By Patience Saghana

Insurance practitioners have begun moves to check the rising tide of fraudulent claims by customers estimated to constitute 12 per cent of total claims.

According to operators, fraudulent claims are most recorded in the motor insurance class of the business.

Insurance fraud is any act committed with the intent to fraudulently obtain payment from an insurer. Though insurance fraud has existed since the beginning of insurance as a commercial enterprise, but fraudulent claims account for a significant portion of all claims received by insurers, and cost billions of Naira annually.

Fraudulent claim is an insurance crime which is diverse and occurs in all areas of insurance. It also ranges in severity, from slightly exaggerating claims to deliberately causing accidents or damage. Fraudulent claims also affect the lives of innocent people, both directly through accidents or deliberate injury or damage, and indirectly as these crimes occasion higher  insurance premiums. This type of insurance fraud poses a very significant problem, and governments and other organizations are making efforts to deter such activities.

The umbrella body of insurers, Nigerian Insurers Association (NIA) specifically is in the course of reaching an understanding with reputable information communication technology providers to build a robust database for all insured vehicles in the country. This is with a view to having an accurate data that will minimise fraudulent motor insurance claims, and reduce loss of vehicles by theft, among others.

Mr Ezekiel Chiejina, NIA Director-General, said that gone are the days when an insured person  gets more than one claim from two or more insurance companies on the same accident vehicle.

He said the association  would be embarking on accreditation and registration of reputable and trusted garages where claimants of damaged vehicles can always take their cars for repairs.

This move, he said, is to minimise the role of motor garages in fraudulent claims emanating from connivance and other sharp practices.

The industry is said to be losing so much money to fraudulent claimants in the area of motor insurance due to the fact that a reliable motor insurance database is non_existent in the country.

Motor insurance in the last financial year ended December 31, 2008 led other classes of insurance contributing about N41.23 billion premiums to the overall industry production.

Before now, insurance companies seem not to mind  the loss incurred as result of fraudulent  practice of insurance clients, until recently when the volume of such claims began to rise .

The industry paid a whooping N53.3 billion on claims in all its insured risk at the end of 2008 financial year as against N25 billion in 2007.

Motor insurance, which remained a major money_spinner for insurance companies in the country, is also responsible for the highest claims figure annually.

The key motive behind fraudulent insurance claim  is financial profit. Insurance contracts provide both the insured and the insurer with opportunities for exploitation. Opportunity for such crime arises in the case of over-insurance, when the amount insured is greater than the actual value of the property insured.

This condition can be very difficult to avoid, especially since an insurance provider might sometimes encourage it in order to obtain greater profits. This allows fraudsters to make profits by destroying their property because the payment they receive from their insurers is of greater value than the property they destroy.

To repudiate the claim, any genuine insurance company must be able to show that the customer was trying to obtain more than he or she was entitled to by insisting that customers produce receipts for all the items they claim for.
But insurers sometimes put customers in a position where they may be tempted to create substitutes for lost receipts.

So if customers do produce false receipts, it is essential to determine why they did this. Was it solely to substantiate transactions that really took place, or did the customers intended to obtain more than they were entitled to?