Insurance fraudsters causing motorists pain
Fraudulent claims and organised insurance crimes are becoming increasingly prevalent as motorists admit having fallen prey to everything from bad-faith claims to scams within the sector.
Consumers with motor-related covers are getting concerned that the practice is more widespread than was previously thought. This brings into sharp focus the never-ending fear of insider dealing in the insurance sector that continues to deny underwriters their fair share of revenues with many counting losses in claims settlement.
Narrating their experiences to Business Hub, most customers say that insider deals by rogue employees of certain insurance firms conspire with auto assessors and other entities to profit from gullible consumers.
Their concerns have been illustrated by a social media user @wakilinomad who has stirred a Twitter conversation that has since gone viral.
“Friends if you ever get into an accident, even when you have merely scratched each other’s cars, do not shake hands and ask each driver to go and fix or paint his/her car. There is an emerging scam whereby you shake hands, you go home thinking all is well,” he said.
In one of his cheeps, the username going by the name Rutto narrates how crooks are also colluding with SECTOR STATISTICS Long-term insurance premiums increased by 20.5 per cent to Sh70.66 billion compared to Q2, 2021 Premiums that were at Sh58.66 billion – a period in which Insurance Industry Premiums hit Sh163.06b The latest IRA data shows that, claims paid increased by 12.7 per cent in the second quarter of 2022 to Sh34.51 billion compared to Sh30.6 billion paid in Q2 2021 unidentified auto garages in falsifying documents including bank cheques, and satisfaction notes to rip-off customers, unknowingly, with caution to victims to have the police involved in case of an accident.
“False repair reports are prepared for huge sums of money, false photos of a car similar to one of the guys with its plate number are then taken with severe damage, false garage receipts, invoice cheques, and satisfaction notes made – all for huge sums of money.”
Insurance policies Two years ago, industry statistics estimated that more than 40 per cent of motor vehicle insurance policies in Kenya are fraudulent according to a study by Kenyan insurance Tech Company Bismart targeting 146 people settled in Nairobi alone.
Insurance fraud is believed to undermine 8 to 10 per cent of the turnover of local companies. The most common practice is when motorists anticipate being hit, then fake injuries then report the car to file a claim.
Theft by agents was thought to have reduced in recent times following the creation of the Insurance Fraud Investigation unit (IFIU) by the Insurance Regulatory Authority (IRA) together with a specialised unit under the umbrella of the Directorate of Criminal Investigation.
The unit is among other things meant to protect the interests of policyholders, insurance beneficiaries, and the general public. But despite the existence of the unit, insider fraud at insurance companies continues to thrive. In 2020 for instance, such cases jumped 13.4 times to Sh258.4 million from Sh19.2 million the previous year, according to the IRA.
It cited a number of cases of stealing by insurance employees as well as complaints against insurers without including fraudulent claim settlements, with the motor class the biggest casualty and a target by scammers.
