Analysis of the factors responsible for fraudulent claims in motor insurance businesses in Nigeria

Shoyemi, Olatokunbo Sunday, Brito, Mario and Dawson, Ian (2023) Analysis of the factors responsible for fraudulent claims in motor insurance businesses in Nigeria. International Conference on Trade, Business, Economics and Law, University of British Columbia, Vancouver, Canada. 17 - 19 Apr 2023.

Abstract

In the insurance industry, studies have consistently confirmed the existence of fraud claims by policyholders. This has created a serious concern to the global insurance market and has become of focal topic for fraud researchers. For example, the net premium income of the Nigerian motor insurers has been significantly reduced due to this issue. This study was conducted in order to analyse the perceived antecedents of fraudulent claims in motor insurance business in Nigeria. A survey of representative selection of experienced employees (N=167) of motor insurers in Nigeria was used to gather the data for analysis. The study found that (i) the frequency of occurrence of perceived internal fraud, perceived external fraud, and perceived connivance fraud is practically on the same level in Nigeria insurance market, (ii) perceived antecedents of motor insurance fraud are capable of influencing the perceived motor insurance fraud types (i.e., internal fraud, external fraud, and connivance fraud); and finally, (iv) internal fraud controls are not currently effective/capable of moderating the relationship between the perceived antecedents of motor insurance frauds and perceived motor insurance fraud types in Nigeria. In light of these findings, it is recommended that (i) employees of insurance companies in Nigeria should be duly rewarded and fairly treated in line with the international best practices in order to reduce the frequency of occurrence of the fraud types; (ii) to make internal fraud controls effective/efficient, the heads of internal fraud control units should be truly independent in carrying out their job functions (i.e., report directly to the board of directors of insurance companies rather than as usually be the case, being checked by management staff); and (iii) to deter the occurrence of internal fraud, the latter recommendation should be strictly monitored with applicable sanctions by the national insurance commission of Nigeria (NAICOM).

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Contributors

Author: Mario Brito

Author: Ian Dawson

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