The Insurance Regulatory Authority (IRA) has released a report trailing how Kenyan motorists burnt a total of Sh200 Million through false fire policy claims.
How you ever wondered why so many cars are reported to have all over sudden burst into flame on-most of the reported occasions- Thika Super Highway? Does it have anything to do with the road?
19:30 Avoid Thika Super Highway A car is burning in the midst of the road at Pangani Drift Jam on both sides pic.twitter.com/oNh41diZrv via @Luchivya
— Ma3Route (@Ma3Route) October 23, 2020
According to experts, the high-speed limits on the superhighway makes all car components to heat up much faster hence increasing the fire risk in case of any pre-existing faults.
“There are so many electric items in a car, but drivers can at least check if the battery terminal is fixed on the battery properly if there is a caution lamp on the dashboard as well as avoiding entrusting your car to an untrained technician,” Toyotsu Managing Director Daisuke Toyooka San said.
In recent statistics, IRA states that the value of fraud in Kenya’s insurance sector rose 24.4 percent to Sh386.3 million in the year ended June 2019.
The Insurance Regulatory Authority records show that fire insurance accounted for Sh200 million or 51.8 percent of the value of fictitious claims. Well, Kenyan motorist, not all but some deliberately torched their homes or business premises to fetch some money from insurers.
On top of the fake fire policy claims, IRA also listed fraud on motor insurance which consumed Sh52.87 million), life insurance sunk Sh44 million and medical insurance gobbled Sh42.5 million.
Fraud in vehicle policies was in the form of fictitious accidents, forged insurance certificates and forged theft of motor vehicles as IRA disclosed, in the latest annual report that the blocked fraud came in the year its investigative arm—Insurance Fraud Investigation Unit (IFIU)— received and detected 83 fraud cases, down from 91 the previous year.
A separate report by the Association of Kenya Insurers (AKI) showed that 14 of the 37 companies that had covers for domestic and industrial fires made underwriting losses.
The Insurance Fraud Investigation Unit (IFIU) was set up in 2011 to deal with cases of fraud in the insurance industry and has seen the number of cases drop for the third year from a peak of 168 in 2017.
Of the 83 cases reported last year, a majority (21) came from agents, mainly through theft and commission fraud. Motor vehicle insurance fraud followed with 20 cases, ranging from fraudulent accident claims to fake car theft claims.
Last year, general insurers had their worst record over two decades when they sank into Sh3.27 billion underwriting loss mostly contributed by motor vehicle insurance.
In the IRA report, the underwriting losses from insuring motor vehicles jumped to Sh7.35 billion a 92.4 percent increase, with private vehicle insurance returning losses for the eighth running year.
Insurance company employees also posed risk to the business with nine cases valued at Sh19.28 million being reported as theft of premiums by staff.
Insurance Fraud Investigation Unit spent Sh28.7 million, down from Sh29.6 million the previous year, to investigate the cases as the IRA had reported in their previous year report that it had spent Sh27.3 million.
Expense ratio—the percentage of premium that insurance companies use for paying all the costs of acquiring, writing and servicing insurance— was highest for aviation (98.21 percent) followed by personal accident (66.7 percent).
Blockchain is being touted by AKI to help cut paperwork and also lockout fraudulent claims by validating documents from customers and provide permanent audit trails that can be used to identify claims. Will the use of technology help?
Last year, insurance industry premiums grew 6.1 percent to Sh229.5 billion while net profit rose 108 percent to Sh15.12 billion. Kenya was ranked third in Africa in terms of gross premium income after South Africa and Morocco.
The long-term insurance business grew 11.4 percent to Sh97.4 billion while general insurance business grew 2.5 percent to Sh132.1 billion.
But in case of a fire accident, immediately stop the car safely and turn off the engine then get every person out of the car and move a distance from the burning vehicle.
Read more about Insurence cartels in Kenya HERE
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