The House of Representatives has uncovered alleged “fraudulent practices” perpetrated by insurance firms in connivance with Ministries, Departments and Agencies to defraud the Federal Government of billions of naira annually in insurance premiums.
An ad hoc committee of the House cited some of the practices on Monday as it grilled the chief executive officers of some insurance firms.
The committee, which is chaired by Mr. Adekunle Akinlade, observed that a practice common with most insurance firms was to receive premiums in excess of the amount due to them from the MDAs.
Lawmakers suspected that the overpayment of premiums might be a deliberate act by heads of MDAs, who would later retrieve the funds and convert them to private use.
Akinlade stated in his opening remarks as the probe got underway in Abuja, “It is noteworthy to state here that this ad hoc committee has no intention to go on a witch-hunt of any individual, group of persons or organisation but rather carry out its mandate within the ambit of the law, which is to establish that monies were paid to civil servants.
“Although, we have identified very alarming infractions running into billions of naira, they will not be made public at this point in time as we are still consulting with the relevant law enforcement agencies and financial institutions to ascertain the level of complicity of those involved.”
The first CEO grilled by the committee was the Managing Director of Standard Alliance Insurance, Mr. Bode Akinboye.
The committee pointed out several “infractions” in covers the firm signed with the MDAs.
In one instance, the firm invoiced N625,000 as gross premium on a vehicle worth N12.5m. It was insured by a Federal Medical Centre.
However, N900,000 was the eventual sum paid as premium, with a difference of N275,000.
Besides, the committee said the firm entered multiple covers but used a single policy number for all of them.
The committee noted, “The premium received is higher than the gross premium invoiced. Standard Alliance therefore claims to have received an amount in excess of their entitlements to the tune of N275,000 as contained in this report.”
In another instance in the Ministry of Works, the firm was paid N900,000 as against the N150,075 premium due to it, with a difference of N749,000.
The insured sum was N30m.
However, Akinboye argued with the committee members, saying that his firm applied the standard practice in insurance business.
He stated that policies involved other costs that could be added later to the premiums.
“There are payments for other classes of business,” he added.
But, there was drama when Akinboye could not defend the N128,666 invoiced as premium for an insured sum of “1, 580.”
The insured sum was also recorded in asterisk and neither the committee, nor the MD could establish whether it was in dollars or naira.
But, it was clear to both sides that the N128,666 premium was higher than the insured amount.
Akinlade asked, “How can the premium be higher than the sum insured? This is in respect of the Presidential Fleet. Was the 1,580 in dollars or naira? It is smaller than the premium of N128,666.”
Akinboye later said that it was in dollars.
“This must be a typographical error. The sum insured is in dollars, but definitely not 1,580,” he told the committee.
Another firm, Regency Alliance Insurance Plc, had similar issues of differences in invoiced premiums and the real premiums paid by MDAs.
The firm was represented by the Executive Director, Business Development, Mr. Sammy Olaniyi, and the ED, Operations, Mr. Akin Adelakun.
Read more at http://punchng.com/reps-accuse-mdas-insurance-firms-defrauding-fg/