Motor insurance fraud has been a major problem in Kenya for many years. Insurance companies have been struggling to tackle this issue as it not only affects their profitability but also the trust of their clients. The most common types of motor insurance fraud in Kenya include staged accidents, fake claims, and false information provided during the policy application process where a client states that they intend to use the vehicle for private errands and end up using it as a taxi.
The latter has resulted in insurance companies becoming more cautious when insuring certain types of vehicles, particularly those that are valued below Kes 1 million and are commonly used for hire and reward. The same was seen last year when several major insurance companies announced they will not be insuring such vehicles on private policies due to the increased risk.
Small vehicles, especially those used for hire and reward, are more prone to accidents due to the nature of their use. They are frequently on the road, carrying passengers or goods, and are exposed to greater risks. This has led insurance companies to view them as high-risk vehicles and therefore, they may be hesitant to offer coverage or charge higher premiums. Additionally, the owners of these vehicles are more likely to engage in fraudulent activities to get compensation from insurance companies.
Insurance fraud in Kenya is a major challenge because it not only increases the cost of insurance for policyholders but also affects the profitability of insurance companies. Insurance companies have to bear the cost of fraudulent claims, which results in increased premiums for all policyholders. This, in turn, leads to reduced demand for insurance services.
To address this problem, insurance companies in Kenya have implemented various measures such as increased fraud detection systems, increased collaboration with law enforcement agencies, and increased public education on the consequences of insurance fraud. However, the problem persists, and more needs to be done to combat it.
In conclusion, the motor insurance problem in Kenya is largely driven by insurance fraud, particularly in the small vehicle sector. To address this issue, insurance companies need to take a more proactive approach to fraud detection and prevention, while also working closely with law enforcement agencies to prosecute those engaging in fraudulent activities. Proper investigations should also be done to ascertain the legitimacy of claims.
I am Nyambura The Motorist
I have a bias for Hybrids
An insurance expert
