By BISI OLADAPO
Until September 14, Adeola Ojebisi, a lecturer, believed his car was duly insured by a recognized insurance company as he has a vehicle insurance cover to that effect. So, when he mistakenly hit another car on his way from work that evening, he was confident of being indemnified by his insurer. But he got the shock of his life on getting to the office address indicated on the insurance certificate. The signpost on the building had another company’s name. Further enquiries revealed no company as the supposed insurer had ever occupied the building.
Olabisi, therefore, headed for the Lagos Office of the National Insurance Commission, NAICOM, the supervisory body of the insurance industry. When asked how he got the certificate, his story went thus: “When I went to process the papers for my new car at the licensing office, an insurance agent approached me and sold the certificate to me at the cost of N1, 000.” At this point, he was told that nothing could be done for him because his vehicle insurance certificate was fake. He was advised to go back to the insurance agent who sold the certificate to him, which he did. But the agent could not be located. In the end, he had to bear the expenses of repairing the damaged car.
Ojebisi is not the only unsuspecting victim of fake insurance operators, often referred to as touts. Their stock-in-trade is selling fake vehicle insurance to unwary motorist, who are subsequently left out in the cold due to loss or damage to their vehicles. Such victims cannot get indemnity in the event of loss or damage; consequently they bear the cost of repairs themselves. This is, however, peculiar to third party vehicle insurance. The Motor Vehicle Insurance Ordinance of 1950 bars the use of vehicles without valid insurance cover. Users of motor vehicles are mandated to be insured against third party risks. By the Act, it means that liability must be incurred by the insured in respect of death of or injury to third parties caused by the use of an insured vehicle. “This perhaps explains why sale of fake insurance certificates affects only third party insurance since it is a compulsory minimum requirement”, says Ifeanyi Iwu, a banker.
However, section 6 of the same Act stipulates that the insurance cover must be provided by an insurer approved by the finance minister. Today, unapproved insurers issue insurance covers while insurance companies registered by NAICOM are deprived of the premium income they would have earned. “The industry loses millions of naira to insurance touts every year”, says Sola Ladipo-Ajayi, managing director, LASACO Assurance. He believes that the industry which earns an average of N2 billion annually from motor vehicle insurance portfolio could have earned more but for the activities of the touts who corner substantial premium from the industry.
“Those who patronize fake insurance agents have themselves to blame considering that in the event if loss or damage no insurance company will indemnify them,” explains Boye Olapade, an insurance broker. Ismaila Ibrahim, an insurance executive, also shares his views. He says, “Nigerians believe in quantity and not quality. This is why you find our people patronizing roadside insurance operators who know nothing about the insurance business. Theirs is just to sell ordinary paper and go away with your money.”
Anthony Iba, a vehicle insurance policyholder, agrees but has reasons for patronizing touts. According to him, it is cheaper for him to pay N1, 000 for insurance cover instead of N5, 000 as being demanded by approved insurance companies which, after all, default in settling claims. He told the magazine. Iba said, “is it not cheaper to pay just N1, 000 for third party insurance when I know that in the event of a loss, insurance companies are likely to default in settling claims? That is when they will start asking questions like, ‘were you under the influence of alcohol when you were driving…?’ what does that have to do with the contract signed that they will indemnify you? At the end of the day, you will be the one to pay for the repairs. This is why most people go for fake cover”. Apart from the fact that the certificate is cheap, “it is also meant to satisfy the police”, says Ibrahim.
The touts operate mostly in licensing and tax offices nationwide. Ojebisi blames both the regulator and operators in the risk-bearing industry for the existence of fake insurance cover. He believes that if NAICOM and insurance companies furnish the insuring public with the names of the approved insurance companies, people would be saved from running into troubled waters/. Let government and insurance companies themselves embark on public enlightment campaigns so that the populace will be aware of the companies to patronize. By this, when the certificate of an unknown company is issued to us, we can easily know,” continued Ojebisi. He believes that this will also assist the police to identify fake certificates when motorists present them. Similarly, he appealed to NAICOM to release the list of registered insurance companies certified as having recapitalized as required by the federal government, saying that this will help to curb the menace of charlatans in the industry.
Attempts have been made in the past by federal government in this respect. Concerned about the unpatriotic activities of insurance touts, NAICOM introduced the Vehicle Insurance Sticker in 2003 as a device to curb fake insurers. But the scheme was embroiled in controversy which put paid to it, which is why the dubious activities of touts persist.
