MOTOR INSURANCE

Is your motor vehicle insurance sticker genuine? - IRA

In Summary

• One customer said she had an accident and when she went to claim, she was told that the insurance company did not have her details in their system, despite having paid for the premiums.

• The research confirmed that 12 per cent of the covers simply did not exist in the books of the underwriters despite full payment for the cover and motorists having cover certificates.

NEW COST: Insurance cover for private vehicles is set to increase to 7.5 per cent of the value of the car.
NEW COST: Insurance cover for private vehicles is set to increase to 7.5 per cent of the value of the car.

Motorists are purchasing fake motor vehicle insurance stickers, the Insurance Regulatory Authority has confirmed. 

According to the regulator, some are doing so knowingly but others are victims of crafty insurance agents.

"The drivers are given options on whether they want genuine or fake policies at the point of purchase, it is sad that people buy these policies to pass the traffic police and not because of the risks involved," a senior official at the authority said. 

New research by insurance aggregator Bismart shows that 40 per cent of Nairobi drivers could be holding fake car policies. 

The study reveals that only 60 per cent of motorists polled in Nairobi can confirm full insurance cover. This leaves the rest other road users exposed.

Going by the findings in Nairobi, the firm says, the situation countrywide could be worse.

While it was not possible to verify the true status of 22 per cent of the motor insurance policies, the research confirmed that 12 per cent of the covers simply did not exist in the books of the underwriters despite full payment for the cover and motorists having cover certificates.

According to  Bismart Insurance CEO Eunice Maina, the stickers might be genuine but the cover and personal details do not appear in the insurance firm system. 

In response to the verification process, IRA said they are currently putting in place a portal to integrate car owners details and their respective insurance providers.

To deal with the increased fraud, the regulator confirmed that the portal will show the vehicle registration and all the insurance providers insuring it. 

Further, it will enable anyone to confirm the authenticity of a policy by sending a given number to a provided messaging code. 

Before then, Maina says drivers should ensure they have the genuine receipts and  policy documents to be on the safe side. 

She noted that fraud in motor insurance is very perverse in the insurance sector, and many motorists are driving around without protection even after they have paid for it.

“The fact that you have an insurance sticker does not mean that you have insurance cover. It is good for motorists to verify the state of their cover to avoid exposure in case of an accident,” Maina said.

From the research, about 3 per cent of the policies were reported to be unpaid and premiums not remitted to the insurance company, despite the holders having insurance stickers.

Such policies were at the risk of being cancelled from the books, again leaving the insured exposed to risk.

About 1 per cent of the policies were registered as third-party covers despite the clients paying for and bearing certificates for comprehensive covers.

Bismart carried a three-week research focused on fraud at the point of buying cover and polled 146 policy holders from Nairobi County.

The firm further polled car insurance policies from 25 insurance companies to get a better understanding of how fraud is perpetrated.

The insurance holders were asked to ascertain the status of the insurance cover policies purchased through various insurance intermediaries for a period of one week.

One customer said she had an accident and when she went to claim, she was told that the insurance company did not have her details in their system, despite having paid for the premiums.

Another customer with a broken windscreen could not get compensated despite paying for a comprehensive cover for a whole year.

A recent report released by Association of Kenya Insurers estimated the cost of insurance fraud to be between 8 per cent and 10 per cent of the industry’s total amount paid up for health care insurance costs and losses & damage to property (mostly vehicles).