Car Insurance Fraud – The Menace Threatening Insurance Business in Kenya

Insurance companies have always had to deal with fraud since time immemorial. It is, however, the rising cases of car insurance fraud that has the industry threatened.

The Kenyan Government has Insurance companies assured of business as it is a legal requirement in the country that all cars must have insurance with evidence displayed at the left side of the windscreen.

Big business means bigger risks which are most probably why the insurance industry has to wrestle with such magnitude of the fraud. Insurance customers just like in any other business range from the genuine, the naïve, the crafty and the fraudulent.

The insurance sector lost a total cost of 307 million shillings in reported fraudulent cases by the end of 2015 making car insurance fraud the largest contributor in insurance fraud. These were only cases that got reported, one can only be left to imagine the unreported to be in a position to figure out the magnitude of the problem.

One of the most worrying trends that seem to be reaping off insurance companies big time is con artists buy low-cost cars and insuring them with a number of insurance companies. This car could later be involved in an ‘accident’ which must be bad enough to have the car written off. Companies that don’t engage in thorough investigations mostly fall prey to such cases and compensate which later causes them huge losses. The con having insured the car with a number of companies gets compensated by the number of insurance companies.

Kenya was once referred to as a hotbed for terrorism unto which Kenyans took offense most likely because our country is more of a hotbed for corruption than that of terror. Corruption has largely contributed to these increased car insurance fraud cases as rogue traffic police work in conjunction with rogue insurance officials to necessitate fraud.

Insurance cases cannot drop to nil but neither should we allow great insurance companies with the likes of Britam insurance, ICEA Lions, Heritage Insurance amongst all the respectable insurance companies to drop due to our lack of discipline and honesty.

Fraud does not just affect a company; it crumbles a family’s source of livelihood since when a company makes losses, it is forced to retrench to stay afloat, we, therefore, cannot accept fraud as a normal occurrence.