Friday, August 14, 2020

How Nigerian government loses N6bn annually over fake cargo insurance

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More than 300,000 of the cargoes imported through the nation’s airports and seaports yearly have no genuine insurance papers, Guardian reported

Being an import-dependent economy, the country gained about N112 billion between 2010 and 2016 from insuring over 700, 000 out of the 1.1 million imported cargoes on a yearly basis.

If the sector could realise the revenue from the 300,000 cargoes, it would boost activities in the industry and contribute immensely to the nation’s Gross Domestic Product (GDP).

Though, there is no fixed premium for marine cargo insurance, as the price is determined by some factors, mainly the worth of the goods in a cargo, there are signs that the least valued cargo is worth N10 million, while an insurer demands 0.2 per cent of the N10 million, translating to N20, 000 per policy. Hence, the country gets at least N16 billion every year aside from the over N6 billion the insurance industry is losing to fake cargo insurance racketeers yearly.

Some cargoes are worth N100 million or more, translating to N200, 000 per policy, hence the insurance industry could have made more than the estimated N16 billion per annum.And with the naira devaluation, coupled with the plan of the insurance industry to rid the ports of fake insurers, as well as the Federal Government’s ban on the importation of vehicles through the land borders which will make vehicle importers to use the ports the more, the country could exceed the estimated N16 billion yearly premium it is getting from marine cargo insurance.

An investigation shows that the fake insurers do issue fake marine certificates to customers at major centres where shipping activities are carried out, especially in Apapa and its environs in Lagos State. It was further revealed that one can get an Institute Cargo Clauses (ICC) “C” marine insurance cover, which is the minimum marine cover, for N2,500 notwithstanding the insurance value.

It was learnt that most of these fake certificates bear the names and logos of registered insurance companies, even though these insurers know nothing about these dirty deals. Others use fake names to deceive the unsuspecting public, as the policies are being sold at a cheap price.

The Guardian learnt that cargo insurance is classified into three categories: ICC ‘A’ which has the most risk covered, with ICC ‘B’ and ICC ‘C’ having less insurance coverage. An importer is expected to choose which one best suits him or her.

Giving reasons for fake insurance at the Nigerian ports, the Commissioner for Insurance, Alhaji Mohammed Kari, said “most of the insurance papers that are used to cover imports into Nigeria are expected to be insured by Nigerian insurance operators, but unfortunately the Customs Service doesn’t have the facility to identify fake insurance.

“So what they do is that, once they cannot confirm if the insurance is fake or where there is no insurance, they just add the value of insurance to calculate the CIF, but they don’t pursue the insurance aspect which is a big loss to the sector and the Nigerian economy.”

To address this anomaly, the National Insurance Commission (NAICOM) had earlier collaborated with the Nigerian Customs Service (NCS) to ensure that all goods imported into Nigeria have genuine insurance.

The Comptroller-General of Customs, Col. Hameed Ibrahim Ali (rtd), at a meeting on the joint effort said it would include NAICOM building technical capacity for the customs to be able to detect fake insurance at the seaports and others. “The commissioner has graciously agreed to give us his team of experts who will train us on insurance. This is novel and we are sincerely grateful,” he said.

The Deputy Commissioner (Technical) of NAICOM, Sunday Thomas, told The Guardian the operators had collaborated with the Nigerian Insurance Association (NIA) and NAICOM to address the issue of fake insurance papers at the airports and seaports.

The Head, Corporate Affairs and Human Resource of NIA, Davis Iyasere, said the association had expanded its Nigerian Insurance Industry Database (NIID) to capture marine insurance in a move to end fakery.

According to him, the association, through the NIID, has captured 50,000 cargoes on its database and the exercise is still ongoing. When concluded, he said, the NIID, which is an electronic system that identifies original insurance certificates, would help the customs to verify authenticity and subsequently clamp down on those parading fake papers.

According to Iyasere, the NIID is an information technology-based system that facilitates easy collation and dissemination of statistical and other information relating to insurance while helping to check presentation of fake documents.Marine cargo insurance covers, among others, the risks of loss and damage to goods during their transportation from one place to another.

  




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