Insurance fraud up 45% in Q3 2024, motor industry lead surge - regulator
Most cases emanated from the motor industry, with fraudulent motor accidents recording 16 cases, up from two in the previous corresponding quarter.
The number of insurance fraud cases for the three months to September 2024 increased by 45 per cent, according to a new report.
The quarterly release by the Insurance Regulatory Authority (IRA) shows insurance firms reported a total of 55 cases in the period under review, compared to 38 in the corresponding quarter, of the previous year.
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Most cases emanated from the motor industry, with fraudulent motor accidents recording 16 cases, up from two in the previous corresponding quarter.
Cases of contravening Insurance Act Section 164 recorded the second highest, 10, followed by cases of obtaining money by false pretenses which recorded a total of six.
Section 164 provides a legal framework for enforcing the provisions of the Insurance Act, ensuring that insurers, agents and policyholders follow the rules laid out under the law.
Ideally, if someone contravenes any of its provisions, they are often subject to penalties as determined by the IRA.
For example, if someone lies or misrepresents information to an insurance company to gain financial benefits improperly, that would be a violation of this section.
Exploiting policies
Generally, the rise in the number of fraudulent cases highlights a growing concern within the industry, as more individuals and organisations attempt to exploit insurance policies for financial gain.
Recently, the regulator indicated that the malpractices were inflating insurance premiums in Kenya by up to 25 per cent.
In the period under review, the industry premiums recorded a 15.6 per cent increase, hitting Sh311.19 billion, up from Sh269.30 billion in Q3 2023.
The general insurance business remained the largest contributor to industry insurance premiums, contributing 52.8 per cent of the total premium.
Motor insurance and medical insurance classes of business accounted for 63.7 per cent of the gross premium income under the general insurance business.
On the claims side, the general insurance business settled claims amounting to Sh71.09 billion, with medical, motor private, and motor commercial classes contributing 46.2, 20.8, and 19.8 per cent of the total claims settled, respectively.
“This demonstrates the industry's continued dedication to policyholder protection and efficient claims processing,” IRA said.
Notably, The insurance industry recorded a 385 per cent increase in net profit to Sh47.2 billion, compared to Sh9.7 billion in the corresponding quarter of the previous year.
The highest underwriting profits were recorded under medical insurance, at Sh1.18 billion, while motor commercial and motor private classes incurred the highest underwriting losses of Sh1.63 billion and Sh1.12 billion, respectively.
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