The House of Representatives on Thursday unveiled plans to conduct a forensic audit of the insurance industry with the view to tackling the endemic corruption in the industry.
The resolution was passed following the adoption of a motion under matter of urgent public importance on the ‘Need to investigate into the breaches, impunity and other infractions of some Federal Government institutions on insurance and actuarial and the need to ensure probity’ sponsored by Hon. Gideon Gwani.
While responding to questions on the motion referred to his Committee, Hon. Darlington Nwokocha reiterated commitment towards sanitising the insurance industry which he noted ought to drive the nation’s economy.
“I’m fully and wholly in support of that motion because to the best of my knowledge I know there are so many breaches and infractions that bothered around insurance industry vis-a-vis the stakeholders either insurance companies, some MDAs, some individuals.
”When I came on board as the chairman of this committee, I tried my best possible to invite all the stakeholders including Nigerian insurance association, NAICOM, insurance companies, National Health insurance scheme (NHIS), Nigerian Insurance Trust Fund, to make sure all of us are on the same page and understand our work plan.
“We see this motion as something to unravel which has called for the forensic audit of all the activities including the impunity, the accounting, financial outlay, we are going to investigate all and will bring necessary recommendations on the consequences of not doing the right thing and considering what the Nigerian economy is facing currently.”
In his lead debate, Hon. Gwani who observed that Section 88 (1 & 2) of the 1999 Constitution (as amended) empowers the House to expose corruption, expressed concern over the level of impunity being perpetrated by public servants in connivance with insurance companies to carry out the fraudulent practices.
“These institutions are currently renewing their insurance with suspected existing breaches which will put Nigeria and Nigerian populace at serious economic and social disadvantage hence Nigeria will lose millions of naira thereby worsening the political and social disequilibrium the nation is currently facing.
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“The House is aware that the low retention capacity of dollar-denominated businesses in Nigeria has a direct influence on low human and financial capacity in the Nigerian Insurance Industry. This has created room for massive cessions and retrocessions of insurance businesses outside Nigeria.
“Consequently, not fully exhausting the capacity of the Nigerian insurance industry by giving all registered Insurance and Reinsurance Companies in Nigeria the right of the first refusal depletes Nigeria’s Foreign Reserve.
“The House is also aware that this practice of domiciling some of the insurance ventures outside the country tremendously promote Money Laundering/Illicit Financial Flows to the tune of several billions of naira in the Insurance sector.
“For instance, International Oil Companies through NAPIMS, Nigeria Satellite Communications Limited on the insurances of NIGCOMSAT 1R are all suspected to be in breach of various laws.
“The House is further aware that several billions of naira are suspected to be paid as premium annually on either non-existent assets or on unverifiable data with unadjusted premium in breach of Section 61 of Insurance Act 2003 by some Federal government institutions, which include but not limited to; Office of the Head of Civil Service of the Federation, National Youth Service Corp, some security agencies in collaboration with insurance companies that do not pay claims.
“The House is worried that the ineffective regulation of foreign placements of insurances has made it impossible for the Nigerian insurance industry to contribute meaningfully to the Gross Domestic Product of Nigeria today, less than 0.5% contribution to the country’s GDP as against 2.8% in the United States of America.
“Nigerians Foreign Reserve is highly depleted due to unchecked huge retrocessions of business because each business placed abroad amounts to importation of service that has direct impact on our foreign reserve; billions of naira are suspected to have been lost by the nation through Insurances of moribund assets, non-existent assets, over-valued assets and high premium rates. Most importantly the poor handling of the Group Life insurance Schemes of these Organisations has bought untold hardship on the families of our fellow countrymen who laid down their lives serving their fatherland because they are not paid the entitlements of their Breadwinners. When paid at all, unallowed deductions are made, thereby shortchanging them.
“The House is concerned that there are huge unsettled life claims in Nigeria due to the fact the premium meant for these payments were suspected to have been squandered by some insurance companies and few individuals and is only forensic auditor will bring this to fore,” he urged.
To this end, the House mandated its Committee on Insurance and Actuarial Matters, to conduct an investigative hearing involving all relevant stakeholder to identify any breaches and ascertain the veracity of the suspected infractions by the aforementioned Institutions.
The Committee is also expected to “engage a forensic auditor to ascertain the level of misapplication of premium”.
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