Insurance Regulatory Authority reveals firms rejected Sh658 million in claims in first quarter of 2025
The amount marks a 77.6 per cent increase from the Sh370.93 million worth of claims turned down in a similar period last year.
Insurance companies declined compensation claims totalling Sh658.9 million in the first quarter of 2025, highlighting a sharp rise in rejections as the industry heightens scrutiny of potentially fraudulent cases.
The amount marks a 77.6 per cent increase from the Sh370.93 million worth of claims turned down in a similar period last year. According to data from the Insurance Regulatory Authority (IRA), a total of 22,364 claims were rejected between January and March.
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These included 56 general liability claims worth Sh43.8 million, 22,086 non-liability claims valued at Sh412.9 million, and 222 claims from long-term insurers amounting to Sh202.2 million.
“These are claims that the insurer has declined to pay during the quarter for various reasons as per the policy document or otherwise,” the IRA stated in its quarterly report.
The rising number of rejections comes as insurance firms increasingly turn to technology to detect fraudulent claims. Insurers are now relying on tools such as Artificial Intelligence to flag suspicious applications.
Jubilee Holdings reported blocking Sh400 million worth of fake claims in 2024, thanks to AI-powered verification systems.
The number of fraudulent cases identified rose by 286 per cent compared to the previous year, with 16 incidents referred to the Insurance Fraud Investigations Unit under the Directorate of Criminal Investigations (DCI).
The company said most cases were handled internally through staff disciplinary measures, claim denials, and improved risk assessment procedures.
Industry analysts estimate that fraudulent claims account for approximately 20 per cent of all insurance payouts.
Motor insurance remains the most targeted segment, with some policyholders submitting claims for accidents that never happened or insuring a single vehicle under multiple policies.
Other motorists have been found using insured vehicles for purposes outside the agreed terms, which increases their risk exposure and invalidates their coverage.
Despite the high number of rejected claims, insurance companies disbursed a total of Sh53.24 billion during the same quarter.
General liability claims accounted for Sh5.51 billion, non-liability claims stood at Sh19.87 billion, while long-term insurers paid out Sh27.86 billion.
This represents a 22.7 per cent increase in total payouts from the Sh43.4 billion paid during the first quarter of 2024.
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