Fraud, inflated claims afflict insurance industry

Fraud and inflated claims continue to haunt the local insurance industry with underwriters in the health sector facing the biggest fraud claims.

Latest data from the Insurance Regulatory Authority says Madison Insurance and AAR Insurance companies topped the list of claim settlers in the second quarter of 2017.

The report says many companies are taking long to settle claims due to rising cases of illegal claims and long legal settlement process.

For a long time underwriters in the local industry have bemoaned the high level of fraud due to ambulance chasers and inflated claims. Medical and public service vehicle sectors have over the years posted the highest number of illegal claims.

The Association of Kenya Insurers estimates that 2 out of 10 claims lodged in the health sector are not genuine while 3 in the transport industry are fake. Last quarter of 2016 the sector posted a loss ratio of 76 per cent across the 18 firms offering medical insurance covers.

The insurance regulatory authority says in the second quarter of this year Madison insurance led with the most settled claims followed by AAR. Out of the 2,000 claims lodged with Madison, the firm settled 571 liabilities.

This represents a settlement rate of 28.6 percent, including new and outstanding claims. AAR Insurance and GA Life Assurance have been ranked top in terms of settling claims in liability, non-liability and long-term insurance categories respectively during the second quarter of the year.

The report says instances of alteration of documents to increase the claimed amount, concealing pre-existing medical conditions, falsifying prescriptions or over-prescription of drugs and even identity theft by non-members using insured members’ details are some of the tricks used in claiming illegal pays in the Medical sector.

In the non-liability class, Jubilee and the Kenyan Alliance came in second and third respectively. Jubilee settled 80 per cent of claims lodged while Kenyan Alliance paid out 727 of the 985 claims and declined 27 of them.

The industry regulator says it will strengthen the fraud unit to deal with the rising levels of fraud.


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