, NAIROBI, Kenya, Apr 11- Insurance Regulatory Authority has summoned insurance firms’ executives over increasing fraud in the sector.
According to the IRA Communication Manager Noella Mutanda the Commissioner of Insurance Sammy Makove is set to meet with the Chief Executives of Insurance companies this week to discuss the matter.
Mutanda says the firms will be expected to showcase what measures they intend to take in a bid to lower fraud in the sector.
“Insurance firms are the ones supposed to manage cases of fraud, so they need to act as fast before it goes out of control,” Mutanda said during a media workshop at the weekend in Naivasha.
As at October 2015, insurance fraud had hit Sh26 million.
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, “said 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 and 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.
The insurance industry gross premiums Sh175 billion in 2015 an increase from Sh157.8 billion in 2014.
Of the insurance companies that have reported so far, Kenya Re, CIC Insurance and Jubilee Insurance have registered a growth in core earnings of 13.3 percent, 4.4 percent, and 0.6 percent, respectively while Liberty and Pan Africa have recorded declines of 35.7 percent and 96.8 percent, respectively.
The declines were mainly as a result of the fair value losses on investments given the decline in the stock market and the increase in interest rates in 2015.