NAIROBI, Kenya, Jun 23 – Fraud in the insurance sector continues to thrive with the first three months of the year 2016 registering a 60 percent increase compared to the first quarter of 2015.
According to the Insurance Regulatory Authority Insurance Fraud Investigation Unit 2016 Q1 report, the first three months of 2016 saw fraud reported increase to a total of 43 cases from 26 cases previously.
Fraud amounted to Sh63 million in the first three months of 2016.
Motor insurance classes proved to be the most vulnerable to insurance fraud with a total number of 18 fraudulent claims amounting to Sh52.45 million which is 83 percent of the total fraud.
These were both motor accident and material damage claims.
“Fraud in the insurance sector is always unwelcome, especially when it concerns agents. It eats into company’s profits and demoralises investors. It also causes premiums to go up to cover for losses experienced due to fraud,” commented Bima Intermediaries Association of Kenya Chairman Washington Ndegea.
Industry Gross Premium Income experienced a lower growth rate during the quarter under review compared to that recorded in the first quarter of 2015.
Insurance premiums during the first quarter of 2016 registered a growth of 9.6 per cent to hit Sh55.27 billion while a 16.4 percent year-on-year growth was registered in the first quarter of 2015.
These were largely driven by the non-life segment that contributed a larger proportion of 68.6 percent to Sh37.92 billion while the life segment contributed Sh17.35 billion.
Reinsurance premiums reported during the first quarter of 2016 grew by a margin almost equal to the insurers’ premiums growth of 9.7 percent to stand at Sh3.22 billion compared to 2015 of Sh2.94 billion.
Claims incurred during the first quarter of the year rose to Sh13.87 billion compared to Sh12.39 billion of the previous year’s first quarter with loss ratio under general insurance business at 64.2 percent from the 64 percent in the first quarter of 2015.
The total life benefits paid out by the industry dropped by 27.7 percent to Sh9.44 billion by the end of March 2016 from Sh13.06 billion reported in the first quarter of 2015.
The insurance industry asset base stood at Sh498.46 billion as at the end of March 2016 a 10 percent growth from Sh452.84 billion held as at the end of the previous year same period.
In 2015 fraud in the insurance sector hit Sh366 million a 257pc percent shoot from 2014 numbers that were at Sh102.7 million.
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.