-Advertisement-

-Advertisement-

About 25% of insurance claims are fraudulent – NIC

Twenty-five percent (25%) of all insurance claims made in the country are fraudulent, inflated, and staged by insured persons, says Commissioner of the National Insurance Commission (NIC), Dr Justice Yaw Ofori.

“I don’t have the exact figure, but I can say that in Ghana we should have about 25 percent of claims being fraudulent, staged and inflated, to the point that even sometimes insured persons stage their death to make a life claim,” Dr Ofori stated.

Adding that, fraudulent claims add to the high cost of premiums charged to insured persons in Ghana and globally.

“So far as there are leakages (fraudulent claims) it results in high premium payments for consumers worldwide,” he added.

Globally, fraudulent claims account for 40% of all insurance claims made.

Dr Justice Ofori in an interview said, investigations into claims by insured persons need to be carried out by insurance companies to ascertain the legitimacy of claims made.

“It’s the responsibility of insurance companies to do due diligence before embarking on claims payment, investigations into claims are important to weed out fraudulent claims,” he noted.

Speaking further, Dr Ofori averred the Commission is looking to set up a digital platform to monitor and track processed claims by all insurance companies in the country.

“We are looking to build a digital base which is going to be a hub on which all the insurance companies in the country will have to process their claims and once we have that information we can track down people who are high risk, involved in fraudulent claims and all that. Because for now we don’t have the software to do that and so it’s very difficult to track persons that make fraudulent claims,” he said.

He, however, quickly added that the Commission is likely to have such a software or digital base in place by the end of this year, on the back of a grant approved for the creation of the database by the World Bank.

Also touching on the GH₵ 50 million minimum capital requirements for insurance firms, Dr Ofori posited that insurance firms in the country are working towards attaining the set minimum capital requirement, stating that most of the firms have presented to the NIC their work plan on achieving the capital requirement.

“We are still encouraging the insurance firms to meet the minimum capital requirement by the end of this year. Most of the insurance companies have brought their work plan on how they are going to achieve the GH₵ 50 million.

So, it’s in progress and by the end of the third quarter we will have a clear picture of those who can meet it and those who can’t. But most of the firms are doing all they can to meet the requirement,” he intimated.

READ ALSO: Fitting Shops, Commercial Buildings Must Be Insured – Insurance Commissioner

Previously, insurance companies in the country were to recapitalise with a minimum of GH₵ 50 million by June 30, 2021.

Reinsurance companies and Insurance Broking companies were also to recapitalise with at least GH₵ 125 million and GH₵ 500,000 respectively, while that of Reinsurance Broking companies was maintained at GH₵ 1 million.

The new MCR according to the NIC is to strengthen the balance sheets of regulated insurance entities, thereby enhancing their underwriting capacity and make resources available for investment in essential technology.

The move is also to improve the development and distribution of appropriate products to increase insurance penetration while strengthening the regulatory framework.

It is to also improve the implementation of risk based supervision and solvency requirements, strengthening risk management and corporate governance structures and practices including claims payment culture within the industry.

Currently, there are about 142 regulated insurance entities comprising 24 life insurance companies, 29 non-life insurance companies, three reinsurance companies and 85 insurance brokers and loss adjusters with more than GH₵ 6 billion in total assets.

You might also like
Leave A Reply

Your email address will not be published.