When David Effiong and his colleagues decided to take up life insurance with a major insurance firm in Nigeria, they thought they were investing in their future. Several months after, they realised the insurance agent they had been dealing with had defrauded them of their hard earned money.
“The insurance agent convinced us to take up life insurance about 14 months ago. We completed the forms and made the initial down payment through him. After some time, he brought our policy documents to us. After that, he started visiting us at the end of every month to collect our premium. He would return a few days after to give us our receipts. When he failed to show up about two months ago we went in search of him in his home only to get the shocking news that he has relocated abroad with his family,” explains Effiong. When the insurance company was contacted, it was found that the agent had long stopped remitting premiums collected to the company. Moreover some of the receipts already issued to the policy holders were found to be fake. Till date, the issue is yet to be resolved.
In another incident a policy holder who wanted to make withdrawals from his account was shocked by the news he got that his policy had lapsed about six months earlier and all the cash values withdrawn by him. This crime was perpetrated by his insurance agent who has since disappeared into thin air. There are a lot of court cases involving insurance agents who forge companies’ documents to defraud customers of their money running into several millions of naira.
Premium fraud is one of the most common types of fraud in the insurance industry. It happens when agents or brokers fail to remit the money collected from policy holders to the insurance company. Crooked agents usually forge policyholders’ signatures to steal premiums and cash values of insurance policies, steal premiums and issue fake receipts to deceive clients, and engage in many other fraudulent activities that hurt the insurers and their clients. Huge sums of clients’ money are stolen annually by agents across the country.
Although there are honest insurance agents out there doing their job professionally but the fraudulent ones also abound, which is why a consumer of insurance products should be very careful in his or her dealings with them. Oftentimes, policyholders completely trust their agents to handle all their insurance policy details and when a fraud is eventually discovered, the agent is long gone.
How to protect yourself
The industry at the moment lacks the capacity to stop this crime but as a consumer you can minimize the risk of being defrauded. Below are some tips:
• Before taking up an insurance policy, ensure that the insurance company is licensed to conduct insurance business in the country. You may contact the sector’s regulator, National Insurance Commission (NAICOM) or the Nigerian Insurers Association (NIA)
• Contact the insurance company to confirm the identity of the agent before parting with your money because there are many unlicensed agents out to steal your money.
• Agents are licensed to sell specific types o insurance, so make sure your agent has a licence for the kind of insurance you need.
• Don’t be persuaded by any agent to provide false information when applying for insurance coverage.
• Transfer fund directly to the insurance company electronically or from ATMs. Better still, you can give your bank a standing order to remit the value of your premium monthly to the insurance company if you are a bank account holder.
• Do not pay cash to insurance agents or brokers. If you must make payments through them, issue crossed cheques payable to the insurance company. Cash transactions increase your risk of being defrauded.