The House of Representatives on Wednesday charged its Committee on Insurance and Actuarial Matters to conduct a forensic investigation into over N30 billion in unsettled insurance claims tied to the Nigeria Police Force, the Head of Service, and the Ministry of Defence.
The House noted that the unsettled claims were a result of failures in actuarial valuation, gap analysis, and non-compliance with Section 57 of the Insurance Act, 2023, and Section 4, Subsection 5 of the Pension Reform Act, 2014, among others.
The resolution of the House was a sequel to the adoption of a motion titled, “Breaches and Other Infractions of some Federal Government Institutions on Insurance and Actuarial Matters using Forensic Auditors” moved by the member representing Gummi/Bukkuyum Federal Constituency of Zamfara State, Mr Sulaiman Gumi.
Speaking in favour of the motion, Gumi noted that while conventional insurance is struggling with outdated insurance laws, there is a dearth of professional loss adjusters and irregular payment of loss adjusters fees, non-remittance of premiums, especially to reinsurers, lack of innovation and inconsistent government policies within the insurance industry.
He also identified the failure to collaborate effectively with the Central Bank of Nigeria and the Assets Management Company of Nigeria to secure financial stability in the Nigerian economy and the cumbersome process of failure resolution and reimbursement of depositors, as some of the challenges facing the industry.
He said, “The House is concerned that non-transparency and lack of accountability in insurance practice in Nigeria today have resulted in over N30bn unsettled claims in the group life insurances of the Nigeria Police Force, Head of Service (for Federal Civil Servants), and Ministry of Defence (for the Nigerian Armed Forces) because of no actuarial valuation, no gap analysis, and non-compliance with 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 added the effect of this development “has led millions of families of the deceased Federal Government’s personnel that are the beneficiaries suffering because they were not paid the entitlement of their breadwinners.”
He stated, “When paid, in some cases, unallowed deductions are made, thereby shortchanging them.”
“The House is worried that the Committee on Insurance and Actuarial Matters letters to the Ministries, Department and Agencies like the Nigerian Ports Authority, the Nigerian National Petroleum Company Limited, National Emergency Management for either document to enable them oversight or appear before the Committee to address these issues are being treated with ignominy.”
The Zamfara lawmaker further claimed that there are huge unsettled life claims in Nigeria “because the premiums meant for payment were suspected to have been squandered by some insurance companies and a few individuals, and it is only a forensic auditor that will unravel this.”
The motion was unanimously supported by lawmakers presented at Wednesday’s plenary and was thereafter referred to the Committee on Insurance and Actuarial Matters to report back to the House within four weeks for further legislative action.