About eight insurance companies have either collapsed or have been put under statutory management by the regulator thanks to fraudsters. They include the Kenya National Assurance Company, Lakestar Insurance Company, Liberty, Access, Blue Shield, and United Insurance
By John Oywa
Automobile mechanic Zacharia Makori lay unconscious next to the mangled wreckage of the ill-fated bus. Blood oozed from what remained of his right leg that had been dismembered from the knee in an accident along Keumbu-Kisii road in Nyanza.
As he writhed in pain that fateful afternoon in 2002, two young men coaxed him for his personal details.
He never saw them again, only to learn later that they were ‘ambulance chasers’– a clique of shadowy characters working for fraudsters that have brought many insurance companies to their knees.
Makori, a father of six, later learnt the insurance company that insured the Nyanza Broadways bus had actually collapsed and decided to pursue the bus firm for compensation. In 2005, a Kisii High Court judge awarded him Sh2.6 million for the injuries he suffered.
Seven years later, today, Makori has not been paid a penny.
Makori is among thousands of victims of the massive fraud in Kenya’s Insurance Industry.
The Kenya Association of Insurers (AKI) estimates the Passenger Service Vehicle (PSV) insurance industry generates about Sh4 billion annually and loses an equal amount through fraud over the same period.
The association further estimates that between 30 and 40 per cent of the money paid for claims are usually fraudulent, forcing the insurance firms involved in PSV underwriting to incur massive loses.
So grave is the situation that in 2009, only six companies out of the 32 underwriting private motor vehicle business made profits.
In 2008, the loss ratio for private motor vehicle insurance was the highest for the industry at 84 per cent.