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ISSUES OF ENFORCEMENT OF MOTOR VEHICLE INSURANCE POLICY: A ROAD SAFETY PERSPECTIVE

ISSUES OF ENFORCEMENT OF MOTOR VEHICLE INSURANCE POLICY: A ROAD SAFETY PERSPECTIVE. A PRESENTATION BY OSITA CHIDOKA AT THE INSURANCE FUTURE SUMMIT, TRANSCORP HILTON HOTEL, ABUJA APRIL 7- 8, 2008 . PREAMBLE. Due to rapid Economic growth in the 70’s & 80’s, and lack of a Lead

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ISSUES OF ENFORCEMENT OF MOTOR VEHICLE INSURANCE POLICY: A ROAD SAFETY PERSPECTIVE

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  1. ISSUES OF ENFORCEMENT OF MOTOR VEHICLE INSURANCE POLICY: A ROAD SAFETY PERSPECTIVE A PRESENTATION BY OSITA CHIDOKA AT THE INSURANCE FUTURE SUMMIT, TRANSCORP HILTON HOTEL, ABUJA APRIL 7- 8, 2008

  2. PREAMBLE Due to rapid Economic growth in the 70’s & 80’s, and lack of a Lead agency in Road Safety, Nigeria witnessed an Increase in Road Traffic accidents Federal Government Intervention FRSC was established vide Cap 141 Laws of the federation as Amended by the FRSC Act 2007 FEDERAL ROAD SAFETY COMMISSION (FRSC) (1988-2008)

  3. ROAD TRAFFIC CRASHES IN NIGERIA

  4. ROAD CRASH RECORDS BETWEEN 1996-2006 (NIGERIA) KEY: UPWARD MOVEMENT OF ROAD CRASH . DOWNWARD MOVEMENT OF ROAD CRASH Source: Nigeria Police/Federal Road Safety Commission- 2007

  5. YEARLY COMPARISON OF FATAL, SERIOUS & TOTAL CASES OF CRASHES • The issues that gave rise to the high incidence of road carnage in 2001 are what we are determined to effectively tackle in the 4year Rolling plan under the Mass Transportation sector. For example, staff morale was so low in 2001, there was paucity of logistics, and corporate inertia owing to the then merger with the Police There is a rise in crashes compared previous year 2006.This shows that there is need for intervention to check this upward trend source: Nigeria Police /Federal Road Safety Commission 2007

  6. SOME ALARMING FACTS • FERMA would need an estimated 70 billion Naira to rehabilitate 3,500km of road network annually under the Systematic Road Strengthing and Enhancement Programme (SRSE)……………Daily independent, Thursday February, 2008 • The Lagos-Ibadan-Ogbomosho-Ilorin-Jebba-Minna Expressway in Nigeria is ranked amongst the 23 most dangerous roads in the World by theAssociation for Safe International Road Travel, U.S.A. The road is described as a congested road with deep potholes and a median in disrepair that links northern and southern Nigeria. • There are an estimated 15 million drivers in Nigeria, however license production by FRSC till date stands at an estimated 3,686,303………………….Department of Motor Vehicle Administration (FRSC, October, 2007)

  7. ROAD TRAFFIC CRASHES (RTCs): THE SOCIO-ECONOMIC COST • It is estimated that developing countries currently loose an estimated $100 billion every year from Road Traffic Crashes, twice as much as its total development assistance ……….(The World Bank Group, www.worldbank.org/transport/roads/safety.htm, Accessed 4th Feb, 2008) • An estimated 50 million people are injured and 1.2 million die every year from Road Traffic Crashes….(RTA: Emerging Epidemic, Indian Journal of Neorotrauma, Vol. 3. No.1, 2006) • Road traffic Death to increase by 80% in developing countries by 2020 if adequate measures are not taken ……….(WHO, World Health Day report, April 2004)

  8. THE INSURANCE INDUSTRY IN NIGERIA

  9. WHAT IS THE VEHICLE INSURANCE POLICY • ‘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 ISSUED WITH AN INSURER UNDER THIS ACT.’ Section 68 (1) of the INSURANCE ACT 2003 ACT No.1. • THE ABOVE ‘…SHALL COVER LIABILITY OF NOT LESS THAN N1MILLION)’. Section 68 (2). • THE ABOVE ‘…SHALL BE IN ADDITION TO THE LIABILITIES REQUIRED TO BE INSURED UNDER THE MOTOR VEHICLE (THIRD PARTY) INSURANCE ACT 1950…’ Section 68 (3). • ‘A PERSON WHO CONTRAVENES THE PROVISIONS OF THE SECTION COMMITS AN OFFENCE AND LIABLE ON CONVICTION TO A FINE OF N250,000 OR IMPRISONMENT FOR 1YEAR OR BOTH’. Section 68 (4).

  10. MOST DRIVERS DRIVE WITHOUT INSURANCE PAPERS AND DO NOT PATRONISE INSURERS MOST PEOPLE DO NOT HAVE CONFIDENCE IN INSURANCE CLAIMS SOME DRIVERS DRIVE WITH EXPIRED INSURANCE PAPERS MOST DRIVERS USE TOUTS TO OBTAIN FAKE/FORGED INSURANCE DOCUMENTS COMPLIANCE IS AT A LEVEL OF NEAR NON-COMPLIANCE LEVELS OF COMPLIANCE WITH MANDATORY THIRD PARTY VEHICLE INSURANCE COUNTRY COMPLIANCE Costa Rica 84% UK 90-95% Ghana 70% Pakistan 3-5% Nigeria ? Source: GRSP Focus, Motor Vehicle insurers & Road Safety, 2003 COMPLIANCE LEVEL OF MOTOR VEHICLE INSURANCE POLICY

  11. LOW PUBLIC CONFIDENCE IN POLICY ‘The Insurance Companies, according to former President Olusegun Obasanjo smile at you when you come to pick up a Policy and frown at you when you come to make a claim. Charlatans , knowing fully well that nobody comes for claims came with fake Insurance Companies only for one purpose- to give people paper to get pass the Police at check points. The system is so chaotic that even the Insurance Companies are finding it difficult to identify their own Policy Certificates while the Law Enforcement Agencies are completely incapacitated in that regard’.-04 November, 2007 11:00:00 BETHEL OBIOMA THIS IS TOO GOOD TO BE TRUE!!! PICK A POLICY WITH US AS WE LOVE YOU TOO MUCH GIVE ME THE CLAIM YOU PROMISED WHAT CLAIM? YOU ARE NOT ENTITLED TO ANY MOTOR VEHICLE INSURANCE POLICY AN ACCIDENT OCCURS MOTOR VEHICLE INSURANCE POLICY

  12. PICTORIAL OF ROAD CRASHES A ROAD CRASH INVOLVING A CAR ALONG BODE SAADU ROAD A FIRE ROAD CRASH ALONG BODE SAADU ROAD INVOLVING AN OVERLOADED BUS ALL OCCUPANTS WERE TRAPPED AND BURNT ALIVE A ROAD CRASH INVOLVING A BUS THAT ROLLED OVER

  13. ROAD CRASHPICTURES

  14. THE WAY FORWARD

  15. SOME INITIAL CHALLENGES OF FRSC DATABASE • The FRSC Database was last updated in 2003 . • Corrupted Data • There was no link between vehicle information and their registered keepers. • The FRSC vehicle license production stands at 8million number plates. • However, only an estimated 0.3m records of registration have been captured in the database due to non return of form MVA01 by the various State Boards of Internal Revenue

  16. NEW DEVELOPMENTS (FRSC DATABASE) • A Consulting firm has been engaged to review and re-engineer the Vehicle License process. • The process of overhauling the National Drivers License Scheme is in progress. • Such processes will ensure that Motor Vehicle licenses would only be issued upon presentation of valid insurance policies (minimum third party). • The Drivers License database has been cleaned and updated with 2.4 million records. • Online verification of Drivers License will commence soon to deal with the issue of fake/multiple drivers license • 12 VSATs installed in the Zonal Commands and another 85 to be deployed in all the License processing centers/Sector Commands

  17. FRSC DATA BASE FRSC DATABASE VEHICLE INSURANCE INFO VEHICLE LICENSE INFORMATION To determine insurance premium DRIVERS LICENSES INFORMATION The FRSC Data base is already Host to information of estimated 2.4 million drivers OFFENDERS REGISTRY PERSONAL INFORMATION

  18. HOW DO WE IMPROVE THE NIGERIA SITUATION ? THE INSURANCE INDUSTRY: To partner with the FRSC in the following area’s: • IN UTILIZING & FUNDING THE FRSC DATA BANK LICENSING SCHEME • PROVISION OF PATROL EQUIPMENTS • JOINT ENLIGHTENMENT CAMPAIGNS • SUPPORT /SPONSOR THE PROVISION OF ‘ROAD SAFETY FUND’ IN THE INSURANCE ACT • TO PROMOTE INDIVIDUAL PASSENGER INSURANCE BY COMMERCIAL TRANSPORT COMPANIES GOVERNMENT: TO ENACT A NEW INSURANCE ACT AND PROVIDE FOR THE ‘ROAD SAFETY FUND’ SIMILAR TO THE ‘FIRE SERVICES MAINTENANCE FUND’ IN SECTION 65(4) OF THE 2003 INSURANCE ACT. “SAFER ROADS, FEWER CLAIMS”

  19. HOW CAN FRSC ENFORCE VEHICLE INSURANCE POLICY ? INSURANCE POLICY CAMPAIGN OPERATION ‘FREE CHECKS’ OPERATION ARE U INSURED? OPERATION ‘MUST BE INSURED’

  20. CREATING AN ENABLING ENVIRONMENT FOR THE INSURANCE INDUSTRY: OUR MISSION FIGHT PIRACY THROUGH ICT SYSTEMS: • Build a robust and enhanced Database for the ULS that shall synchronize insurance policy information. • The FRSC already has an information database of more than 2.6 million drivers • The Data base shall host records of all licensed drivers and vehicle • Offenders register that shall capture: • Driving history records (Crash & violation records) • Drug & Alcohol records OPTIMIZE ENFORCEMENT: • Ensuring that registered/re-registered vehicles are insured and are “Road worthy”. • Enforce both driver and vehicle insurance. “TO RESTORE THE INTEGRITY OF THE NIGERIAN DRIVERS” LICENSE

  21. ROAD SAFETY FUND

  22. A CASE FOR A ROAD SAFETY FUND AS % PREMIUM THE CURRENT INSURANCE ACT: • ‘EVERY PUBLIC BUILDING SHALL BE INSURED WITH A REGISTERED INSURER AGAINST THE HAZARDS OF COLLAPSE, FIRE…’ Section 65 (1). • ‘0.25 % OF THE NET PREMIUM RECEIVED BY EVERY DIRECT INSURER ….SHALL BE PAID QUARTERLY BY EVERY INSURER INTO A FIRE SERVICES MAINTENANCE FUND… FOR THE PURPOSE OF PROVIDING GRANT OR EQUIPMENT TO INSTITUTIONS ENGAGED IN FIRE FIGHTING SERVICES’ Section 65 (4). THE PROPOSED ROAD SAFETY FUND: • THE PERCENTAGE OF INSURANCE LEVIES DEDICATED TO ROAD SAFETY SHALL BE DEDICATED TO ACCIDENT PREVENTION MEASURES, ROAD SAFETY EQUIPMENT, ICT TECHONLOGIES TO SUPPORT ROAD SAFETY FRONT-END OPERATIONS, RESCUE OPERATIONS & ROAD FURNITURE.

  23. WORLD BEST PRACTICES The province of Quebec, CANADA uses insurance premiums from motor vehicle insurance to fund road safety activities, like education on road safety and public enlightenment. FINLAND, is the pioneer country to enforce the use of insurance levies to support road safety activities for over 40 years. It has been reported to raise $8million per year for education & publicity campaigns on Road Safety. The GHANA National Road Safety Commission ACT, 1999 provides that a levy on mandatory third party insurance is dedicated to Road Safety infrastructure. In the state of Victoria, AUSTRALIA insurance levies dedicated to Road Safety were intially 3% of premium, which was later increased to 10%. In ZAMBIA, there is a proposal to apply a 10% levy on (compulsory) third party insurance which is estimated to amount to about $1million per annum Source: Wetteland, T & S. Lundebye (1997)

  24. WHO BENEFITS FROM FRSC EFFICIENCY ? • THE NATION- REDUCED ACCIDENTS, REDUCED CAR THEFT (SECURITY), A BETTER IMAGE TO INVESTORS • INSURERS- MORE DRIVERS NOW INSURE THEIR VEHICLES (LARGER CUSTOMER BASE), MORE MONEY, FEWER CLAIMS FROM THE INSURED AS A RESULT OF ACCIDENTS AND CAR THEFT REDUCTION • ROAD USERS- CONFIDENCE IN INSURANCE COMPANIES WHILE FEWER PEOPLE INVOLVED IN ACCIDENTS AND GREATER PEACE OF MIND. • DRIVERS/OWNERS- CONFIDENCE, SAFER ROAD, FULLER LIVES AND FEWER THEFT CASES

  25. THANK YOU FOR LISTENING

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