Insurance Companies abusing Taxpayers’ money |15 February 2018
There are so many insurance scams going on in Seychelles that Seychelles Civil Society (SCS) has submitted a proposal to
President Faure to create an Insurance Ombudsman which will share the facilities of the current Ombudsman, thus making some savings in time and resources. Right now insurance companies are abusing taxpayers’ money by using the Police to do their dirty work for free and they turn a profit for their shareholders. Insurance companies have in the past relied on the Police to extract confessions of liabilities, whose fault it was, from motorists involved in motor accidents andto apportion blame for the accident when this is not what the Police are trained to do and are paid to do. The Police’s time is wasted going out to measure the road and take statements whenever a car bumps into another when the Police should be taking care of the rising crime rate which affects our community as a whole. Furthermore the Police is not a court of law and should not be used as such because the Police’s mandate is to investigate, arrest and detain not be the judge and jury but this has been the way things have been done thus far in Seychelles and it cannot continue. Our country is going through a period of change and the days of a free lunch areover.
In other countries when there is a motor accident the drivers merely exchange insurance details, name and address of each other, they report the accident to their insurance company and if they wish they make a rough sketch of the location of the accident and the only time the Police is called out is when there is personal injury or another party’s property has been damaged as a result of the accident. Insurance companies in other countries operate a “knock-for-knock” system whereby each insurance company meets the cost of their client’s repair instead of all the high cost of finding who was to blame for the accident and charging each other which in the end it works out cheaper to just pay for the repair of their respective client’s damage whether it is a Third Party or Comprehensive cover. We have yet to learn how to do this in Seychelles and it is time for us to move forward. The Police should refuse to go out to motor accidents scene from now on unless there is personal injury or damage to other people’s property and the insurance companies in Seychelles must find ways to deal with settling accident claim the way it is done in other countries and stop abusing Taxpayers’ resources. If insurance companies wish to apportion blame then they should take the matter to the Magistrates Courts and let a Magistrate decide. The Police is not paid by the Taxpayers to do private jobs for the insurance companies. This holiday must come to
an end.
Meeting with the Commissioner of Police
Just to clarify my argument I met briefly with the new Commissioner of Police, Mr Labonte, who is a qualified lawyer in his own right and he told me that he has already put in his report to Government that the Police should not be called out to the scene of every motor accident unless there is personal injury or damage has been caused to someone else’s property, such as a fence or a wall, as a result of the accident. He suggested leaflets could be given out by Licensing to make sure every driver receives the information. Commissioner Labontesaid he is aware that in other countries the Police is not called out to every motor accident because it is not necessary and here in Seychelles he agreed with me that the insurance companies have wasted the Police’s time when the insurance companies should be employing their own investigators and leave the Police to take care of crimes. If the insurance companies need to extract liability from any driver then they should use the court system to do so but here in Seychelles they prefer to use the Police because it is a free service paid for by the Taxpayers. I must confess that I found the new Compol to be a breath of fresh air, a very positive man and a very well educated man and no doubt this new broom is going to sweep clean every nook and every cranny and leave no stone unturned, which is well overdue in Seychelles in relation to the use or waste of Police time.
The Motor Vehicle Insurance (Third Party Risks) Act June 2012
To further establish my facts I obtained a copy of the Motor Vehicle Insurance (Third Party Risks) Act of June 2012. This Act has got to be the worst Act ever written, it is full of ambiguities, bad grammar, poor English and typing errors as to be unbelievable. Who dared to publish such a poor document? To think we employ so many people in the Judiciary and at the Attorney General’s Office that by now someone would have rewritten this Act properly. Notwithstanding this Act does not make it mandatory for the Police to attend to every motor vehicle accident nor does it lay at the Police’s door the responsibility to act as a court of law and extract liabilities from the drivers. Can you really imagine any Seychellois accepting liability and saying“sorry it was my fault”? I doubt it very much because accepting blame does not come easy in our culture.
The Act clearly puts the onus on the insurance company to sort out who was to blame and in the event that the insurance company fails to do so then the matter goes to the Magistrates Court paid for by the insurance company. In this Act there is no onus placed on any of the drivers involved in an accident to resolve the disputesamongst themselves or take each other to the Police. Car owners pay good money to the insurance companies as premiums therefore the onus is on the insurance companies to sort out the repair of their vehicles when an accident occurs like in other countries. The premium should be used by the insurance companies to take the matter to court if there is a disagreement or the knock-for-knock system comes is introduced.
Insurance companies set brother against brother in acrimonious disputes and arguments and bad feelings when all the time the responsibility to establish who was to blame and meet the repair lies with the insurance companies and it is up to them to employ investigators, lawyers or the courts to apportion blame and not abuse the Police public service.
The role of the Financial Services Authority (FSA)
One of the insurance companies pointed me towards the Financial Services Authority of Seychelles (FSA) which is the regulator for non-bank financial services in the Seychelles. Established under the Financial Services Authority Act, 2013, the Authority is responsible for the licensing, supervision and development of the non-bank financial services industry of the Seychelles. I had a meeting with FSA to clarify the matter. In my mind FSA should be able to tell us why they allow insurance companies to abuse Taxpayers’ resources because they are supposed to control the insurance companies. Lack of Control by FSA means any misdemeanour the insurance companies commit, the same crime is committed by FSA.
Other insurance scams
One very common scam is when an insured has an accident and the insurance company’s assessor comes to assess the damage, the assessor asks the vehicle owner for a fee when the assessor is being paid by the insurance company. The assessor pretends he will give the policyholder’s wreck a higher value so the policy holder benefits. Alternatively and sometimes concurrently the assessor values the wreck at a low price then he tells his buddy about it and his buddy goes to the auction or tenders for the wreck below market value and when the wreck is repaired and sold they share the profit. By far the biggest scam is perpetrated by the insurance companies themselves who value your vehicle at say RS 2,000.00 and you pay a premium based on RS 2,000.00 but when you have an accident and your vehicle is written off they pay you say only RS 1,750.00 and they call the difference depreciation. My argument is if the vehicle was valued at RS 2,000.00 when the premium was calculated and the premium is for one year then for the whole of that year the vehicle’s value should remain at RS 2,000.00 and depreciation can only be applied next year and next year’s premium should reflect the lower valuation. It is day light robbery to apply depreciation just because the vehicle has been written off. This practice is illegal and someone should challenge it in court.
There are so many insurance scams in the household insurance schemes going on at the moment that this article cannot cover all of them which means the time has come for us to appoint an Insurance Ombudsman providing he/she is given some teeth. To be fair the scams are not only perpetrated by the insurance companies and their assessors but also by the policyholders who have a nasty tendency to over claim which is why the insurance companies employ assessors then there are fictitious claims where some insured get their belongings over valued or claim for items which do not exist and in the process our premiums go up because at the end of the day the insurance company cannot operate without a profit. Another scam is the insurance company will quote you say RS 2,000.00 to insure your vehicle or property then the insurance company’s Broker comes along and quotes a renewal premium 30% cheaper than what the insurance company quoted. How can this be? I smell a rat and an Insurance Ombudsman will be able to find out what on earth is happening in the whole insurance industry in Seychelles.
Contributed by:
Barry Laine FCIM, FInst SMM, MCMI, MBSCH
Seychelles Civil Society
P O Box 1336 Victoria
Email: barrylaine@hpcgroup.sc