Insurers pay over N350m claims on banks, others fraudulent acts

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Chuks Udo Okonta

Insurance companies paid over N350 million claims on frauds perpetrated by banks’ staff and fraudsters in 2018.

Data obtained from the Nigerian Insurers Association (NIA) stated that NEM Insurance paid the largest claims amounting to N115.20 million, which was paid to Union Bank Plc. The bank also got N62.38 million claims from Cornerstone Insurance Plc.

NEM Insurance Plc also paid N13.13 million claims to Whyte Cleon Limited, while AIICO Insurance Plc paid N9.33 million to Union Bank Plc and Leadway Assurance Limited also paid the bank N9.22 million.

Royal Exchange General Insurance Company Limited, paid N6.86 million to Standard Chartered Bank Nigeria Plc other banks and organisations got different amounts for losses they suffered on fraudulent acts.

The Acting Commissioner for Insurance, Sunday Thomas, said insurance companies are in the business of insurance primarily to settle genuine claims made by policyholders. He urged board of directors of companies to ensure that in all their policy formulations, prompt settlement of claims should be given a high priority, stressing that the National Insurance Commission (NAICOM) will view seriously any case of late or non payment of genuine claims.

Major payment channels in Nigeria were hit with the high reported fraud incidences in 2018, as revealed by data obtained from Central Bank of Nigeria (CBN).

The apex bank’s Financial Stability Report disclosed that the payment channels hard-hit include, Automated Teller Machines (ATM), Point of Sales (POS) and Mobile.

Details provided show that ATM recorded the highest incidences of fraud in Nigeria with 34.87 per cent Fraud Interest Index in the period under review. Also, the Mobile payment channel ranks the second with the highest fraud incidences with 28.21 per cent Fraud Interest Index, while POS recorded 19.55 per cent Fraud Incidences in 2018.

Fraud incidences recorded across other payment channels include “across the counter” (8.52%), Cheques (1.87%), E-commerce (0.14%) and Internet Banking (0.43%).

Payment channels’ fraud showed that cases of fraud and forgeries recorded by Deposit Money Banks (DMBs) rose to 25,029 at the end of December 2018, from 20,774 cases at the end of June 2018. In terms of the amount involved, the sum of N18.94 billion was recorded as cases of fraud and forgeries in 2018 full year, with actual losses estimated at N2.21 billion.

Insurance operators had within five years paid N648.16 billion claims to claimants. Inspenonline learnt that life operators within 2014 and 2018 paid N315.47 billion, while non-life operators within the same period paid N332.69 billion.

A breakdown of the claims showed that life operators paid N35.95 billion, in 2014; N50.57 billion, 2015; N61.87 billion, 2016; N72.30, 2017; N94.78 billion, 2018, while non-life operators paid N51.06 billion in 2014; N54.65 billion, 2015; N57.76 billion, 2016; N70.52 billion in 2017 and N98.70 billion in 2018.

On claims settled in 2018, the top three firms with the largest claims were: Leadway Assurance Limited, which paid N57.93 billion; AIICO Insurance Plc, N28.55 billion and African Alliance Insurance Plc, N8.75 billion.

On what was paid to claimants based on region, South West got N171.29 billion; North Central got N19.93 billion; South South, N12.97 billion; North West, N4.73 billion; South East, N2.54 billion and North East, N52.91 million.

Group President/Chief Executive Officer, Standard Insurance Consultants Limited, Dr. Ahmed Salawudeen, implored insurers to do more in the area of claims payment, stressing that public confidence on Insurance could only be restored through prompt payment of claims.

According to him, the insurance industry will grow when underwriters live up to the claims responsibilities. He urged operators to esteem professionalism and execute their business based on trust which is the core of insurance operators.

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