Insurance fraud costs industry Sh4b

By JOHN OYWA

Insurance policy holders can play a key role in fighting fraud, which costs the industry Sh4 billion annually, if they are educated on the operations of the sector, a senior stakeholder has said.

 MJ Okumu,  chairman,  Institute  of  Loss Adjusters and Risk Surveyors  of  Kenya, said  most fraudsters in the industry were targeting  those with little knowledge on the industry.

He said it was regrettable that most Kenyans are ignorant of the association’s work, which plays a critical role in determining compensation claimants.

Okumu told The Standard On Sunday yesterday that his association has now embarked on educating the public on its role and to weed out quack loss adjustors and surveyors who were not registered with the body and the Insurance Regulatory Authority.

Professionalism

“As professionals, we can save this industry.  We want the public to know their rights and how to detect possible fraud whenever they are seeking condensation or insuring their property or themselves,” he said.

He said the Authority received complaints that some claims in the motor insurance industry that forms almost 60 per cent of the total claims were exaggerated due to  possible collusion between motor vehicle repairers and owners.

Okumu said his association members play a big role in saving Insurance companies from paying for fraudulent accident claims.

“It is our members who investigate the fire and motor accidents on behalf of the insurance firms. We also help those planning to take insurance premiums on what type of policies to take depending on the risks their businesses face,” he said.

He added, “But unfortunately those who do not know about us go ahead and blindly take policies that could not help them whenever they incur losses.”

There are 46 licensed insurance companies by 2010, 163 licensed Insurance brokers, 23 Medical Insurance providers, 4,223 Insurance agents,  120 licensed investigators, 800 motor assessors,  21 loss adjustors, two claim setting agents, 10 risk manager and  26 insurance surveyors. IRA Chief Executive Officer, Sammy Makove  said  in a past interview that says PSVs paid a total of Sh3.2 billion in premiums last year.

Makove who is also the Commissioner of Insurance says that in the same year, total claims made against the insurance firms from accident cases totalled Sh1.5 billion.

Out of this, only Sh728m has so far been paid. But almost 40 per cent of this amount already paid out was pocketed by fraudsters. More than   ten insurance have collapsed in the past few years due to fraud in claims.