A third of Insurance claims fraudulent - Claims IRA

Embu, Thursday June 8, 2023

KNA by Steve Gatheru

The Insurance Regulatory Authority (IRA) says up to 30 per cent of insurance claims made are usually fraudulent.

An officer with the authority Jude Kibet on Wednesday told a workshop to sensitise journalists on the insurance industry in Embu that such fraud includes cases where police officers collude with motor vehicle owners to exaggerate the damage to vehicles following accidents.

Some clients also collude with investigators and assessors to defraud the insurance companies.

Mr Kibet said the effect of such fraud is to make premiums paid by clients more expensive and hence decrease the overall uptake of insurance services.

He however noted that the insurance industry was generally on a growth trajectory with more people taking up medical insurance. Medical insurance also paid out nearly half of all claims paid out.

The Policyholders’ Compensation Fund (PCF) organised the sensitisation workshop in a programme dubbed PCF Mashinani in which they want to make the public more aware of the fund that compensates policyholders when their insurers go under.

Mr Noel Nzuma of the fund said product underpricing, inadequate reserves, poor corporate governance as well as poor investment decisions and illiquidity were some of the reasons that led to insurance companies failing in the past.

Nzuma said some 20 insurers had gone under over the last 25 years, leading to the government to create the fund to provide a safety net for the insured when the companies fail.

Courtesy ; K. N. A