How Motor Insurance Service Lost N160bn To Fraudsters

Despite efforts by the insurance industry to ensure that motorists carry genuine motor insurance policies, huge number of vehicles have continued to ply Nigerian roads with fake or no insurance certificates.

Although the efforts by the industry to create awareness on the importance of genuine motor insurance cover is evident in the moderate growth in motor premium income, a huge gap still exists.

According to Financial Vanguard findings in the data of the Nigerian Insurers Association, NIA, show that 71.7 per cent of vehicles registered in Nigeria do not have adequate insurance cover. This also shows that only 28.3 percent of the vehicles on the Nigerian roads have genuine insurance covers.

According to the NIA, of the 12 million vehicles registered in the country, only 3.4 million have insurance cover as captured in the Nigerian Insurance Industry Database, NIID. This means that 8.6 million of the vehicles do not have genuine auto insurance covers.

Industry stakeholders have put the insurance policy premium of these vehicles on the road without genuine insurance at a whopping N160 billion per annum.

However, Financial Vanguard findings also show that premium income from motor insurance has recorded moderate growth in recent years.

Analysis of financial results of the first seven insurance companies that have released 2021 full year report shows that their combined auto insurance premium income increased by 19.9 per cent in 2021 to N21.1 billion from N17.6 billion in 2020.

The figure had increased by 4.8 per cent to N17.6 billion in 2020 from N16.8 billion in 2019.

The companies are Consolidated Hallmark, Coronation Insurance, Lasaco Assurance, Linkage Assurance, Nem Insurance, Sovereign Trusts Insurance, as well as Axa Mansard.

Chairman of NIA, Mr. Ganiyu Musa, said, as at the end of January, 2022, the 3.4 million vehicles were those whose insurance policies were still up to date.

Also speaking, President of the Nigerian Council of Registered Insurance Brokers, NCRIB, Barrister Rotimi Edu, who gave the figure of N160 billion as lost annually to fake motor insurance racketeers in the country, noted that it is disheartening that an industry which had been contributing less than one per cent to the Gross Domestic Product, GDP, in spite of its huge potentials, loses such amount to fake vendors who contribute nothing to the growth of the nation.

He stated: “Nigeria insurance industry loses over N160 billion yearly to fake motor insurance vendors. Some of these fake operators have their offices in some local government secretariats across the nation, carrying out their unethical acts unabated.

“Aside from loss of revenue and premium that should accrue to the industry, these criminals create for us a bad image. Most of the unattended claims in motor insurance are victims of fake certificates.

“It is sad to note that most motorists go about their daily businesses with certificate of moribund and deformed insurance companies, just because there is no proper enforcement. Some of these insurance policies flying around local government premises across the country, are just putting money into people’s pocket.

“I am certainly aware that the NIA deployed technology to curb proliferation of fake certificates. But I am of the opinion that enforcement is still at low ebb.”

Solution

On the way forward, the NIA Chairman, Musa, noted that to ensure compliance becomes effective across the country, the NIA is working with the Lagos State government in the enforcement and validation of genuine compulsory third-party insurance made mandatory by law through Automatic Number Plate Recognition (ANPR) device of Vehicle Inspection Service (VIS) through NIID Verification Platform.

Musa said the partnership with Lagos State will be replicated in other parts of the country so that people can be sure that what they have and carry as insurance is only from genuine and registered insurance companies.

He stated: “Now, if your policy document is not captured in the NIID, then that policy document you have as a motor third-party insurance certificate is fake and worth nothing.

“You can actually verify it yourself, right from anywhere you are. This has not only brought a check to fake documents, but it has also now empowered you to make claims on all third-party liabilities.

“Verifying the authenticity of your vehicle insurance policy on the NIID gives you peace of mind and assurance that your claim will be paid.”

Also speaking on the way forward, NCRIB President, Edu called on government at all levels to wade into the situation and curb the perpetrators of fake motor policies.

He said: “Our economy continues to drag because we are not paying attention to the issue of insurance. I plead with government at all levels to wade into this matter. I equally plead with the VIS to see this as a clarion call.

The agency can as well increase its enforcement strategies to include insurance certificate in such a way that any motorist without genuine motor insurance certificate should be made to face sanctions as stipulated in the law.”

Meanwhile, Commissioner for insurance, Mr. Sunday Thomas, charged insurance industry players to increase awareness and educate Nigerians on, majorly, the six compulsory insurances, which include, third party motor insurance.

According to him, proper awareness on the features and importance of these insurance policies will deepen insurance penetration and drive up the revenue of the Nigerian insurance industry.