Tyrone Reid, Enterprise Reporter

The insurance industry is losing millions of dollars in premiums due to a mushrooming cover note racket, major players in the market have revealed.

While unable to place an exact dollar figure on the losses, stakeholders said that it has long passed six figures.

"The industry is losing a lot of money because we know that there are thousands of cars out there without insurance or proper insurance and persons out there are benefiting," said Ruth Cummings, motor underwriting manager at United General Insurance (UGI).

She stressed that the fraudulent documents are "a thorn in the side of the entire industry. We all suffer. There seems to be a whole network out there and we are the victims."

Officer in charge of administration at the Police Traffic Division, Deputy Superintendent Byron Powell, told The Sunday Gleaner that the police have not been able to estimate the value of the illegal industry.

In-depth investigation

"I think it is something that needs in-depth investigation. Maybe there is a need for us at traffic headquarters to be more vigilant and return to former practices," said the senior officer, who added that the matter had not been brought to his attention in recent times.

Meanwhile, it seems that persons within the insurance companies are feeding the illegal practice, as Ms. Cummings disclosed that from time-to-time, one of the company's cover note books would disappear. "We don't usually recover them. We just put an advertisement in the paper and we look out for them to ensure that they don't come back into the system."

A highly placed Sunday Gleaner source revealed that the "major ongoing fraud" was again brought to the fore at an insurance week luncheon held in July of this year.

Karen Bhoorasingh, general manager at West Indies Alliance Company Limited, a member of the Guardian Holdings Group, concurred that the insurance trade is losing big.

Organised activity

"It is rampant, no question about that. Our information is that it is an organised activity," she said.

In addition to the millions of dollars the industry is losing in potential premium, Mrs. Bhoorasingh said insurance companies also face the risk of paying out claims that they will not be able to recover, as the other persons involved in accidents are fraudulently insured, that is uninsured.

Additionally, she pointed out that innocent motorists are also feeling the pinch. She argued that while persons with comprehensive policies will get their cars fixed and the insurance company bears the loss, motorists with third-party coverage are left in the dark, as they can only recover funds from the guilty party's insurance company.

"You have people out there who are injured and can't get any money, (while) some third-party policy holders have to foot the cost themselves," she said.