The rush by vehicle owners to purchase Third-party motor insurance policy in the wake of crack down on defaulters by the Nigeria Police Force (NPF) calls for concerted efforts by all stakeholders to ensure that only genuine policy is sold, writes JOSEPH INOKOTONG.
The Nigeria’s insurance market is experiencing a surge in the demand for health insurance due to the increasing awareness of the importance of preventive healthcare, experts have said.
Closely following this trend is the Third-Party Motor insurance policy. This may be attributed to the current crackdown on defaulters of the policy by the Nigeria Police Force (NPF).
The Insurance market in Nigeria holds great prospects. It is projected to reach a market size of US$7.84 billion in 2025 (gross written premium). Life insurance dominates the market with a projected market volume of US$4.68 billion in 2025.
The average spending per capita in the Insurance market is estimated at US$33.43 in 2025. The gross written premium is expected to show an annual growth rate (CAGR 2025-2029) of -3.14 per cent, resulting in a market volume of US$6.90 billion by 2029.
All these loft projections may come to naught if the threats posed by the activities of the unscrupulous elements in the society who indulge in forging genuine insurance policy are not nibbed in the bud.
There have been heightened concerns about insurance policy forgery in the wake of the spirited efforts by the Nigeria Police Force (NPF), working in concert with the National Insurance Commission (NAICOM) to enforce the Third-party motor insurance policy in the country. The exercise has forced many vehicle owners who hitherto did not have insurance policy to scamper for one. In the mad rush to make purchase to evade arrest, and possible prosecution, many have fallen into the wrong hands of fraudsters specialising in selling fake insurance policies.
The development has thrown to the fore the need to ensure that customers purchase a genuine insurance policy, by always buying directly from a licensed insurance company or through a reputable broker, and to verify its authenticity, check the policy document for verification details like a unique policy number, QR code, and use the insurance company’s online verification platform to input the details and confirm its validity. Also, it is important to contact the company’s customer service to inquire about the policy details.
Verifying the policy’s authenticity entails cross-checking with the insurer directly either through call or email to confirm the policy details. Using online verification portals will be helpful as many insurers provide an online portal where the policy can be verified.
If the policy was purchased through an agent, it is pertinent to confirm their registration with the insurer.
It may be an understatement to infer that the menace of fake vehicle insurance policies in Nigeria may not go to extinction soon. Unfortunately, it hurts everyone in the chain, starting from road users, car owners and the insurance industry.
The erroneous impression that the insurance industry does not pay claims can be partly attributed to the activities of fraudsters selling fake vehicle insurance policies to unsuspecting car owners. The activity of this unpatriotic people has helped fuel the wrong perception that the insurance sector always defaults in claims payment. Those faking vehicle insurance policy have inadvertently, by their action, denied vehicle owners the shield an authentic motor insurance policy usually provide.
It has often been reported that local governments, car licensing and registration offices play a big role in the activities of fake insurance policy agents because they often go between vehicle owners and insurance policy providers.
However, the advent of technology has helped to change the way businesses are done all over the world, and Nigeria is not an exception. At present, technology has impacted positively the way the motor insurance business is transacted, giving the insured the power to ascertain the genuineness of their policy.
Now, with the help of technology and mobile phone, motor insurance policyholders in every nook and cranny of Nigeria can verify the genuineness of their policies online in real-time, using a dedicated platform or code such as askniid.org or the USSD code *565*11#. This is courtesy of the Nigerian Insurance Association (NIA) which has developed the tool to checkmate fake compulsory insurance certificates.
Known as ASKNIID (www.askniid.org), vehicle owners and law enforcement agencies use it to confirm the validity of motor insurance policies. The insurers have invested handsomely in acquiring the technology to make this operation to be seamless and accessible to customers.
A fake vehicle insurance policy is a counterfeit insurance policy that is unauthorised and not recognised by the regulatory insurance bodies and any official. This means that the insurance policy does not exist beyond the paper certificate that criminal agents and brokers provide, and unauthorised source offers.
Every year, millions of vehicle owners in Nigeria fall for this scam perpetrated by criminal-minded elements in the society. According to the Nigerian Insurance Association (NIA), as of January 2022, there were only 4.3 million vehicles with a genuine motor insurance policy. This translates to millions of vehicle owners on Nigerian roads risking the lives of Nigerians and exposing themselves to legal consequences. As Section 68 of the Insurance Act 2003 states, “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.”
As a vehicle owner in Nigeria, a third-party insurance policy is a minimum required and it is crucial to purchase a genuine one because it covers death or bodily injury to a third party arising from an accident. It also covers damages to third-party up to N1 million. For vehicle owners who do not comply with owning a genuine vehicle insurance policy, the penalty for non-compliance is one-year imprisonment, a fine of up to N250,000 or both. Since ignorance of the law is not an excuse, everyone should look at how to spot fake vehicle insurance policy.
The first thing to look at is the price of a vehicle insurance policy. When seeking to spot a fake vehicle insurance policy, a quick place to begin is to thoroughly look at the price. In many cases, because it is a quick money grab by fraudsters, fake policies are priced lower just to pocket any amount of money.
The next step is to ask about who the insurer is. It is pertinent to inquire about the insurance partner backing the broker or agent selling the policy when buying any vehicle insurance policy. If any doubt crops up about the institution, it is advisable to conduct a quick research online and double-check with regulators like the Nigerian Insurance Association (NIA) and National Insurance Commission (NAICOM) licensing of such institution or their partners.
The check policy on Nigerian Insurance Industry Database was developed by the NIA as a tool to checkmate fake compulsory insurance certificates. Known as ASKNIID (www.askniid.org), vehicle owners and law enforcement agencies use it to confirm the validity of the policy.
In addition to the work already done, and in line with its commitment to solving the fake motor insurance policy scams, the NIA launched the Unstructured Supplementary Service Data (USSD) code *565*11# to enable vehicle owners verify the authenticity of insurance policies they purchase. Dial the *565*11# code, enter your vehicle registration number, and you are charged Twenty Naira to confirm the policy’s validity instantly.
This latest development signposts the fact that the insurance sector in Nigeria has come of age, and unlike what many people had believed, insurers in Nigeria pay claims.
The NIA said: “Verifying the authenticity of your vehicle insurance policy on the NIID gives you peace of mind and assurance that your claim will be paid”.
According to the NAICOM, NIID is a product of the NIA, and the huge success it has recorded over the years had necessitated the Commission’s collaboration with the Federal Road Safety Commission (FRSC), and the Nigeria Police Force (NPF) on modalities for curbing fraudulent motor insurance schemes. It is the view of NAICOM that the NIID has assisted in no small measure in reducing the occurrence of fraudulent activities. It noted that every genuine motor insurance policy issued by an insurer in Nigeria is uploaded onto the NIID, which is available to all security agencies, and motorists are at liberty to validate the authenticity of their insurance policies with text messages to the NIID. It is on record that the NIA in collaboration with the regulator, NAICOM in 2010 took a giant step towards eliminating the incidence of fake insurance certificates through the introduction of the Nigerian Insurance Industry Database (NIID) an electronic platform that avails Insurance Policyholders ample opportunity to verify the authenticity of their certificates.
A genuine insurance policy provider will always be listed by the regulator, and easily verifiable. Running a quick check for official documentation to ascertain the validity of any policy purchased should not be considered as a wasteful exercise, but a necessity that prevents unpleasant consequences.
READ ALSO: Verifying genuine vehicle insurance policy in Nigeria
and then