Government agency, insurers to recover N45bn from fake insurance operators

By Bankole Orimisan |   25 February 2020   |   4:01 am  

The Federal Government is working with operators to recover about N45billion lost to fake insurance practitioners nationwide on Third Party Motor Insurance Policy in Nigeria.

Accordingly, the Federal Roads Safety Corps (FRSC), has concluded plans to harmonise its portal with that of the insurance industry to track about N8.5million registered vehicles with fake Third Party Motor insurance policies or without cover at all in a bid to compel these motorists to get genuine covers.It was gathered that while this relationship will also be extended to comprehensive motor insurance where the industry is said to be losing about N10billion yearly, the partnership will also be instrumental to the recovery of stolen vehicles across the country, thus reducing the spate of car theft.

Third Party Vehicle Insurance comes at a fixed price of N5,000 for privately used saloons, and Sport Utility Vehicles (SUVs), while commercially used vehicles are charged N7,500. The Guardian reliably gathered that the FRSC is currently pushing a bill that is now ready to undergo second reading at the National Assembly.

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The bill, which prescribes heavy punitive measures against car owners without the needed particulars, including insurance covers, also stipulates a six-month jail term for offenders or heavy monetary fine or both to maintain law and order on Nigerian roads.

This, according to a competent source, will also lead to enforcement of Third Party Motor Insurance as well as Comprehensive Motor Insurance.The partnership will entail Nigerian Insurers Association (NIA), and the National Insurance Commission (NAICOM), supporting FRSC to carry out enforcement of insurance, especially on federal roads across the country.

Before now, fake insurers have been on the rampage, selling fake third party motor insurance papers to over eight million unsuspecting motorists, thereby depriving both the government and the industry of the huge expected premium income.The FRSC data revealed that there are 12.5 million registered vehicles plying Nigerian roads with only four million of these vehicles having genuine insurance, translating to 33.2 per cent of the total registered vehicles in Nigeria.
Further investigation showed that most of the motorists carrying fake insurance papers obtain them at some vehicle licencing offices, an agency that is under the purview of Vehicle Inspection Offices (VIOs).

There are racketeers, who market this fake insurance to commercial vehicle drivers at their parks, garage and bus stops. The fake insurance papers, it was learnt, are being sold for N3,000 to N1,000, even though the papers carry names of insurance firms that do not exist.Most drivers who go for fake insurance do so not only because it is cheap, but also saves them from the wrath of the law enforcement agents.

With little or no knowledge of the benefits of buying original insurance cover, other uninsured motorists, it was learnt, preferred to settle their way with the law enforcement agents whenever they meet them on the roads.

Confirming this development, the Corp Marshal of FRSC, Boboye Oyeyemi, said most of the vehicles registered in Lagos carry fake insurance papers.Regretting that the touts sell fake insurance at the licensing offices nationwide, he said, while the volume of cars increase yearly, which is supposed to generate more money for the industry through the purchase of covers, the reverse is the case.He added that accidents are also on the rise, which is the reason why insurance is needed, noting that instead of getting genuine certificates, motorists would go for fake ones and expect the industry to pay claims when they have accidents.

“Obtaining insurance must not be at the vehicle licencing office. About 90 per cent of insurance certificates being sold there is fake. Quacks must be eliminated from the insurance industry through the efforts of NIA and NAICOM,” he stressed.Stating that fake insurance companies must be completely eliminated, Boboye, who pointed out that there are also saboteurs in sectors that are feeding fat from the system, called on operators to fish out those saboteurs and deal with them accordingly.“If all the 12.5 million registered vehicles around the country are properly insured, you can imagine the income and revolution it will bring to the insurance industry.”

While charging the industry to have a link with the FRSC portal to ensure that vehicles registered before, but stolen, are not re-registered through the insurance industry platform, he said: “Once people know that once a vehicle is stolen, it cannot be registered, it will reduce car theft.“Fake insurance companies must be completely eliminated. The regulatory and supervisory agencies must ensure proper enforcement. If insurance is both well designed and implemented, it can have an enormous impact for improving road safety.

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“Given this strong alignment, there is an opportunity for the insurance industry to take a leadership role in furthering the cause of safer roads, especially as it stands the risk of compensation in event of crashes.”

Similarly, the Inspector General of Police (IGP), Mohammed Adamu, urged NAICOM to constitute a taskforce comprising the FRSC, the Nigeria Police Force, among other critical stakeholders to eliminate fake operators.He noted that in Lagos State alone, there are more than 230 fake insurance companies operating, while urging the industry, through NIA, to constitute a mobile taskforce, which will be verifying the insurance certificates of motorists, he said the Police are ready to work with the industry if called upon.

“In insurance industry itself, there are saboteurs who connive with these fake operators. Those saboteurs within the industry must be eliminated. The regulator must resuscitate the taskforce team that was initially set up in 2003, but had to stop working because funding was a major problem then,” he said.

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