Has Industrial and General Insurance Plc become a Ponzi scheme?

Is Nigeria’s insurance industry now a glorified Ponzi scheme? This is the question concentrating the minds of investors right now. It has concentrated mine since August last year.

The reason is simple. When an insurance company defaults in paying the claims of clients at the maturity of a policy, it is not better than a Ponzi scheme, an unconscionable pyramid investment that lures investors solely to defraud them.

An insurance firm that conjures all manner of policies to entice clients without intention of meeting obligations is a pyramid investment. Simple!

And that is what Industrial and General Insurance Plc. (IGI) has become and I will not let it get away with the fraud.

Luckily, President Muhammadu Buhari is in sync with Nigerians on this issue.

Speaking in Abuja on October 14, 2021 during his conferment with the grand patron of the Chartered Insurance Institute of Nigeria (CIIN), Buhari had a simple advice for his guests: honour the claims of your clients in good time.

He implored insurers to increase the number of Nigerians and businesses that would benefit from and be benefited by insurance.

“As you are well aware, you need to dispel misconceptions about the insurance industry presently held by a good number of Nigerians, especially as it relates to claims and need for insurance,” Buhari said.

‘‘The insurance industry as a whole must improve its efficiency and honour claims in good time.”

Truth be told, they are not, which explains why the industry is grossly underperforming. Elsewhere, insurance protects people from risks. In Nigeria, it exacerbates risks for people.

In other climes, the insurance sector plays a great role in increasing Gross Domestic Product (GDP) because insurance premiums impact positively on economic development. The reverse is the case here.

That brings me to another fundamental question: who regulates the insurance industry? This question may sound jejune and insubstantial. But is it? It is a fundamental question and I will explain why.

The National Insurance Commission (NAICOM), established in 1997 by the National Insurance Commission Act, is responsible for ensuring effective administration, supervision, regulation and control of insurance business in Nigeria, and protection of insurance policyholders, beneficiaries and third parties.

But to what extent has the regulator performed its duties particularly the protection of insurance policyholders, beneficiaries and third parties? How many clients of insurance companies get their claims promptly? Of what use are insurance companies if they cannot meet their obligations at the maturity of a policy?

Perhaps, NAICOM does not know. But the truth is that insurance business in Nigeria has become a glorified Ponzi scheme, an investment swindle, literally.

Yet Nigerians have no one to complain to.

That is exactly my situation with Industrial and General Insurance Plc. whose head office is at Plot 741 Adeola Hopewell Street, Victoria Island, Lagos.

Nine years ago, I took its life assurance policy called ‘Dividends Plus Plan’ which commenced on August 1, 2012 with a maturity date of August 1, 2021.

With a sum assured of N5 million, the policy was a strategic investment. And starting from the first premium date of August 1, 2012, I religiously paid N46,755 as premium every month for 108 months until the last premium date of July 31, 2021.

Every year I faithfully paid N561,060 to Industrial and General Insurance Plc. and when I paid the last premium, my cumulative payment was N5,049,540. Most times, it was difficult to raise the money to pay the premium. It wasn’t an easy undertaking. As the economy tanked and money became harder to come by, I borrowed most times to meet my premium obligation.

If I had died before the maturity of the policy, Industrial and General Insurance Plc. was supposed to pay my next-of-kin the sum assured even if I had only paid premium for one month. That would be their loss.

To minimise that risk, they subjected me to comprehensive medical examination before the contract was signed even though they marketed me for the policy.

But if I lived till the maturity of the policy, I would be paid a little above N7 million, in which case I must have earned a little profit since they invested my money.

I didn’t die. IGI didn’t incur any loss. But it has refused to pay my claims since August last year.

What is worse, there is no clarity as to when the claim will be settled. If this is happening when I am alive, imagine what would have happened if I had died and my next-of-kin had to make the claims.

As President Buhari pointed out, this lack of fidelity is the reason why many people shun an industry that is a goldmine elsewhere.

And why won’t my money be paid? I am being given all manner of spurious excuses. I have been told, unofficially, that Industrial and General Insurance Plc. is broke and can no longer meet its obligations. Yet it is still collecting premium from Nigerians every day.

Is NAICOM aware that IGI no longer has money to settle the claims of its clients? If it is not, what then is its responsibility as insurance industry regulator? But if it is aware, what is it doing to protect people from this hollow pyramid called insurance company?

I am informed that IGI has a financial controller who plays god with other people’s investments. He whimsically decides which claims to settle and which ones not to settle immediately at maturity. It has got so bad that if you want your claims settled at the maturity of your policy, you have to show up and do the needful.

But the most ridiculous excuse I am given is that the amount involved in my claim is rather too big for Industrial and General Insurance Plc. to settle at once and it would, therefore, rather pay lesser claims.

Really?

If an insurer is panting over a N7 million claim, is it really in business? In any case, when did IGI realise that a N5 million sum assured policy is way too high for it? And why did it collect premium from me for 108 months?

In December 2021, I went to the head office to see Dr Remi Oluoma, the Head of Group Life & Annuity, a job he has done for over 16 years since 2005. He knows where all the Industrial and General Insurance Plc. bodies are buried.

There was no clarity from him on the issue. Instead, he promised the payment would be staggered starting from the first quarter of 2022. The first quarter is gradually coming to an end and there is no word from IGI.

Of course, my money will be paid. I have no doubt about that. But as Buhari pointed out, settling claims promptly is also important. Insurance policy such as the one I took with Industrial and General Insurance Plc. is an investment. People invest to meet obligations in the future.

When I took the policy, I knew it would mature in 2021, the year my daughter would graduate from secondary school and go to university. It was a strategic investment.

She has passed out of secondary school with a very good result – Data Processing A1, Civic Education A1, Biology A1, Chemistry A1, Computer Studies A1, English Language B3, Economics B3, Mathematics B3 and Physics B3. My insurance policy has matured. Yet I can’t send her to university to read the course of her choice because Industrial and General Insurance Plc. is sitting on my claims, even as it has my N5 million premium in its kitty. That is unconscionable.

It is a tragedy that nobody protects Nigerians from the evil schemes of sundry financial institutions fleecing them of their hard earned money. This must stop. Industrial and General Insurance Plc. may well decide to play the Ponzi game believing that this is Nigeria, a country of anything goes. But the sooner it settles my claims, the better for it. I hope NAICOM is listening.