Risk Perceptions of Motor-Insurance Fraud in Nigeria: Insights From Industry Experts

Abstract

Motor insurance fraud poses a critical threat to the insurer solvency and market integrity, particularly in developing economies where regulatory enforcement and data infrastructure remain weak. In Nigeria, both opportunistic exaggerations (“soft” fraud) and deliberate schemes (“hard” fraud) distort claims performance and erode public confidence in insurance. This study investigates how industry professionals perceive the scale and consequences of fraud, drawing on behavioural and institutional perspectives. Using an expert elicitation methodology, data were obtained through a structured questionnaire administered to 120 insurance experts, including underwriters, claims managers, brokers, and regulators. The findings reveal that systemic weaknesses, such as weak enforcement and cultural tolerance for minor deception, amplify fraud risks. Respondents viewed soft fraud as more frequent but harder to prove, while hard fraud was perceived as less common yet more financially damaging. These results extend existing literature by providing context-specific, empirically grounded evidence from a sub-Saharan African market where reliable claims data are scarce. The study contributes to risk research by demonstrating how perceptions of fraud are shaped by institutional capacity, and it offers actionable implications for enhancing regulatory oversight, improving insurer resilience, and strengthening governance frameworks in emerging insurance markets.