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Sector lobbyist unveils new tool to crack down on motor insurance forgery

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Efforts by the insurance industry to crackdown on fraud are pushing sector lobbyists to new heights amid rising cases of fraudulent claims in one of the notorious classes of business – motor insurance.

Industry’s lobby group – the Association of Kenya Insurers (AKI) now says fraudulent motor vehicle (accident) claims are one of the largest contributors to the industry fraud cases reported in the previous years, behind medical insurance class– with cases of businesses operating without proper licenses also a key concern.

It was announced during the unveiling of a new solution that will now see consumers able to verify statuses of their motor insurance, report a motor insurance claim and authenticate their life insurance tax relief certificate.

Dubbed, Bima Yangu – the new mobile application will also see motorists report a motor insurance claim such as an accident, stolen vehicle parts or a stolen vehicle.

“AKI has been on a digitization journey over the last five years to improve back-end operations and customer experience in the insurance industry.

The Bima Yangu App started out as two separate applications, but given consumer and insurance company feedback, we have combined these two applications, made it simpler to use and added other services to this revamped version”, said AKI’s Executive Director, Tom Gichuhi, during the launch at the AKI office.

Using the Bima Yangu App, consumers can scan the QR code on their motor insurance certificate to check the status, to determine whether such documents are genuine, expired, invalid or upcoming (starting at a later date).

According to its developers, the solution will immediately notify the insurer of the claim and the customer will be able to track the progress of the claim report.

The App enables a consumer to geolocate the accident scene, take and upload pictures and videos, and upload documents such as driver’s license and police abstract. Consumers will also be able to reach ambulance and towing services near them.

“For life insurance services, once you purchase a life insurance cover, you are entitled to a 15 percent tax relief on the premium amount subject to a maximum of Ksh5,000.  your insurer should issue you with a Life Insurance Tax Relief Certificate to submit to your employer to deduct the tax relief.

If self-employed, the certificate should be used when filing your annual tax returns. The Bima Yangu App enables consumers to verify your Life Insurance certificate by scanning the QR code on the certificate,” reads in part a statement by AKI.

This comes amid rising cases of fake or fraudulent insurance claims in the motor class according to both AKI and the industry regulator, Insurance Regulatory Authority (IRA).

Fraud in this class, ordinarily takes the form of reporting and claiming of fictitious damage or loss, exaggeration of losses covered by the insured and misrepresentation of facts.

Local market players in the underwriting industry find automobile insurance to be one of most challenging products for insurers due to the large technical loss accounting for 68.92 percent and 60.72 percent in motor private and motor commercial respectively, according to previous AKI figures.

It essentially means that, for every Sh100 earned by the insurer in premium, about Sh68.92 and Sh 60.72 respectively or more goes out to settle insured’s claims.

Indeed, the insurance industry paid claims worth Sh39.1billion in the first quarter of 2023, representing a 6 percent increase compared to a similar period last year when they paid Sh36.77 billion. Paid claims mean actual payments by firms to the policy holder, net of recoveries, made to a health and medical services provider or reimbursed to an individual by a carrier, third party administrator, or excess loss or stop loss carrier.

The greater the number of claims filed, the greater the likelihood of a rate hike. File too many claims—especially in a very short amount of time—and the insurance company may not renew your policy. If the claim is based on the damage you caused, your rates will almost surely rise.

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