Insurers Discover N20bn Fraudulent Claims From #ENDSARS Destruction

Insurers Discover N20bn Fraudulent Claims From #ENDSARS Destruction

Businesses and individuals who suffered massive destruction from the last #EndSAR protests lodged fraudulent claims amounting to about N20 billion to the insurance industry.

An investigation by Newera News shows that the insurance industry received about N40billion claims from the public, but discovered that about 50 per cent of the claims, amounting to about N20billion, were actually fraudulent.

The industry, it was learnt, has so far paid N11 billion in genuine claims from that incident with plans to pay an additional N9 billion in the next couple of months.

A fraudulent claim is an insurance claim request whose insured risk or incident is falsified and painted to look real. Here, the racketeer submits fake documentation to insurance companies with the motive to profit from the insurance system through claims.

In the past, insurance operators have paid huge claims believed to be fraudulent, but the industry has improved over time, and are now able to detect claims lodged fraudulently, and hence are able to cut down these unnecessary expenses and add more to their bottom line.

Confirming this development, at the 6th BusinessToday Conference in Ikeja, Lagos, at the weekend, the chairman, the Nigerian Insurers Association (NIA), Mr. Ganiyu Musa, acknowledged that fraudulent claims were indeed lodged from the #EndSARS destruction.

Musa, who is also the group managing director/CEO of Cornerstone Insurance Plc, noted that several mechanisms put in place by insurance companies were able to discover these fraudulent claims before they were paid, hence, the industry was able to avert such fraudulent payment.

According to him, “We have to take our time because the industry received about N40billion claims requests, of which 50 per cent or more are actually fraudulent. But we are lucky the mechanisms put in place by different insurance companies were able to discover them before they were actually paid which saves the industry a lot of money.”

The essence of insurance, he said, is to put the insured victims in a financial position he or she was before risk crystallizes, even as he warned Nigerians against profiting from an insurance system that gets little in the form of premium and is paying much as claims.

Insurers Discover N20bn Fraudulent Claims From #ENDSARS Destruction

“The motive of insurance is not to profit from it but some want to profit from the system by lodging fraudulent claims. As insurers, we have to conduct our due diligence to separate fake claims from genuine ones,” he said.

Earlier, the managing director/CEO, Universal Insurance Plc, Mr. Ben Ujoatuonu, said claims payment is an important aspect of the insurance business and operators have improved in the time it takes to settle claims.

Disclosing that most insurers had invested heavily in  Information Technology (IT) to improve turnaround time, as well as to be prompt in service delivery, he urged Nigerians to insure their assets and lives, adding that underwriters will always pay claims as long as they genuine.

He disclosed that NIA and the National Insurance Commission (NAICOM) have complaint Bureaux where aggrieved customers can channel their complaints, urging Nigerians to approach these Bureaux if their insurers fail to honour claims obligations.

Similarly, chief consultant, B. Adedipe Associates Limited (BAA Consult), Dr. ‘Biodun Adedipe, on his part, while appreciating efforts put in place by insurance companies to pay genuine claims, advised operators to improve in the area of customer service delivery.

He urged insurance operators to listen to the pain points of their policyholders and act on them, stating that “every criticism of customers about your service is to ensure you improve on service delivery.”

Insurance firms, he said, must not wait until a policy elapses before reaching out to their clients. He told insurers that they must celebrate their customers’ birthdays and marriage anniversaries, among others, to make customers feel elated and important.

During the last #EndSARS protests in the country, most government offices, banks, shopping malls, media houses, toll plazas, and private offices were set on fire by suspected hoodlums after soldiers reportedly shot in the air to disperse protesters on the night of 30 October 2020.

The estimated cost of destruction has been put above N1 trillion.

While most insurance contracts excluded damage to property from war, riots, or other forms of force majeure, most underwriters decided to use discretion to pay claims emanating from such risks, even though some policies have no such extension.

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