Fake insurance: Mobile devices to the rescue | Independent Newspapers Limited
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Fake insurance: Mobile devices to the rescue

Posted: Apr 28, 2015 at 5:30 am   /   by   /   comments (0)


The Nigerian insurance industry has consistently been striving to put on end to the menace of fake motor insurance policies in the country in the past seven years with little success. Now, the industry has come up with mobile gadgets to confirm the genuineness of motor insurance documents as quickly as possible so that the industry can be able to contribute its expected quota to the nation’s GDP. In this special report, Sylvester Enoghase, Sola Alabadan, Andrew Airabhuobhor, Phillip Oladunjoye, Emma Okwuke, Bamidele Ogunwusi, Abel Orukpe, Olamide Bakare examine how far the industry will go with this gadget to ensure sanity as well curb corruption in the economy

Place of third party motor insurance

Fake motor insurance certificates are rampant in the country because it is the only motor insurance policy that is compulsory by law before anyone can use or permit the use of a motor vehicle on public roads.

However, since most Nigerians buy motor insurance just to avoid being embarrassed by the law enforcement agents on the roads rather than to ensure that they are adequately protected by way of insurance, majority of the populace usually opt for third party motor insurance which is a lot cheaper than comprehensive motor insurance policy.

 Wale Onaolapo, MD, Sovereign Trust and Yemi Soladoye, MD, Riskguard Africa

Wale Onaolapo, MD, Sovereign Trust and Yemi Soladoye, MD, Riskguard Africa

It therefore means that majority of the people don’t know that a third party policy is actually legal and indemnifies the insured from third party losses. Thus, a lot of accidented vehicles which ordinarily would have been repaired by the insurance company are borne by the car owners.

For the sake of better understanding, under the third party motor policy, the first party is you; the second party is the insurance company, while the third party is everyone else.

So, arranging third party motor insurance means that if you damage (crash into) someone else’s vehicle, the insurance firm pays the owner of that vehicle (the third party), or more importantly, if you injure someone else with your vehicle, the insurance company pays. It should therefore be understood that third party liability coverage is part of your basic motor policy and covers you for claims made against you by other drivers after a crash.

In other words, under third party insurance, you cannot claim for the car you are driving since that is not covered under the insurance contract. You need a comprehensive cover to be able to enjoy that benefit. It will be helpful to stress that with a third party motor insurance, if you are driving your car or someone else’s car, the insurance company won’t pay you claim to have the car you are driving repaired but will only compensate the owner of the car you hit.

Do note, however, that the required premium must have been paid by you to the insurer at the inception of the contract. This is in line with section 50(1) of the Insurance Act 2003, which stipulates that “The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium paid in advance.”

It is worthy of note that the money to pay for damages comes from the premium paid to arrange the insurance cover. Invariably, if premium has not been paid for a third party motor insurance, there won’t be any compensation whatsoever, in case of accident.

If you go for a third party motor insurance from a registered insurance company, you will be able to save yourself the cost associated with causing damage to others in the process of driving the car. Assuming your car injures a pedestrian, the insurance company will pick up the medical bills and thus save you from being torn apart by the relatives of the injured.

Nonetheless, it will be helpful to stress here that as an insured person, it is an offence trying to defraud an insurance company when there is no genuine claim. Once the insurer thinks you are not acting ‘in good faith’ or they think you are trying to rip them off, they will refuse to pay that claim, cancel your insurance, report you to the police for fraud and blacklist you.

To get a third party auto insurance policy contact a registered insurance company or use the services of an insurance broker.


It pays to have insurance cover

If you think you can cater for unexpected disaster by yourself then you may consider yourself as not needing insurance; otherwise, insurance is very good for you. Insurance means you do not have to be on the streets, if for any reason the family breadwinner passes away, or the roof over your head is snatched or your life savings are stolen. In all these cases, a good insurance is your road to quick recovery.

According to the Managing Director, Riskguard Africa, Mr. Yemi Soladoye, the greatest asset insurance bestows is the absolute peace in case of most traumatic moments of one’s life. “A dying man, who is insured for life, would breath his/her last in complete peace, knowing he/she can pass away without fretting over the financial state of his/her family.

“In automobile accident, you do not lay down in a panic attack, if the vehicle is properly insured. Hence, it would be justifiable to claim that insurance brings an extra strength to face the worst upsets of life.”


NAICOM’s efforts to rid Nigeria of fake insurance

The Commissioner for Insurance, Mr. Fola Daniel, said that the commission was aware of the menace of fake insurances in the country, which had over the years deprived the nation of the socio-economic benefits inherent in genuine insurance transactions.

In line with the commission’s determination to rid the nation of fake insurers and insurances, he stated that, over the past seven years, NAICOM had embarked on various campaigns aimed at sanitising and eradicating fake insurances from the system through its Market Development and Restructuring Initiative (MDRI).

“The eradication of fake insurances and the sanitisation of the insurance industry is one of the cardinal objectives of the MDRI. We are of the belief that the launching of the NIID will go a long way in assisting the commission in this campaign,” he said.

Due to the devastating effects of the activities of fake insurance operators at vehicle licensing offices, NACOM had to stop the issuance of insurance certificate at vehicle licensing offices in 2009.

While some licensed insurance companies were issuing genuine motor insurance certificate at licensing offices, the insurance industry believed that putting a stop to the practice would do the industry a lot of good in view of the fact that fake insurances were rampant in the compulsory motor insurance class of the business owing to the activities of fake insurers issuing insurance certificates at vehicle licensing offices across the country.

Specifically, NAICOM task-force team comprising policemen, insurers and staff of the commission carried out a raid on the Area 1 vehicle licensing office in Garki, Abuja and arrested five illegal insurance operators.

Among those arrested were three ladies and two men parading themselves as agents of some insurance companies. Some fake insurers’ certificates and receipts purported to belong to these companies were retrieved from them.

Again, in continuation of its efforts to stamp out fake insurers in the country, six persons, including two staff of the Lagos State Internal Revenue Service, were also arrested in Lagos by the special taskforce of NAICOM.

This followed a raid on the premises of the licensing office in Ikeja. Those arrested were subsequently handed over to the Area F Police Station in Ikeja.

Those arrested were found with fake motor insurance certificates which they sold for N2,000 whereas the original certificates go for N5,000. The certificates purportedly had the names and logos of registered insurance companies.

The Commissioner for Insurance stated that the exercise was meant to tell Nigerians that the commission was resolute on ridding the sector of fake insurers and protecting the interest of both genuine insurers and the insuring public.

The NAICOM boss said the exercise would continue until the commission got rid of fraudsters who are tarnishing the image of the insurance sector.

Daniel therefore appealed to Nigerians to join hands with the commission in wiping out fake insurers in  the country by going directly to insurance companies to purchase their third party motor vehicle insurance and not from the licensing office or by the road side.

Daniel also urged Nigerians to always patronise licensed insurance companies, agents and qualified brokers whenever they want to purchase insurance policy, stressing that the insurance policy is to guide against unforeseen occurrences.

The NAICOM boss assured Nigerians that the Commission will not relent in its drive towards ensuring the restoration of sanity and public confidence in the insurance industry. The arrested illegal operators, he said, would soon be arraigned at the law court in accordance with the provisions of the Insurance Act passed by the National Assembly.

While urging Nigerians to desist from buying insurance policies from vehicle registration offices, Daniel noted that it was in the best interest of the motorists to go to offices of duly registered insurance companies to get the original certificates so that they could have access to claims in case the insured risk crystallises.

It will be instructive to point out, however, that the menace of fake insurance is a worldwide phenomenon as regulators across the globe have been warning the people to beware of unscrupulous people claiming to be insurers or representing an insurance outfit.

Missouri Insurance Director, John Huff, had to issue a cease-and-desist order and more than $1 million in fines in a “massive crackdown against bogus health insurance plans being sold in Missouri.”

The order targets more than a dozen companies and individuals Huff said defrauded Missouri consumers by selling them health discount plans designed to look like comprehensive medical insurance.

Similarly, the Insurance Regulatory and Development Authority (Irda) India also warned the public to watch out for unscrupulous persons selling insurance policies by claiming to be the regulator’s representatives.


Fake insurance: Mobile devices to the rescue

The Nigerian Insurers Association (NIA) officially launched the Nigerian Insurance Industry Database (NIID) portal in June 2012.

The NIID is an information technology-based system to facilitate easy collation and dissemination of statistical and other information relating to insurance while helping to check activities of fake documents.

While the NIID portal is the only central record of all insured vehicles in the country to ensure that only insured vehicles are driven on the roads, the website is used by the police and other agencies to enforce motor insurance law.

Once a motor insurance policy has been arranged by a licensed insurance company, the NIA ensures that the details of such an insurance policy are reflected on the website (www.askniid.org) within 24 hours.

With a mobile device, a product of the NIID, it is now easy for law enforcement agencies and relevant authorised persons to identify genuine insurance documents.


Claims, stolen vehicles modules to NIID portal

NIA’s Information Technology Committee has added modules on claims reporting, stolen vehicles reporting and auditors’ platform to the NIID portal. The committee is the primary drivers of the NIID as the concept, design and implementation frameworks were its ideas.

Confirming this development, the Director General of NIA, Sunday Thomas, informed that these modules are not open to the public as they are company specifics and only the concerned companies can view them.

He explained that the claims reporting module enables the insurance companies to report and upload the claims paid so that once the NIA flags it, it will broadcast to other companies to avoid double and fraudulent claims.

The stolen vehicles reporting module, he noted, is basically for insurance companies to upload information on stolen vehicles and once NIA approves it, the association will alert other companies.

The NIA DG added that the auditors’ module allows the auditors to view policies uploaded on the website to ensure that it correlates with the revenue reported by the respective insurance companies.


Verifying status of motor insurance policy

To verify the status of any motor vehicle insurance policy, just log on to the NIID website: www.askniid.org, click on “Check Policy” and follow the instructions laid out.

You could enter your Vehicle Number or Insurance Policy number to confirm its authenticity. Once entered, the result will appear right in front of you. If your policy is authentic, your vehicle number, policy number, vehicle type will appear. If it is fake, no information will appear meaning it is not in the database.

Again, the motorists can just send SMS to 33125 in this format: Policy Number*Vehicle Plate Number.

In case any motor insurance policy is not found on the website, the NIA advised the affected motorist to contact either their insurer or the association.

Should any motorist have any issue on his insurance contract, the NIA further advised that the affected motorist should send his complaints as a text message to 08030400804 or 07011784884.

Alternatively, the association added that motorists with any grievance can send email to: support@niid.org; ccare@nigeriainsurers.org and info@nigeriainsurers.org.

NIA, the umbrella body of all insurance companies in the country, has therefore been encouraging all motorists to visit www.askniid.org to verify the genuineness of their motor insurance policy online, pointing out that if any vehicle is not on the NIID portal, the vehicle is not insured.