It is estimated that the industry paid out total claims worth Sh26 billion in 2011, with the projection for 2012 being placed at Sh30 billion.
Speaking during a claim payment on Tuesday, First Assurance Managing Director Stephen Githiga said the poor claim payment process in the industry further exacerbates the situation.
“We have a problem with claims being paid to clients in the industry as well as fraudulent claims especially in motor, medial and workman compensation policies,” he said.
Last year, First Assurance paid Sh1.4 billion in claims and expects to pay Sh2 billion in claims this year.
The insurer handed over a Sh136 million claim to Chase Bank on Tuesday, following a robbery in July.
Police managed to recover at least Sh6 million following the robbery at Chase Bank in Nairobi, with the case now in court after four suspects were arraigned.
Investigations are still ongoing as some suspects, who posed as guards are still at large.
“We have a very elaborate process to vet security providers in terms of their reputation, track record and performance and then we require due diligence and background checks,” Chase Bank Kenya General Manager Parmain ole Narikae said.
Bank thefts are often caused by as inadequate security systems that are easily tampered with, some untrustworthy staff, and some complicit security guards.
Banking fraud has proven to be a thorn in the side for financial institutions in Kenya that on average lose Sh500 million a month based on 2010 reports from the Central Bank of Kenya.
The insurance industry as a whole almost doubled between 2007 and 2012 from Sh48 billion to Sh91.6 billion, according to the latest Association of Kenya Insurers Insurance Industry annual report.