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Kenyan insurers fight fraud

NAIROBI, Kenya, Aug 12 – Fake insurance claims could be a thing of the past as insurance stakeholders turn to technology to curb the vice.

The Association of Kenyan Insurers (AKI) has partnered with telecommunication firm Safaricom to develop a system that allows for information sharing between insurance firms.

Dubbed the Integrated Motor Insurance Data System (IMIDS), it is expected to aid motor insurance underwriters to share information and counter incidents of fraud, which has become endemic in the business.

“IMIDS is going to help us manage motor insurance data so that it cannot be manipulated, which has been the case in the past,” AKI Chairman Stephen Wandera said adding it had been very costly for the industry.

Under the three-year deal signed between AKI and Safaricom, the telecommunication firm will interconnect all insurance companies affiliated to AKI through its 3G network, undersea fibre and WiMAX to the central system.
 
“For instance, this will help with a situation where a dubious character will want to go make a claim at two or three different insurance companies,” he said.

Underwriters of motor insurance remain exposed to losses, as they try to contend with the escalated client claims. Over the years, more than 10 motor vehicle insurance providers have closed shop citing unbearable fictitious claims, sending a wake-up call to other providers.

It is estimated that 35 percent of insurance claims are fraudulent with private and commercial motor vehicle insurance categories recording the highest loss ratios in the industry attributed to fraud and false claims.

The new data focal point will help contain escalation of costs, which eat into insurers profit margins.

IMIDS will assist AKI categorise drivers according to their accident history, where drivers with high instances of accidents would pay higher premiums, while drivers with a low accident rate and claims history get discounts on their premiums.

He said IMIDS is an effort to deal with the genesis of what has cost the industry colossal losses, and generally aims at reducing the amount paid out as claims by the industry.

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The system will also allow AKI and other insurance industry stakeholders to track motor vehicles from registration to de-registration.

Mr Wandera said the umbrella insurance body is committed to industry reforms that will lower motor insurance premiums and make its members more profitable as incidents of fraud decrease.

Safaricom Chief Commercial Officer Peter Arina said the company was keen to offer innovative data services that will assist corporate organisations to improve efficiency and cut down on their operational costs as well impact on their bottom-lines.

“We believe Safaricom is in a good position to offer and deliver managed services, data centers in terms of backup and storage,” Mr Arina said.

The system will also allow AKI and other insurance industry stakeholders to track motor vehicles from registration to de-registration.

Mr Wandera said the umbrella insurance body is committed to industry reforms that will reduce the number of accidents on Kenyan roads, lower motor insurance premiums and make its members become more sustainable as incidents of fraud decrease.

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