Reps Probe N30bn Unsettled Insurance Claims

The House of Representatives has directed its Committee on Insurance and Actuarial Matters to conduct a forensic investigation into over ₦30 billion in unsettled group life insurance claims affecting the Nigeria Police Force,the Head of Service, and the Ministry of Defence.

The House raised concerns over unsettled claims attributed to the lack of actuarial valuations, gap analyses, and non-compliance with key legal provisions, including Section 57 of the Insurance Act, 2023, and Section 4(5) of the Pension Reform Act, 2014, among others.

The resolution of the House was sequel to the adoption of a motion titled “Breaches and Other Infractions by Some Federal Government Institutions on Insurance and Actuarial Matters Using Forensic Auditors,” moved by Hon. Sulaiman Gumi, representing Gummi/Bukkuyum Federal Constituency of Zamfara State.

Speaking in support of the motion,Gumi highlighted several challenges plaguing the insurance industry. He noted that conventional insurance is hampered by outdated laws, a shortage of professional loss adjusters, irregular payment of loss adjusters’ fees, and the non-remittance of premiums, particularly to reinsurers.

According to him,lack of innovation, inconsistent government policies, and insufficient cooperation within the industry.

These issues,compounded by poor governance and weak regulatory oversight stemming from obsolete laws, have contributed significantly to the collapse of many financial institutions, especially microfinance banks,Gumi observed.

He emphasized the industry’s challenges, including the lack of effective collaboration with the Central Bank of Nigeria (CBN) and the Asset Management Corporation of Nigeria (AMCON) to ensure financial stability in the Nigerian economy.

He said the cumbersome processes involved in resolving institutional failures and reimbursing depositors, which further complicate the sector’s growth.

He said: “The House is deeply concerned about the lack of transparency and accountability in Nigeria’s insurance practices. This has led to over ₦30 billion in unsettled claims for group life insurance policies covering the Nigeria Police Force, the Office of the Head of the Civil Service (for federal civil servants), and the Ministry of Defence (for the Nigerian Armed Forces). These unresolved claims can be attributed to the absence of actuarial valuations, failure to conduct gap analyses, and non-compliance with key legislative provisions, including Section 57 of the Insurance Act, 2023, and Section 4, Subsection 5 of the Pension Reform Act, 2014, among other factors.”

“We are aware that over $1bn that should have been retained in Nigeria if all insurance practitioners are given the option of the right of first refusal (insurance being more about risk bearing and sharing) is being taken abroad, which affects the nation’s economy, thereby always weakening our insurance sector and depleting our foreign reserve.

“These breaches and infractions have given rise to excessive cession and retrocession of businesses in breach of the Local Content Act to the extent that 90 per cent of the risks of some Federal Government organisations are placed outside the country.”

He noted that this development has causes untold hardship for millions of families of deceased Federal Government personnel, who are the rightful beneficiaries. “These families have been left to suffer because they have not received the entitlements of their breadwinners,” he said.

He added: “In instances where payments are made, unauthorized deductions are often imposed, thereby shortchanging the beneficiaries.”

He expressed concern that letters from the House Committee on Insurance and Actuarial Matters to Ministries, Departments, and Agencies (MDAs), including the Nigerian Ports Authority, the Nigerian National Petroleum Company Limited, and the National Emergency Management Agency, requesting relevant documents or inviting them to address these issues, are being treated with disregard.