DIGITISATION

Insurers target fraudsters with digital motor policies

Fraud, especially in the motor insurance sector can be minimised significantly by ensuring only one motor insurance certificate is issued per vehicle

In Summary

•A survey by AKI shows that 22 per cent of motor vehicle insurance policies cannot be verified while another 12 per cent of the covers simply do not exist in the books of underwriters

•Over the years many insurers have faulted fraud for their poor profitability, with premiums remaining relatively high while slowing down the claims settlement process

A head on collision
A head on collision
Image: ANDREW KASUKU

Underwriters are banking on the digital motor insurance certificates to curb fraud in the sector.

Over the years many insurers have faulted fraud for their poor profitability, with premiums remaining relatively high while slowing down the claims settlement process.

“Motor insurance business has been affected by increasing cases of fraud. This, coupled with other factors such as predatory pricing has seen the business struggle to make profits over the last five years,” Association of Kenyan Insurers (AKI) senior manager in charge of general insurance business Birian Akwir said.

While motor private and medical business classes are the largest, they are also among the most loss-making businesses in the industry.

This has resulted in fraudulent claims eating into over 25 per cent of earnings in the underwriting industry.

According to AKI, fraud, especially in the motor insurance sector can be minimized significantly by ensuring only one motor insurance certificate is issued per vehicle, digitally.

The Integrated Motor Insurance Database System (IMIDS) saved the industry over Sh40million in fraudulent claims in 2019, a figure expected to increase as more insurance companies share data via the system.

A survey by AKI shows that 22 per cent of motor vehicle insurance policies cannot be verified while another 12 per cent of the covers simply do not exist in the books of underwriters despite payment of premiums for the cover.

To stem this, insurers have developed the virtual motor insurance certificate that will among others allow insurance firms to issue insurance certificates to clients via digital platforms.

The rollout programme introduced in October 2019 with motorcycle certificates will now see all motorists issued with digital certificates to operate on the Kenyan roads.

The virtual certificates will run concurrently with the physical certificates until the latter are phased out by mid this year.

“Motor insurance customers should not be alarmed when they are issued with the usual physical certificate, we are phasing them out and by mid-year, we will have completed the transition,” Akwir said.

Speaking during the meeting, assistant superintendent of police Boniface Otieno lauded the move by AKI noting that it will assist traffic officers to solve some of the challenges they face with regard to authenticating the validity of motor insurance.

“The digital certificate will help with instant verification of insurance and this will go a long way in supporting service delivery by the police,” he said.

Insurance agents are also for the shift to virtual certificates adding that it will not affect their business operations. 

“Having worked with the clients, we are here to make the process easier and that is what this new innovation will do,” BIMA Intermediaries chairman Washington Ndegea told the Star.