NAIROBI, Kenya, May 8 – The insurance sector is alarmed of the rising trends of fraud especially in general insurance (motor insurance and medical insurance).
According to the industry, 20 percent of the claims paid for motor insurance are fraudulent while in the medical insurance sector fraudulent claims paid are between 30 to 40 percent.
Most of the fraud is done by staff members of insurance companies as well as loss assessors colluding with the insured to commit fraud.
“We are seeing an increasing number of people pretending to have accidents, some people have taken loans to buy cars, and when they are unable to pay for their car loan they fake an accident so as they are compensated and able to pay back the loan, “says CIC Insurance General Insurance Managing Director Kenneth Kimani in an interview with Capital FM Business.
Kimani says motor assessors and even garages are now colluding to commit fraud with others selling their vehicle across the border and pretending that it has been stolen.
“Fraudsters are colluding with garages where damaged panels are fixed in a car to show that the car has been in an accident after the insurance is paid the damaged panels are removed the car is in good condition, these new trends are worrying, “Kimani added.
In the medical insurance, fraudsters are colluding with hospitals to pretend that they have undergone major surgeries and treatments while health service providers are overpricing people who have been insured.
“You will find that in some medical service providers the first thing they ask when you go to hospital is, are you insured? And it seems like they have different prices for the insured and those who are paying in cash, other fraudulent behaviour is when an insured takes their relatives and friends to hospital impersonating as them especially in Health centres without biometric identification, “Kimani added.
He says industry players are facing such a hard time also in investigations as the fraudsters are able to cover their tracks and the quality of investigation leaves a lot to be desired.
He points out that more than half of the claims paid are not investigated.
“This is a big challenge in the industry, investigators are under a lot of pressure to finish the job fast and on time so they don’t do a good job, “Kimani said.
On his part Bima Intermediaries Association of Kenya (Insurance Agents Association) Chairman Washington Degea says fraud in the sector has led to an increase in various making insurance more expensive than it’s supposed to.
“Of all premiums paid in the industry, about 50 percent is fraudulent, insurance agents can play a big role in reducing fraud in the sector that includes identifying their clients, getting to know exactly who they are, doing a background check on them,” he added.
The Association of Kenya Insurance Chief Executive Officer Tom Gichuhi has urged insurance agents to be vigilant especially with claims and assessment.
“Insurance companies need to invest heavily in technology so as to curb the rising fraud in the sector,” he added.
Gichuhi pointed out that the association is working on investing in technology that will track the database of all insured motors so as they are able to help reduce fraud.
The insurance industry gross premiums grew by 20.4 percent from Sh131 billion in 2013 to Sh157.8 billion in 2014 with the general insurance premiums at Sh101.3 billion.
The claims incurred under the general business stood at Sh41.9 billion by the end of 2014 increasing by 25.3 percent from Sh33.4 billion in 2013.