This is according to the Insurance Regulatory Authority 2015 fourth quarter report.
The Insurance Fraud Investigation Unit (IFIU) says the total number of cases reported in 2015 (January 1 to December 31, 2015) were 106, worsening by 21.8 percent from the 87 cases reported in 2014.
“Out of the 106 cases reported during the year 2015, 20 percent are pending in court, while 4 percent have been successfully prosecuted in court, 4 percent finalised and complainants advised, 3 percent forwarded to the Directorate of Criminal Investigation (DCI) or IRA for advice, and the rest – 69 percent are still under investigation,” the report states.
Motor insurance was hit hard with fraud in the sector amounting to Sh43 million while that of medical insurance hit Sh1.7 million.
Life insurance fraud was at Sh2.2 million.
Fraudulent policy holder claims was the highest source of fraud in the sector amounting to Sh239 million compared to the previous year that recorded Sh6.6 million.
Theft by insurance companies’ employees was at Sh20 million while theft by insurance agents hit Sh18 million during the period under review.
“Suitable fraud management strategies may need to be incorporated in the entity’s overall risk management framework if the underwriters are to remain profitable by mitigating the risk of falsified claims and other forms of insurance fraud exposures,” the report states.
Bima Intermediaries Association of Kenya (BIAK) Chairman Washington Ndegea says these cases of fraud from insurance agents has escalated to an alarming rate and urged the regulator to take action.
“We as agents need to regulate ourselves through strengthening of the association by the regulator, that’s the only way we can tackle the increasing cases of fraud,” he stated.
According to the report, the industry claims continue to grow at a much higher rate than the premiums underwritten with general insurance business, incurred claims amounting to Sh49.05 billion growing by 17.1 percent from Sh41.89 billion reported by the end of the previous year.
“This higher growth in incurred claims is a pointer to the much squeezed underwriting margins for the insurers,” the report indicates.
The total life benefits paid out by the industry amounted to Sh32.54 billion by the end of 2015 compared to Sh27.17 billion reported in 2014.
Total premiums stood at Sh173.26 billion by the end of the year 2015 compared to premiums of Sh157.78 billion of 2014 representing a 9.8 percent growth.