Insurance firms in Kenya plan to set up a database that will allow information sharing aimed at curbing rising fraud in the sector.
This is part of the sector's post-Covid recovery strategy, which is pegged on among others, cutting underwriting losses.
The Insurance Regulatory Authority (IRA) is leading the initiative.
It will borrow from the Credit Information Sharing (CIS) among banks where information on outstanding loans and advances is shared through Central bank of Kenya licensed Credit Reference Bureaus (CRBs).
Through CIS, lenders also access reports from the CRB, which informs them about the repayment patterns of a borrower.
In insurance, the platform will be used to flash out potential areas and fraudsters, mainly in motor and life segments of the business, are the most hit.
“We are in discussion with the industry,” IRA acting director supervision and licensing Kalai Musee said.
Insurance fraud is an intentional deception committed by applicants, policyholders, claimants, service providers, agents, brokers, and company employees for financial gain.
It may occur during the process of buying, using and underwriting insurance covers, according to IRA, usually motivated by greed or financial distress.
It is estimated that about 25 per cent of insurance industry income is fraudulently claimed.
About 30 per cent of the motor insurance claims are fraudulent while an estimated 35 per cent of all medical claims are fraudulent.
In the latest IRA quarterly report released in March, there were 34 insurance fraud cases reported to the Insurance Fraud Investigation Unit (IFIU) in quarter four of 2021.
Twelve cases were reported in 1 in October 19 in November, and three in December. This was a drop from 41 in quarter three (July-September 2021).
Fraudulent motor accident (injury) topped followed by fake insurance certificates, medical claims, conspiracy to defraud, misappropriation of commission and fraudulent motor insurance (damage/theft) claims among others.
The initiative will bring onboard the 58 licensed insurance firms in the country and five re-insurance firms doing business with Kenyan underwriters.
There are also 11,932 insurance agents in Kenya, 184 brokers, 142 licensed insurance investigators and 140 motor assessors.
IRA has also licensed 34 insurance surveyors, 33 loss adjusters, 13 claims settlement agents and nine risk managers.
“We continue to have a very strict licensing process,” Musee said.
Last year, the regulator struck out 13 brokers for failure to clear premiums.
Industry gross written premium stood at Sh276.06 billion as at end of Q4 2021, representing an increase of 18.5 per cent from Sh232.95 billion in Q4 2020.
General insurance business underwriting results reduced significantly from a loss of Sh1.18 billion in Q4 2020 to a loss of Sh6.34 billion in Q4 2021.
This was mainly attributed to high increase in underwriting loss in class classes due to relaxation of restrictions that had been imposed on travel due to the pandemic, where motor private made an underwriting loss of Sh6.17 billion and motor commercial an underwriting loss of Sh3.32 billion.
The premium reported by the long-term insurers in Q4 2021 amounted to Sh123.71 billion, a growth of 21.1 per cent compared to a growth of 4.5 per cent the previous year.
Their asset base grew by 13.2 per cent to Sh564.82 billion and largely composed of income generating investments of Sh5524.35 billion, IRA data indicates.
Of the total assets, 10.1 per cent or Sh56.76 billion was funded through shareholders’ equity.
During Q4 2021, general insurance premiums amounted to Sh152.35 billion with underwriters incurring claims amounting to Sh70.14 billion.
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