End of the road for insurance fraudsters

By Jackson Okoth

Mechanics, motor spare part dealers, inspectors and assessors will now be required to follow guidelines when dealing with insured vehicles.

This is to protect motor vehicle insurers from losses as a result of fraudulent claims, which estimates show run into billions of shillings.

These new benchmarks have been drafted by key stakeholders, including Association of Kenya Insurers (AKI), Kenya Automotive Repairers Association, Automobile Engineers and Assessors Association and the National Association of Kenya Investigators.

Fees structure

The measures are meant to contribute to significant drop in losses incurred by insurance companies due to manipulations of quotations for repairs, assessors and investigation by providers of such services.

"The standards will be critical in eliminating fictitious claims filed by service providers," said AKI Chairman Nelson Kuria.

Kuria was speaking yesterday during the signing of an agreement to adhere to the new guidelines by all service providers, at AKI offices in Nairobi’s Upper Hill.

The benchmarks will act as a reference for insurance firms on costs of varied products and services ranging from fees, spare parts, painting charges, labour, re-inspection and investigation reports among other services.

Likewise, the fee structure for investigations, tracing charges and court attendance will also be defined.

Figures indicate that between 2004 and 2007, claims accruing from commercial and private motor insurance covers averaged a ratio of 63 per cent, rising to 75 per cent in 2005.

These new standards and benchmarks will encourage more service providers to join professional associations as a way of attracting business from insurance companies.

‘Long overdue’

The local industry has undergone tremendous changes since its inception in 1978 when the then Finance Minister Mwai Kibaki issued a directive that all foreign insurers were to be locally incorporated.

However, the insurance act remains outdated with its review to reflect these changes long overdue. " There is need to amend the insurance act which is dilapidated," Kariuki told The Standard.

It is estimated that over 30 per cent of all claims in the insurance industry are fraudulent, the motor business contributing the highest number of such cases involving fake claims.

The creation of Insurance Regulatory Authority was expected to streamline the industry and weed out fraudsters.