Expert Urges NAICOM to Develop Operational Frameworks to Combat Insurance Fraud and Scams in Nigeria

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In the wake of mounting concerns surrounding the proliferation of insurance fraud and scams in Nigeria, a shareholder, Mr Celestine Ukpong, an expert in Nigeria’s insurance sector is calling upon the National Insurance Commission (NAICOM) to spearhead the development of robust operational frameworks aimed at combating the pervasive threat of insurance fraud and scams in the country. With fraudulent activities posing a significant challenge to the integrity and stability of Nigeria’s insurance industry, he emphasizes the urgent need for proactive measures to protect both insurers and policyholders from financial losses and reputational damage.
The Escalating Problem of Insurance Fraud:
Research shown some Insurance companies have seen rising fraud claims cases in recent past, worsening with increasing economic difficulties.

The research further stated that insurance companies, some fraudulent clients are filling frivolous claims in cases when they ordinarily would not, and this has been linked to economic difficulties and hardship.

“We have seen some clients file claims in more than one insurance company when they encounter accident, and this amounts to double insurance, one of the industry CEO’s said.

The CEO, stressed further that some clients want to make gain on their claims, most time far above cost of repairs in the case of vehicle accident.

From above immediate reports you can see that Insurance fraud has emerged as a pressing issue in Nigeria, characterized by a range of deceptive practices such as falsified claims, phantom insurance companies, and premium diversion schemes. These fraudulent activities not only undermine the financial viability of insurers but also erode trust in the insurance system, hindering its ability to fulfill its fundamental role of providing financial protection and risk mitigation.
Expert’s Recommendations for NAICOM:
Drawing upon years of experience and expertise in the insurance industry, the expert proposes specific recommendations for NAICOM to develop comprehensive operational frameworks to combat fraud effectively:
1. Policy Formulation:
 NAICOM should lead efforts to formulate clear and enforceable policies and regulations governing the detection, prevention, and prosecution of insurance fraud, thereby providing a robust legal framework for combating fraudulent activities.
2. Capacity Building:
NAICOM should invest in capacity-building initiatives aimed at enhancing the skills and capabilities of insurance professionals, law enforcement agencies, and regulatory personnel involved in fraud detection, investigation, and prosecution.
3. Technology Integration:
 NAICOM should promote the adoption and integration of advanced technologies such as data analytics, artificial intelligence, and blockchain into the insurance industry to strengthen fraud detection mechanisms and enhance transparency and accountability in insurance

4. Collaborative Partnerships:
NAICOM should foster collaborative partnerships between insurance companies, regulatory bodies, law enforcement agencies, and other stakeholders to facilitate information sharing, intelligence gathering, and coordinated efforts to combat fraud across the industry.
5. Consumer Awareness Campaigns: NAICOM should launch targeted consumer awareness campaigns to educate policyholders about the risks associated with insurance fraud, empower them to identify potential scams, and encourage them to report suspicious activities to the relevant authorities.
 Operational Frameworks:
Mr Ukpong highlights successful operational frameworks implemented in other jurisdictions that have proven effective in combating insurance fraud:
1. Centralized Fraud Database: Establishing a centralized database to collate and analyze information on fraudulent activities, enabling insurers and regulatory agencies to identify patterns, trends, and perpetrators of fraud more effectively.
2. Whistleblower Incentive Programs: Introducing whistleblower incentive programs to encourage individuals with knowledge of fraudulent activities to come forward and report such incidents, thereby facilitating early detection and intervention.
3. Cross-Industry Collaboration: Facilitating collaboration between the insurance industry and other sectors, such as banking, telecommunications, and law enforcement, to share intelligence and leverage synergies in combating financial crimes, including insurance fraud.

Challenges and Opportunities Ahead
While the task of combating insurance fraud in Nigeria is undoubtedly daunting, he remains optimistic about the potential for NAICOM to drive positive change through the development and implementation of robust operational frameworks. However, challenges such as resource constraints, institutional capacity gaps, and the evolving nature of fraud tactics must be addressed through sustained commitment and collective action.
As Nigeria strives to strengthen its regulatory framework and promote the integrity and stability of its insurance industry, the development of operational frameworks to combat insurance fraud and scams is paramount. By heeding the mr Ukpong call for proactive measures and working collaboratively with stakeholders across the industry, NAICOM can enhance consumer confidence, foster a culture of compliance and accountability, and safeguard the long-term sustainability of Nigeria’s insurance ecosystem

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