing facilities.

They argued that despite these investments, fuel shortages persist, leaving Nigeria reliant on costly imports even as an oil-producing nation.

They urged President Bola Tinubu to intervene by overhauling leadership in the oil sector, enforcing greater accountability, and putting citizens’ needs first. The protesters vowed to continue mobilizing until their demands for reform and transparency are met.

Speaking to journalists during the mass demonstration, Abdullahi Bilal said, “The Two Million Man March stands as a united voice for every citizen who has been betrayed by a system that continues to enrich a few at the expense of many.

“Today, we call for the immediate resignation of the current leadership in the country’s oil sector. Their management has failed Nigerians.

“Under their watch, we have seen fuel prices skyrocket without consultation or consideration of the devastating impact on the people. We have endured fuel scarcity while substandard, adulterated fuel is imported, causing further hardship.

“We demand the complete removal of the fraudulent fuel subsidy regime that has only served to enrich a select few. Full deregulation is necessary to introduce transparency, competition, and fairness to our oil sector.”

On their part, Otache and Isaac, insisted, “This act of economic sabotage has led to endless fuel queues, skyrocketing fuel prices, and unprecedented disruptions in the daily lives of Nigerians.

“We demand an immediate end to fuel queues, transparency, and accountability from all involved parties. We want to know how substandard fuel continues to enter the country despite assurances of quality control.”

On July 7, 2019, former President Mohammadu Buhari appointed Kyari as the 19th GMD of NNPC, but with the passage of the Petroleum Industry Act, his current portfolio is without recourse to previous employment ranks in the company.

NNPCL reacts

Reacting, the NNPCL spokesperson, Femi Soneye, said the protestors lack understanding of the sector.

He explained that contrary to their agitation, the GCEO ensured Nigerians had access to fuel at N620 per litre for over a year, even when the landing cost was above N1,100.

Responding via a chat, Soneye said, “Unfortunately, they lack understanding of the sector. If they were informed, they would know that the GCEO is not responsible for the fuel price increase; in fact, he ensured Nigerians had access to fuel at N620 per litre for over a year, even when the landing cost was above N1,100.”

Business

Renewed Hope Agenda and Impacts in Aviation* By Mary Odoma

Published

12 hours ago

November 5, 2024

Sahara Weekly

Renewed Hope Agenda and Impacts in Aviation

By Mary Odoma

President Bola Tinubu’s knack for selecting top talent is unparalleled. In his quest to build a prosperous Nigeria, he’s assembled an exceptional team. By leveraging their expertise, experience, and strategic insight, he’s fostering national stability, economic growth, and a sustainable future.

His latest win is in Aviation and Aerospace Development, where he’s appointed a fearless and straightforward leader, Festus Keyamo, SAN. Keyamo’s commitment to excellence makes him an ideal fit. President Tinubu’s vision for Nigeria is taking shape, and his leadership choices are truly commendable.

A dedicated, charismatic and impactful lawyer, the dynamic and astute developer is a terror to mischief makers and enemies of progress. A tough and forceful personality who is determined with an ultimate goal to change Nigeria.

Appointed on 21st August 2023 as the helmsman of the Ministry, Keyamo has been unwavering in his drive for positive transformation, reforming the sector and bringing about enduring positive impact in a transparent manner.

His Ministry has the core mandate of regulating air travel and aviation services in the country. It is also responsible for overseeing air transportation, air development, maintenance, provision of aviation infrastructural services and other needs.

A very patriotic Nigerian, Chief Festus has several achievements, in line with the Renewed Hope Aviation Roadmap approved by President Tinubu to his credit.

In a steadfast commitment towards revitalizing the nation’s aviation sector, Mr Keyamo was able to ensure the approval of the concession of the Nnamdi Azikiwe International Airport (NAIA), Abuja and Mallam Aminu Kano International Airport (MAKIA), Kano Airports. This is in line with the initiation of the Nigerian Airport Concession Strategy.

Also, in line with the Federal Ministry of Aviation Roadmap, Chief Keyamo initiated the signing of an MoU with the Nile University for the take-off of African Aviation and Aerospace University (AU). This milestone achievement of the Minister aims to integrate and create an avenue for the training, research and development of ready middle-class manpower for the sector.

Equally, under his watch, the pragmatic leader led the Ministry into partnership with the ICRC and also a collaboration with the IFC on infrastructural development. This partnership is to both develop and implement a comprehensive and durable framework that will meet the infrastructural needs of the sector over a long period.

Through Keyamo’s congruence and dynamism, the BASA arrangement is another revolutionary innovation aimed at ensuring the operationalization of direct flights between Nigeria and Brazil.

Keyamo’s motivation and altruistic devotion to having a functional aviation and aerospace sector also moved him to upgrade the Muhammadu Buhari, Airport, Maiduguri to the standard of an international airport. This airport is ready to commence full operation on January 1, 2025

In the area of staff motivation, retirees of the Ministry now have no cause for alarm as their interest is covered. Recently, the Ministry honoured 24 retirees drawn from the lowest rung to the highest. It is in a bid to acknowledge those who have contributed immensely to the growth and development of the sector as Nation-builders.

His prompt response to issues including distress reveals an empathetic personality and someone who is very much alive to his responsibilities. Recently, while reacting to the accident involving a helicopter on the 24th October 2024, Mr Keyamo, immediately upon receiving the distress call, activated protocols aimed at search and rescue operations, mandating all relevant bodies to do everything humanly possible to ensure the safety of the passengers on board the ill-fated vehicle.

The Minister was also actively involved with all the relevant agencies towards ensuring a coordinated response. His active and physical involvement led to the minimization of casualties.

In a show of collaboration and solidarity, the Hon. Minister travelled to far away Marrakesh, Morrocco, to give support to the 2024 International Transport Workers’ Federation (ITF) congress. His presence was to underpin the importance the federal government attaches to the role of the transport workers in stabilizing the aviation sector.

Festus Keyamo as the Honourable Minister of Aviation and Aerospace Development is certainly the best thing that has happened to the industry. He has exhibited passion, dedication and selfless forthrightness in the discharge of his duties and a total comprehension of what it takes to carry out his roles. He is well-groomed for the job and his background has helped him greatly towards shaping the positive impact he is making on society.

Today, Festus has proved that a faithful, disciplined, and dedicated Nigerian can stand out of the crowd because he symbolizes what governance is all about. These feats can only be achieved by a man with the right comportment and conduct in the service of humanity and the fatherland.

Deserving of note is that Chief Keyamo, through the foresight of President Tinubu has well-prepared team leaders appointed as heads of the agencies of the Ministry.

The supportive and collaborative roles of the Nigeria College of Aviation Technology, Nigeria Metrological Agency, Nigeria Civil Aviation Authority, Nigeria Airspace Management, the Federal Airports Authority of Nigeria, and the Nigeria Safety Investigation Bureau (NSIB), have brought about those tangible and noticeable volte-face experienced today in the Aviation sector.

With Keyamo at the helm, Nigeria’s aviation sector is experiencing a transformative shift, thanks to President Tinubu’s foresight in appointing well-prepared team leaders. The Nigeria College of Aviation Technology, Nigeria Metrological Agency, and others are working together to bring about tangible change. Keyamo’s dedication, discipline, and commitment to service have improved Nigeria’s image and reformed the aviation and aerospace sectors.

Odoma is the President of New Nigeria Network [NNN[ writing from Abuja.