The economy lost an estimated GH¢325million in 2018 to fraudsters and fake insurance operatives, with the figure said to be rising.
The National Insurance Commission (NIC), which is currently implementing the Motor Insurance Database (MID) system as part of efforts to crack down on the menace of fake motor insurance, disclosed this to the media in Accra following the arrest of workers at Heritage Energy Insurance Company Limited for dealing in fake insurance stickers.
“The losses are expected to keep rising as the years go by; hence introduction of the MID to nip this phenomenon in the bud,” said Mr. Oliver Bio, Senior Manager-Legal at NIC.
The arrests were made by personnel from the Airport Police station and Special Investigative Unit of the National Insurance Commission (NIC) on a tip-off. The case is currently being investigated by the Airport Police.
The workers who are currently in the Airport Police’s grips were picked up at the company’s headquarters at Abelenkpe, a suburb of Accra.
The development comes despite introduction of the MID system, which enables law enforcement bodies to electronically check the validity of motor insurance stickers.
MID replaces the old system of issuing manual motor insurance stickers upon renewal or purchase of new motor insurance policies, and makes it easier to detect fake motor insurance.
However, despite its introduction, certain unscrupulous entities and individuals including some regulated insurance companies have not relented in their fraudulent ways of perpetrating this crime to the detriment of unsuspecting members of the insuring public.
According to the NIC, the sector’s regulator, Heritage Energy Insurance as of the last quarter of 2019 was not in good standing on its books; and hence does not have the license to issue new motor insurance.
“It is instructive to note that the regulator in the last quarter of 2019 published the names of regulated insurance entities in good standing; and one of the companies not on the list is Heritage Energy Insurance Company Limited,” Mr. Bio said.
He explained that Heritage Energy Insurance has been placed under an enforcement action with a condition not to sell new businesses to the general public.
“Heritage Energy Insurance’s continued sale of new insurance businesses to the general public is in violation of the Regulator’s directive.”
Per NIC regulations, only licenced insurance entities in good standing as at September 2019 – as they appear on the list – can do business with the general public.
Caution to insuring public
Mr. Oliver Bio used the opportunity to advise the public to desist from dealing with Heritage Energy Insurance Company Limited until further advice from the regulator.
“In your own interests and in the interests of innocent third parties, all those who have purchased various insurance policies from Heritage Energy Insurance from January 2020 should stand notice that their insurances are invalid; and therefore they may be prosecuted if found by the appropriate law enforcement agencies.
“Heritage Insurance does not have the mandate to transact new businesses with the public since they have not even been set up on the NIC’s MID, as a result of the enforcement action placed on them by the Regulator,” Mr. Bio admonished.
Asked if there had been other arrests so far following implementation of the MID, Mr. Bio responded in the affirmative – noting that the Commission had earlier caused the arrest of some perpetrators for illegally issuing motor insurance stickers in the Ashanti Region, with the culprits still being investigated.
He also cited the arrest of a female insurance agent who sells motor insurance for Loyalty Insurance, but was caught issuing fake insurance stickers belonging to Prime Insurance Company Limited to members of the general public at the premises of the Kumasi DVLA office.
In a similar fashion, two Agents of Millennium Insurance Company Limited had been arrested for possessing fake Allianz Insurance sticker booklets – also at the same Kumasi DVLA office premises.
These cases, according to Mr. Bio, are under investigation by the police service.
NIC Motor Insurance Database
Implementation of the MID policy began on January 1, 2020 with the objective of curbing the menace of unscrupulous persons issuing fake motor insurance to unsuspecting members of the general public, therefore endangering lives and property.
Unfortunately, reality only dawns on motorists with fake motor insurance when they are involved in accidents, and innocent third-party victims of such accidents are not compensated due to the criminal activities of these unscrupulous persons.
The last resort of such accident victims remains accessing the NIC’s Motor Compensation Fund, which is often inadequate as the activities of these miscreants are fast-depleting it.