Recession: The Emergence of Fraudulent claims in Insurance sector

Amidst economic recession in the country, some insuring public have devised various means of making fraudulent claims from insurance companies, in a bid to make quick money, LEADERSHIP learnt over the weekend.

Though, the issue of fraudulent claims is not new in the nation’s insurance industry, findings have shown there has been massive increase in the number of fake claimants since the beginning of the year.

While some underwriters had already fallen victims of these people thereby losing millions of Naira in the process, few were able to detect on time before granting such claims.

LEADERSHIP investigation shows that comprehensive and third party motor insurance has the highest fraudulent claims requests, with other types of insurances suffering similar fate, although not as high as motor insurance.

To this end, it was learnt that insurance companies are now rising up to the occasion by ensuring that they conduct thorough investigations to ascertain the credibility of any claim before compensating the claimants.

The industry, it was learnt, may have lost hundreds of millions to these fraudulent claimants and could lose more, if certain steps are not taken to address this disastrous issue, which is now impeding the profit margins of the concerned firms.

In an exclusive interview with LEADERSHIP at the weekend, Director-General, Nigerian Insurers Association (NIA), Mr. Sunday Thomas, said in recent times, underwriters have been battling with fake claims, adding that operators now carry out adept investigations to ascertain genuine claims in a bid to outsmart the fraudsters.

‘‘People think this is the time to look for means and ways to survive, so they will want to make some fraudulent claims and of course we are beginning to see that coming up and member companies are at alert and they know this, hence, the need to carry out more investigations on claims now more than before,” he said.

He added that those who are out to defraud the industry are not allowed to do so ‘because these are funds that are put in trust and if those who are not entitled to it make claims from it, they will deny those entitled to it.’

Thomas, who disclosed that such fraudulent activity do occur in other jurisdictions , urged operators to work towards ensuring that the sector lose nothing to them.

“The tendency is that people look around and say what the soft target is where they can make some money. Well it is not new, it happens abroad; in most cases people will attack insurance and will like to get something from them fraudulently. It is usually very difficult,” he pointed out.

Despite the current economic recession, he said insurers  are also living up to their responsibilities in paying genuine claims, noting that the vices been perpetuated by fraudsters would not deter insurers in settling claims of those who actually needed to be indemnified.


Source: Leadership