Control of insurance fraud in Nigeria an exploratory study case study

• Published in: Journal of Financial Crime 2009, Vol.16 (4), p.418-435
• Main Authors: Olalekan Yusuf, Tajudeen, Rasheed Babalola, Abdur
• Format: Report
• Language: English
• Subjects: Fraud; Insurance; Nigeria
• ISSN: 1359-0790
• DOI: 10.1108/13590790910993744

Purpose Insurance fraud as a global economic problem threatens the financial strength of insurers and threatens the survival of the insurance institution. The purpose of this paper is to explore the magnitude of the problem including the industry's and regulatory authority's responses in tackling the menace in Nigeria. The paper is motivated by the recent effort on the part of the Nigerian regulatory authority to strengthen the sector through consolidation. Such renewed vigour on part of Nigeria is geared towards fighting all forms of economic crimes in both public and private sectors in postmilitary years. Designmethodologyapproach The paper reviews the literature on the existing fraud control mechanisms, i.e. insurance contract design and auditing and the perception of fraud by customers in the insurance market. A survey is conducted by interview method to explore the size of the problem and the effectiveness of the approach the industry and its regulator are adopting to control it. Findings The paper's findings suggest a lukewarm or no serious attitude on the part of the regulatory authority and the insurance companies in appreciating the enormity of the problem now and in the future. This stems from lack of clearcut sanctions for offenders and mechanism for enforcement. Originalityvalue The paper reveals the paucity of research of such a topical issue in developing economies and suggests the need for urgent stakeholders' summit that will discuss effects of insurance fraud on the industry with a view to identifying specific roles and responsibilities of each stakeholder group in tackling the problem. This should also be complimented with the establishment of insurance fraud bureau that would promote public awareness campaign on the evil effect of fraud on the economy.