Rise in false claims threatens growth of PSV insurance sector

The leading companies that offer PSV underwriting include Direct Line, Invesco and Amaco Insurance Company, with several other firms providing the service selectively.

Trident Insurance Company General Manager Kennedy Abinja said fraudulent claims in PSV underwriting are increasing due to the lack of strong monitoring systems and internal and external investigation units.

“PSV underwriting is a lucrative business in the fast-growing insurance industry, but current emerging factors — mainly false claims — are threatening its growth,” he said in a phone interview.

Abinja claimed that the rise in false claims is being enabled by a long conduit of swindlers that includes lawyers, police officers, accident victims, matatu owners, auctioneers and insurance workers.

Owing to loopholes in the industry, he added, fraudsters are able to get away with insuring their vehicles with more than one company, getting a larger payout.

CIC Insurance Managing Director Nelson Kuria attributed the high rate of fraud cases in the industry to lack of sound governance systems.

“This is a vice being instigated by all the players in the country, including employees of insurance companies. However, PSV underwriting is still a viable business that companies need not fear exploiting,” he said.

IRA’s insurance fraud investigation unit is staffed with detectives from the Directorate of Criminal Investigations Department, Economic and Commercial Crimes Unit.

Sammy Makove, the IRA Commissioner of Insurance and CEO, said the unit is registering progress on reining in fraudsters, with the unit receiving 143 fraud reports amounting to Sh253.6 million last year, and recovering Sh5.2 million.

Unreported cases

“However, unreported cases are on the rise, a situation worrying the entire industry. Some companies do not like to report the cases, fearing it will spoil their reputation,” he added.

Amaco Managing Director Jonah Tomno added that insurance players must work together to crack down on false PSV claims.

“It will require us to institute tough measures. We need to have strong internal fraud investigation units over and above a meticulous workforce. Companies also need to develop a system geared towards sharing information on claims made,” he said.