Premiums prices rise 25% in as fraud bite in Kenya
June 14, 2022768 views0 comments
The Insurance Regulatory Authority (IRA) has urged Kenyans to desist from making fraudulent insurance claims as the practice is hurting the economy, keeping premiums high, and slowing down the pace of claims settlement. One in every five insurance claims made is fraudulent, says the IRA.
The regulator indicated that the malpractices that included false motor accident claims, stealing by agents, conspiracy to defraud and fraudulent motor theft claims were inflating insurance premiums in Kenya by up to 25%, according to a report on the Capital FM news site.
Players in the sector have been decrying huge losses associated with fake claims, especially in general insurance (motor insurance and medical insurance).
Making a presentation during a forum held in Nakuru, IRA corporate communications officer Rosemary Kavili noted however that cases of fake claims have been on a steady decline over the last five years as the industry stepped up ways of curbing fraud by enhancing transparency and disclosure of information during claims.
Kavili said that the IRA has signed a pact with the National Transport and Safety Authority (NTSA) to include insurance details as part of their database to help stop multiple uses of the same number plates to buy insurance. Under the arrangement, insurers transmit details of motor vehicle insurance policies to the Transport Integrated Management System (TIMS) in real-time which at the same time provides the insurance companies with a way of validating vehicle ownership.
NTSA piloted the integrated system with 14 insurance service providers which it said has proved successful. The regulator now wants to bring on board all insurance firms onto the platform.
Kavili said that the IRA was encouraging industry players to take extra measures to curb fraud.
“Technology can help cut paperwork, validate documents from customers and provide permanent audit trails that can be used to identify claims. Service providers must now put enterprise risk management systems to deal with fraud. The losses impact negatively on the underwriters’ solvency,” she said.