Insurance firms, brokers lambast Reps over alleged N200bn insurance scam

By Abdul  Olalekan

Insurance companies and brokers have lambasted members of the House of Representatives over its accusation that about N200 billion insurance fraud was committed in the process of insuring government assets, noting that the Adhoc Committee set up to investigate the matter gets most of its facts wrong.

The underwriters, who spoke under the auspices of the Nigeria Insurers Association (NIA) at a press briefing in Lagos, noted that the association would have waited for the Committee to conclude its investigation before making its comments but that to date, so much damage has and is still being done to the image of insurance industry by some of the statements credited to the Chairman of the committee.

Speaking on behalf of insurers, the Chairman, NIA, Mr. Eddie Efekoha, said some of the statements made by the committee, which are in their material facts, are inconsistent with known insurance market practice.

Efekoha, who is also the Managing Director, Consolidated Hallmark Insurance Plc, appealed to the Committee to conclude its investigation and where necessary, request for clarification from the regulator, the National Insurance Commission (NAICOM) and market associations before making public statements that are capable of damaging the image of insurance industry.

According to him, “the position of the association is that; there is no N200bn fraud anywhere and the Committee may not have been properly briefed about insurance operations and its workings. The Committee should please desist henceforth from making statements that are capable of creating further damage to the insurance industry.”

The association, he said, is insisting that the committee should engage thoroughly to have a full understanding of insurance transactions before going to the press. 
The association is ready to engage with the leadership of the committee with a view to shedding more lights on the operation of insurance business, he pointed out.

Also, speaking in an interview with Business 247 News Online in Yaba, Lagos, yesterday, the President, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Kayode Okunoren, wondered why the committee would say a fraud of N200 billion insurance fraud was committed, when the total premium income is around N300 billion, saying that the committee’s pronouncement has further drenched the image of insurance industry.

“How can you say there is a scam of N200 billion when the total premium income of the industry is N300 billion. I think somebody is just trying to stir things up for their personal gain,” he reasoned.

The leadership of the House set up an Ad-hoc committee led by Honourable Adekunle Akinlade to investigate the multi-billion naira said to have been expended on insurance covers for government properties by Ministries, Departments and Agencies (MDAs).

The resolution of the House was sequel to a motion under matters of urgent public importance moved by Hon. Ossy Prestige, asking the House to compel the Head of Service of the Federation and other statutory government establishments that purchase direct insurance covers to provide detailed data that would cover premiums paid on group life and related government assets.

He alleged that for every N10 billion paid as insurance premium by government, N5 billion was returned to corrupt government officials.

According to him, “Although the processes are presumably carried out in line with the Public Procurement Act, it is generally believed that some companies are unduly favoured during such bid. The unduly favoured companies reciprocate by engaging in a fraudulent practice termed Return on Premium.”

Speaking further, he said, “a percentage as much as 50 of the premium paid by government is returned to government officials as cash payback, thus creating the biggest recurring fraud in the public sector.

“To best appreciate the magnitude of fraud being perpetrated, for every N10 billion paid as insurance premium by government, N5billion is returned to corrupt government officials,” the lawmaker stated.

Settling for the main business, the adhoc committee grilled the Managing Director of Standard Alliance Insurance, Mr Bode Akinboye. The committee, while questioning the Standard Alliance boss, frowned at the document presented before it saying that they were bellow of expected standard. Particularly, the committee was not comfortable with the figures presented by the company’s Managing Director, to the extent that at a point, it questioned the N625,000 invoiced as gross premium on a vehicle worth N12.5 million insured by a Federal Medical Centre.

The committee also queried another N30 million worth insurance done by the company for Ministry of Works where it was paid N900,000 as against the N150,075 premium due to it, leaving a difference of N749,000. At a point, Akinboye admitted that there were typographical errors in the document he presented before the committee. He, however, maintained that the company applied the standard practice in insurance business for its dealings.

Another company, Regency Alliance Insurance Plc, represented by its Executive Director, Business Development, Sammy Olaniyi and the Executive Director, Operations, Mr Akin Adelakun, was equally faced with conflicting figures in their presentation.

At this point, the committee asked the companies to produce documents related to their insurance dealing with the Federal Government as well as the detail of individuals that was paid the brokerage fees and the list of brokerage firms that enjoyed the brokerage fees.