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Monday, 01 October 2012 00:00
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‘New Lagos traffic law will make goods in transit more expensive’

Recently, the Lagos State government passed into law a new traffic act which among many other, restricts movement of haulage vehicles to less low traffic period of the day-night. KAYODE ADELOWOKAN writes on the position of insurance practitioners on what impact the new law would have on  insurance industry.

The Lagos State government recently enacted new traffic laws which have continue to generate mix reactions.
For instance, paragraph 1(2)(1)(2) of the law specifically state that no haulage vehicle other than petrol tankers and long vehicles used in conveying passengers, shall enter into or travel within the metropolis of Lagos between the hours of 6.00am - 9.00pm and any driver  found contravening the provisions of the section shall have his vehicle impounded by a duly authorised officer of the traffic authority and shall upon conviction be liable to a fine of N50,000 (fifty thousand naira) or a term of imprisonment for six  months or both.

 Reacting to the impact the  new traffic law would have  on the insurance industry, Director General of Nigerian Insurers Association (NIA), Mr. Thomas Sunday  said Nigerians need to see the laws from the right perspectives.

On whether the restriction on the movement of haulage vehicles within Lagos metropolis, will expose the insurance industry to more risks because of high level of insecurity associated with driving in the night in the country, he said the laws are specifically meant to decongest the heavy traffic in the State, protect lives and property adding that the government means no harm but to correct the lawless attitude of many Nigerians.

Thomas however, said the law will make goods in transit more expensive and more vulnerable to attacks while consignees will spend more on security.

The director general who enjoined the transport operators to comply  with the new traffic laws even as they thing of security of haulage noted that whatever is loss they might incurred during the process of moving goods about at night would bring an improvement on the security challenges brought about by the situation.

He said that the NIA is also aware that Lagos state government has moved to enhance the security situation in the state, with the provision of more vehicles to the Nigeria Police towards intensifying the security and oversight situation of Lagos metropolis which without doubt should be able to compensate for the new law.

Much more than that, he said the new Lagos traffic laws will bring about safety on the roads which will also be of help to the insurance industry as well.

He said accident should be at a minimal level on the roads adding,  that most of the accidents recorded on Nigerian roads are as a result of indiscipline of many drivers which would brought to its barest minimal, while impacting positively on the insurance industry in terms of claims induced by road accidents.

In his word, “With what we are developing on Nigerian Insurance Industry Database (NIID), we are liaising with the Lagos government and once it is in force, more vehicles will be insured. You can no longer be on the road without a valid insurance document. The law is a good development for a civilised society like Lagos State”.

On his part, the Managing Director, Law Union & Rock Insurance Plc, Segun Ilori cautioned that there is need for Nigerians to recognise the fact that Lagos State is the nation’s hub of  business  and the threat that haulage vehicles pose to other road users are quite high which the new laws is capable addressing.

Ilori also said that the goods that will transitted at night will definitely increase the rate of lose because most of these articulated vehicles are poorly maintain. If the risk of loos is higher it means it will affect the insurance industry exposure which may also call for increase in premium paid. “This law will also reduce the volume of trade which will also affect the demand for covers”, he added.

In the same vein, the Deputy Managing Director, Industry and General Insurance (IGI) Plc, Mr. Rotimi Fashola also said that road mishaps are most often  caused when the road is busy but at night the road is very light, where many people would have returned from work and there would be less people on the road.

“In fact, it is going to reduce the risks at which insurance companies will have to settle claims; it is going to help the owners, the insurance companies and everybody doing business. More accident happens during the day when the road is very busy, a lot of people have been killed in the process; by the new law, if it is a way to reduce accident, it is a fair decision even to trailer owners and their drivers”.

Fashola said though it is common that when Nigerians see a new policy like this law, they will not see the need for it but by the time they look at it very well they’ll see that it is for the betterment of stakeholders in the state.

According to the provision of the new Lagos traffic laws, any vehicle impounded and if the owner did not show up within the specified period of one calendar month, such would be sold. Nigerian Compass asked if insurance company would replace such vehicle if it is insured; finding revealed that owner of such vehicle will bear the loss on his part.

 Rotimi Fashola also added that there is no insurance product that cover anything like fines or penalties in case any policyholder run foul of the laws which can be referred to as breach of law and unless if there is another insurance product which can be call “legal liability” which most companies are still thinking about it, then the policyholder will face the penalty on his or her own.

The legal liability product will always be there in case if it holder commit any public offence or any other offence that has to do with getting a lawyer and any other charges that may show up till the court will come out with her decision.

Generally, Mr. Fashola said the available policies does not cover fines or penalties, rather, if there is any product covers that area now, it may encourage people to commit more crime.

“There is a clear difference from the penalties arising from your misconduct as to the law that is statue; law and the one you have with the insurance company which is contractual relationship with a specified terms. The insurance cover is for something that is accidental; what you don’t expect or theft but when you now flout a law, it is a deliberate thing because you know that the law is there. As it is now, there could be an insurance product looking at any matter that has to do with legal affairs which would be completely different from the initial contractual relationship that exist between the insurer and the insured”.

Mr. Fashola noted that the main essence of law is to deter the citizenry from doing some certain things and to have a better society. “For example, when the law has said don’t drive your trailers in the day time and you were caught driving, if you are arrested, the insurance company does not have anything to do in order to safe such policyholder”.

“Risks, that is. uncertainty is what insurance is dealing with but when you run foul of the law, you cannot expect the insurance company to pay you claims. If an insured vehicle is impounded, it is not the liability of the any insurance company because no theft is involved neither is there any accident involved as well but the moment there is accident; either you damage government property e.g. pole, curvet etc, that is when you have insurance cover. Even if you are charged to court and found guilty as a result of the accident, the insurance company must also be interested because they need to be aware”.

Mr. Thomas Sunday however said that comprehensively insured vehicles have full cover in case he or she commits any offence (accident) against the law which may attract fine.
“The owner of such vehicle does not have to pay for anything. Once you have insurance cover. It means you have insured all your liabilities so if for example you drive and destroy any property that belongs to Lagos State government or another individual, then whatever cost incurred will be paid for by your insurance company”.

Meanwhile, some Nigerians were of the opinion that the new law with many penalties will take over the responsibilities of the insurance industry even at this that the industry is trying to get attention from Nigerians.

Reacting, the Director General of Nigerian Insurers Association (NIA), Mr. Thomas Sunday said that there is no contradiction in the law; “it is still consistent with the insurance practice”, he added.

Finding ways to reduce the risks bear by the insurance companies, the Managing Director, Law Union & Rock Insurance Plc, Segun Ilori said that there is need for the advocacy group of the insurance industry to take step and send representatives to the authority and see how the law can be relaxed.

On the other hand, Ilori said if the vehicle inspection arm of the government can move in to inspect and certify all the articulated vehicles for road worthiness then, they can relax the law or time for their movement because of the other danger their movement at night may also impose. “Meanwhile, if the rail tracks are actually in good condition, this policy will be complementary, this would have forced them (goods owners using trailers) to make use of the rail means to transport their goods”.

Again, the question is would the new law propel insurance industry to design a new product that will cover legal matter or payment of any fines or penalties for whoever that run afoul of the law?

Yes, it will be better but there is need for another consideration because the level of lawlessness will then be high, such product will empower the people to commit crimes and deliberately contravene the law.

Although, findings showed that there are some underwriting companies that have the product already but still thinking about it, it will be better insurance industry have a deep sleep over it before selling such law if we don’t want build rebels against the government.