Insurers say spurious claims on the rise as economy bites

Insurance companies have said some of the people insured, hit by economic hardship, occasioned by rising inflation and falling incomes, are resorting to making spurious claims.

The insurers said they have seen in recent times false claims from customers wanting to take advantage of their loss situation to better their condition.

According to the insurers, this is common in motor insurance policies where at the slightest form of accident, customers want to take advantage of it to fix and maintain their vehicles, which they could not do before the incident.

Nigeria’s inflation rate rose to 19.64 percent in July, the highest since September 2005, from 18.60 percent in June, according to the National Bureau of Statistics.

Olalekan Oyinlade, managing director of Old Mutual Nigeria, who confirmed the rising incidents of fraudulent claims in the industry, said ‘Yes, it is true that some people are taking advantage of their loss to make extra money.

“There are accidents, but people are taking advantage of it to maintain their cars, which they could not maintain in a while.”

“An insured car was bashed from behind and the bumper damaged; now, a new bumper has been bought to replace it, but the owner of the car is asking that the whole body of the car be repainted. That means we are going to pay a panel beater to work on the whole body before painting,” a junior insurer said.

Olusegun Omosehin, managing director of Old Mutual Life Assurance Limited, said: “There are spurious claims, but what we have done is to put in place mechanisms to ensure we detect such frauds.”

Adeyinka Oyekunle, managing director of Lifeguard Microinsurance, the newest player in the Nigerian microinsurance space, said, “We quite understand the challenges dealing with small income earners and how often they could ask for claims, but we have professionals who look at these situations critically and take prompt decisions on claims.”

Read also: Coronation Insurance pays N7.31b claims amidst tough business environment

“When claims are reported, right away we communicate with our agents in the field to go there immediately and confirm the situation and on that position, we take decisions and pay claims without delay. So, as much as possible we are able to detect and avoid fraudulent claims in our system,” she said.

The rate of suspected global digital fraud attempts in the insurance industry has seen the greatest rise on a year-over-year basis, increasing 159 percent between second quarter 2021 and second quarter 2022, according to a report by TransUnion.

TransUnion examined intelligence from billions of transactions and more than 40,000 websites and apps contained in the TransUnion identity-proofing suite.

The research showed that even though there was a global decline of 14 percent of suspected digital fraud attempts across industries, the insurance and logistics industries witnessed the biggest increase.

First-party application fraud in the insurance industry was at the top insurance-focused fraud activity recorded.

This type of fraud involves fraudulent applications containing intentionally inaccurate or manipulated information provided by the policyholder with the intention of receiving certification, lower rates or better terms for a policy/contract.

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