Nigerians advised to be vigilant as insurers turn fraudsters

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Faced with a perennial challenge of low penetration across the country and waning public perception, the nation’s insurance sector may further suffer reputational damage and loss of patronage if findings by our correspondent and allegations of widespread multimillion-naira fraud in the industry are anything to go by.
Some of the shocking discoveries made include the non-remittance of insurance premium by intermediaries such as insurance agents and brokers, marketers defrauding clients, forgery of clients’ policy documents to access part of their funds, failure of Insurance firms’ management to update shareholders on their liquidity status, non-release of annual results in over two years, and absolute lack of corporate governance in some companies.
Some of the insurance firms fingered in the sharp practices include Mutual Benefit Insurance, STACO Insurance, Capital Express Assurance, Linkage Insurance and Guinea Insurance.
Investigations revealed that while some of the clients of Mutual Benefits Insurance and Capital Express Assurance have been allegedly defrauded by the firm’s marketers, there abound complaints by shareholders of Linkage and Guinea Insurance that the management of both companies have failed to update them on their liquidity status.
Sources across the sector disclosed that some of the marketers engage in different types of fraudulent activities such as diverting, for personal use, the monthly premium of unsuspecting and ignorant clients.
But The Point’s findings revealed that the marketers are not alone in the perpetration of the fraud. A good number of the cases in question were executed in connivance with their colleagues in the internal control units of the affected companies.
This explains why victims of the fraud always never suspected foul play as they regularly got message alerts of remittance of their payments to the marketers.
Already, some of the cases have been reported to the Nigeria Police; some of the fraudsters have been sent to the Kirikiri Maximum Security Prison in Lagos State; while others are being interrogated by the Economic and Financial Crimes Commission. Findings by our correspondent also show that several other alleged culprits are yet living large in the sector, looking for unsuspected Nigerians to fleece.
Meanwhile, the insuring public and shareholders in the sector have called for the probe of the Managing Directors of Mutual Benefit Insurance, Capital Express Assurance, Linkage Insurance and Guinea Insurance, over the allegations of fraud allegedly committed by their staff, especially the marketers, and lack of corporate governance in the companies.

Uba Group

Employees and ex-staff of the affected institutions confirmed the assertion by top sources in the industry that some clients’ funds were being diverted.
A manager in an electronic store along Allen Avenue, Mr. Bisi Aina, was perturbed and confused when he found that he had been duped by his kinsman, who is a marketer with Mutual Benefit Insurance.
According to him, every month, he made a deposit of N50, 000 for the Individual Savings Protection Plan product through a marketer and he received alert of the transaction. But he said he almost passed out when an old friend, who he later realised works in the company told him that though his name was in the company’s system, no funds were recorded against that name.

The developmenT requires urgenT aTTenTion of regulaTory agencies in The secTor as iT shows signs ThaT The affecTed firms do noT have a grip over Their sTaff

He said, “I subscribed to the policy to prepare for the future and to avoid any unforeseen circumstances. The ongoing economic recession had made several organisations to sack their workers and I had a strong feeling that my employer may do the same.
“So, my plan was to use the fund to cushion the effect of unexpected job loss. At least, my family would not embark on hunger strike while I try to look for another job, if sacked. Now, my heart skips every time my employer calls the office because I may beg to feed my family if I lose my job,” he lamented.
While the poor employee and scores of others are confused on necessary steps to take, either to recover their funds or to confirm whether their funds are in safe hands, some clients that subscribed to the company’s Child Education Plan product are also embattled.
A number of them that spoke with The Point in separate interviews disclosed that their funds were also trapped. But unlike their counterparts, who prefer to let the sleeping dog lie, some of them are ready to engage the insurance companies in a legal battle.
For instance, a trader, Ms. Funso Mogaji, is set to engage a lawyer to petition the company over an alleged N200, 000 monthly premium she deposited with the company through one of its marketers.
She said that after several attempts to meet with the representative of the management of Mutual Benefit had failed, she was heading for the court.
“I am ready to go to court. Though, some people may think the money is small but I am ready to spend N1 million to look for my N200, 000. It is not penny wise pound foolish because we cannot sit down, fold our arms while some fraudsters rip us off,” she said.

The allegations made by some of the companies’ clients that some of the fraud are carried out by the workers was confirmed by several employees of the insurance firms.
A staff of Mutual Benefit Insurance in its Town Planning, Ilupeju branch in Lagos, close to the headquarters of the company, who pleaded anonymity, told The Point that some of his colleagues, who are marketers, had been dismissed while others were prosecuted and jailed.
He disclosed that the company had witnessed such cases from pockets of some greedy marketers in the last one year and the cases had been treated legally while the funds of the clients were refunded.
According to him, one of the recent cases treated was that of one Mr. Ope Adamson, marketer, (in September 2016) who was dismissed, having defrauded the company of clients’ funds worth N4 million.
“The company has not been taking it lightly with members of staff who defraud clients. In most cases, the company settles the client and the staff or the guarantor is made to refund the company. Most of the cases are the fault of the clients because it is clearly stated in the policy documents that all deposits are to be paid to the nearest commercial bank,” he disclosed.
Mutual Benefit is not alone in the fraud allegation saga. There was also a case of a staff of Capital Express Assurance who absconded with clients’ funds worth several millions of naira. While some had been lucky to get their funds a few months later, others that have not followed the matter up, are still in the dark.

Some industry watchers told The Point that the development required urgent attention of regulatory agencies in the sector as it shows sign that the affected firms do not have a grip over their staff. They attributed the menace to negligence on the part of both clients and firms.
They blamed the clients for their inability to make deposits for products in banks despite the fact that the entire process had been digitalised while also expressing the belief that poor remuneration of workers could trigger greed.

i have Tried several ways To know The financial sTaTe of guinea and linkage insurance buT all To no avail. The chairman of guinea was sacked recenTly by The naTional insurance commission. sTaco and linkage have noT released annual resulTs in Two years and no one has boThered To give us informaTion. when we ask all They say is ‘no problem’

“If the firms had not told the marketers to be aggressive by making deposits on behalf of clients, they would not have done that in the first place. Most of them train the marketers to be aggressive in order to stay above competition,” a fellow of the Institute of Chartered Accountants of Nigeria, Mr. Seyi Meyungbo, said.
Similarly, a fellow of the Chartered Institute of Bankers of Nigeria, Mr. Ken Onyenakaiya, urged insurance firms to refrain from the ills that led to the defunct of several Microfinance Banks in 2009, when most of their marketers also absconded with depositors’ money. The former banker advised the institutions to be prudent and be weary of fraudsters that parade themselves as marketing executives while employing staff.

Leaders of shareholders’ groups of Staco, Linkage and Guinea Insurance have called for the probe of the managements of the companies over what they described as lack of corporate governance.
The investors’ move indicates a vote of no confidence in the managements of the companies.
The news came after the companies failed to inform them of the current state of the financials of the firms.
The National President, Constance Shareholders’ Association of Nigeria, Mr. Shehu Mikail, told The Point that he had reservations about the boards of the company as he alleged that they had not held annual general meetings in the last two years.
He said, “I have tried several ways to know the financial state of Guinea and Linkage Insurance but all to no avail. The Chairman of Guinea was sacked recently by the National Insurance Commission. Staco and Linkage have not released annual results in two years and no one has bothered to give us information. When we ask, all they say is ‘no problem.’
“It is alarming that the Securities and Exchange Commission and NAICOM treated this unethical act with less sense of responsibility. This questions the corporate governance integrity of the companies.”