Insurance racketeers risk N5m fine, two years imprisonment

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Chuks Udo Okonta

Insurance racketeers may be in for a big trouble when the Insurance Industry Consolidated Act becomes operational and fully implemented, as they would face a fine of N5 million or two years imprisonment for transacting underwriting business without a licence.

Presently the racketeers are largely in control of marine and motor insurance, where out of the about 13 million vehicles on Nigeria roads, they issue fake papers to about 10 million.

Determined to address this menace, the consolidated bill, has stated that a person who transacts any insurance business without being licenced for that purpose, commits an offence and is liable on conviction, in the case of – a company, firm or other combination of persons, each principal officer of the company, firm or other combination of persons responsible to a fine of N5,000,000.00 or to imprisonment for a term of two years; or an individual, to a fine of N1,000,000.00 or to imprisonment for a term of two years.

The bill noted that a person who transacts business as an insurance agent without having been licenced, commits an offence and is liable on conviction to a fine not exceeding N250,000.00 or to a term of imprisonment not exceeding 6 months or to both fine and imprisonment.

“In addition to subsection (10) of this section, the court may make an order requiring the person to refund any sums collected by him, while so transacting the business, to the rightful owners or other entitled persons,” it said.

The Director-General of the Nigerian Insurers Association (NIA), Mrs Yetunde Ilori, said the association had intensified awareness on the menace of fake insurance, adding that the association had also continued to educate insurance companies on the need for them to upload their sold motor policies on the Nigerian a Insurance a Industry Database (NIID).

She noted that about 2.5 million vehicle insurance policies have been uploaded on the NIID, stressing that the NIID platform remains one of the best ways to curb fake motor insurance policy, adding that to help vehicle owners to easily verify the genuineness of their policies, the insurance industry introduced the Unstructured Supplementary Service Data (USSD) code *565*11#.

According to her, awareness on usage of USSD code *565*11# is really gaining more ground as people daily rely on it to settle issues bothering on genuineness of their policies.

Former Chairman of the NIA, Tope Smart, said the code would help bring insurance closer to the people and ultimately eliminate fake insurance certificates in the market.

He posited that in 2010 the association took a major step towards eliminating fake insurance certificates in the market through the inception of the Nigerian Insurance Industry Database (NIID), stressing that the database went live in 2011 and insurance policies obtained by motorists could be checked real time online on the internet and through dedicated hand held devices.

He stated that the objective of the NIID is to serve as an authentic database of the Nigerian insurance industry data providing qualitative statistics/analysis of the industry data! as well as a vehicle for easy verification of genuine insurance certificates by all stakeholders and to reduce incidences of fraudulent insurance transactions especially for motor and marine policies.

Smart posited that the industry has continued to reap the benefits of the scheme, adding that prior to the establishment of the platform, cloning and faking of insurance certificates was a thriving business, but the establishment of the database has assisted the industry in reducing the incidents of fake insurance certificates in the market and that presently, there are over three million vehicle details on the platform.

He noted that the platform has been enhanced to include stolen vehicles and claims reporting modules in response to the challenges thrown up by actions of suspected fraudsters that made multiple claims with the intent to defraud the industry over the last few years.

“The NIID platform had been operational nationwide, but with challenges in verification in areas with poor internet coverage. Verification of motor certificates through the dedicated devices became highly impaired due to the vicissitudes of internet operations in the hinterlands. This led to the introduction of the USSD technology.

“The USSD is a Global System for Mobile Communication (GSM) technology used to send text between a mobile phone and an application programme in the network. It works independent of internet connectivity. In this instance, any mobile phone (not necessarily a smartphone) would communicate with the NIID system to retrieve policy status whenever required.

“It is hoped that with the USSD, we would have fully overcome the problems associated with the dedicated devices as it guarantees uninterrupted service throughout the country and on all networks. Our existing and prospective customers now have the opportunity to confirm the genuineness of their respective policies at the time of purchase to avoid any embarrassment should claim occur,” he said.

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