Industry

Insider fraud at insurance firms increases to Sh258m

insurance

Insurance Regulatory Authority CEO Godfrey Kiptum. FILE PHOTO | NMG

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Summary

  • The regulator’s report for 2019 cited seven cases of stealing by insurance employees and two complaints against insurers without including fraudulent claim settlements.
  • IRA noted that fraud cases, in general, jumped 53 per cent to 127 cases worth Sh327.7 million during the Covid-19 period led by motor, medical cases and theft by agents followed by insider fraud.
  • The value of motor fraud declined from Sh52.8 million to Sh12.1 million while the value of medical fraud dropped from Sh42.1 million to Sh1.5 million.

Insider fraud at insurance companies jumped 13.4 times to Sh258.4 million in 2020 from Sh19.2 million the previous year, according to data from the Insurance Regulatory Authority (IRA) that started tracking fraudulent settlement of claims.

The regulator’s report for 2019 cited seven cases of stealing by insurance employees and two complaints against insurers without including fraudulent claim settlements. A year later 10 employee theft cases, seven complaints and one fraudulent settlement of a claim were recorded.

IRA noted that fraud cases, in general, jumped 53 per cent to 127 cases worth Sh327.7 million during the Covid-19 period led by motor, medical cases and theft by agents followed by insider fraud.

The most frequent cases in 2020 were fraudulent motor insurance claims at 39 (30.7 percent) and theft by insurance agents 23 (18.1 per cent) cases respectively.

Although the number of motors and medical fraud cases increased, the value dropped significantly in the two classes and was overtaken by insider fraud.

The value of motor fraud declined from Sh52.8 million to Sh12.1 million while the value of medical fraud dropped from Sh42.1 million to Sh1.5 million.

Theft by agents also dropped from Sh4 million to Sh2 million.

“The Insurance Fraud Investigation Unit (IFIU) received reports and detected cases of insurance fraud totalling 127 in 2020 compared to 83 cases in 2019. Out of the cases reported in 2020, one case has been finalized and the complainants advised,” IRA chief executive Godfrey Kiptum said in the report.

Insurance companies have set up measures including technology to combat motor and medical frauds which have been the biggest problem in the sector.

Last year insurance lobby Association of Kenya Insurance (AKI) launched a mobile platform for filing accident claims in the latest push to cut back on motor fraud, reducing instances of fraud where motorists would collude with the police to alter circumstances of an accident.

The application with geolocation features allows users to upload videos and photos from the scene of the accident together with police abstracts, ID card and driving license.

While these efforts are seemingly bearing fruits, insurance companies are now facing a problem within their organisations as employees become their biggest concern.

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