The Insurance Supervision Commission (ICC), which is part of the Ministry of Economy and Trade, has barred some brokers from selling automobile insurance policies.
The ICC justified its decision by citing cases of false motor policies which it had found in inspection tours conducted in all regions of the country since the beginning of the year, reported L’Orient-Le Jour, citing an anonymous source at the commission.
“These are mainly brokers which offer fake insurance contracts at lower prices than those set by law. The customers were generally aware that the policies were fake,” the source said.
However, details as to the number of brokers affected by the ICC decision, their identity, or the fraud detected, were not provided.
The ICC urged insureds to exercise vigilance, urging them to systematically ask brokers for a copy of their contract for their own retention as well as a copy to be handed mechanical inspection centre where the vehicles are registered or by checking with the commission whether the broker is an approved entity.
“We also advise clients to inquire with the insurer which is issuing the insurance policy that the broker is selling to them before signing the contract,” the source said.
In one case, a broker in Dekwana had been selling fake motor insurance contracts for months. The fraud was discovered through the seizure of a forged policy. It was found that the company had been selling insurance policies such that every three policies carried the same serial number.
The company profited from the proceeds of the fake insurance policies. In addition, it evaded taxes. The company paid tax on one third of the policies it sold, while two thirds were not taxed because the Ministry of Finance did not know about them.
For example, if the company sold 300 compulsory auto insurance policies on cars, with every three policies bearing the same number, it would return to the Ministry of Finance a receipt for one third of these policies. Therefore, tax would be paid for the policies covered by the receipts, ie, only 100 policies.
The third way the company gained was by evading regulations of the Ministry of Economy. Insurers are obliged by the Ministry to maintain a financial reserve of 30%. As the company sold one authentic policy and two counterfeit policies, it maintained reserves covering one third of the policies it sold. M