There are lots of fraudulent practices in the insurance brokerage business The Republic investigation has revealed.
According to our investigation, a good number of insurance brokerage firms collect money – premium in trust for insurance companies, such monies which under normal circumstances on behalf of which they are collected are diverted into banks accounts as call money.
Investigation also revealed that such money paid into fixed deposits where they yielded huge amounts of interest.
Top officials of insurance companies who pleaded anonymity said that brokers are not allowed to hold premium collected on behalf of insurance companies beyond 30 days. The 30 days minimum period for returns of such money is provided by the insurance act of 1976.
According to the act, brokers are to submit whatever money they collect on behalf of insurance companies within a period of 30 days. This provision according to investigation is being flouted by insurance brokers with reckless abandon.
The brokers apart from submitting what they collect to insurance companies late most of the time end up not remitting their collection of insurance companies.
According to a top official of one of the insurance companies considering the judiciary position of insurance brokers there ought to be a law requiring them to keep a prepared audited account.
According to him, auditors of such account in their reports should have examined the account and satisfy that the broker has paid over all they have collected on behalf of insurance companies especially those in rural areas where most insurance companies have no branches.
Regrettably, there is no provision in the insurance act to that effect and brokers have exploited the loophole to defraud insurance companies of quite substantial amount
Investigation reveals that a particular insurance company has about N14,000,000 outstanding with brokers which they have not paid up to them with one broker owing as much as N300,000.
Investigation further reveals that most insurance reveals that most insurance brokerage firms are either wholly or partial owned by top insurance companies executive who use the means to enrich themselves.
Apart from the financial gains, top executives of insurance companies use their positions to suppress any true investigation by insurance company into the activities of insurance brokers who perpetuate such malpractices.
According to the 1976 insurance act, the ministry of finance was empowered to investigate the activities of insurance companies and the position of their accounts unfortunately since the act come into being and such investigation has been carried out, such investigation would have exposed the nefarious activities of brokers.
Officials of the insurance department of the federal ministry of finance said they could not comment on the issue s they are not authorised to speak to the press. The minister and permanent secretary were said to be busy with the budget to be seen.
An executive of one of the insurance company suggested that the insured should be made to pay directly to insurance companies while brokers pick up their commission directly from the insurance companies.