Control of insurance fraud in Nigeria: an exploratory study (case study)

Abstract

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 post-military years. Design/methodology/approach -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 clear-cut sanctions for offenders and mechanism for enforcement. Originality/value -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.

Investigating Policyholders’ Perception Towards Insurance: Evidence From Structural Equation Modeling

“…Conversely, others acknowledge the peace of mind and financial security it offers during emergencies, as highlighted in Insureds' Perception towards Insurance Services (Maltby et al, 2023). Distrust towards insurance companies due to perceived claim avoidance can also be a factor, potentially stemming from past experiences or negative media portrayals (Olalekan & Rasheed, 2009).). Xu et al (2018) further emphasizes that socioeconomic background and cultural attitudes towards risk significantly influence these perceptions.…”

Unprotected Insurance: a Case from Jiwasraya

“…So far, the integration of sophisticated systems is still in the banking sector. Tajudeen & Abdur (2009) [3], who conducted a study in Nigeria, showed that the indecisive attitude of the insurance industry supervisory authority that began with unclear sanctions could lead to economic crime.…”

“…Insurance fraud is a global economic problem that threatens companies and the insurance industry [3]. According to Hayirsever (2020) [4], insurance fraud not only affects insurance companies, policyholders, but also the insurance industry as a whole.…”

Determinants of Financial Stability of Islamic Insurance Companies Listed on Indonesia Financial Services Authority

“…Micro factors that affect the financial stability of companies include corporate governance (Lassoued, 2018), financial performance (Elbadry, 2016;Rashid, Yousaf & Khaleequzzaman, 2017), human resources performance (Djafri, Noordin & Mohammed, 2018;Piaralal et al, 2016), market control (Husin & Rahman, 2016;Rashid, Yousaf & Khaleequzzaman, 2017), audit opinion (Foster & Zurada, 2013) and excellent service (Piaralal et al, 2016). Meanwhile, macro factors that affect financial stability are political stability (Ozili, 2018), government regulations and policies (Kay, 2018;Berkem, 2014), level of corruption (Korbi & Bougatef, 2017;Ozili, 2018), government supervision (Kobayashi, 2017;Yusuf & Babalola, 2009), level of competition (Ozili, 2018) and level of productivity or unemployment (Din, Regupathi & Abu-Bakar, 2017).…”