PSV insuranceFeb 22nd, 2012 | By MrJob N. Okemwa | Category: General Information
MANY commuters may be unknowingly travelling in uninsured Public Service Vehicles as the recently launched insurance fraud investigations police unit increasingly unearths use of fake stickers in this sector, it has emerged. Insurance Regulatory Authority CEO Sammy Makove is nowurging the public to cooperate with the new police unit under the authority toensure that passengers’ claims are valid in the event of accidents whiletravelling in PSVs.
Makove cited a case in December in which a Mombasa bound buswas involved in an accident over the Christmas holidays and though somepassengers even lost their lives, none of those affected were legible forclaims payout as the insurance cover sticker issued for the vehicle was fake. “As we speak now, a fleet of matatus operating on the Kayoleroute have been grounded thanks to the insurance fraud investigations teambecause they had bought fake insurance while others have been impounded,”Makove said yesterday.
He was speaking during the official launch of the fraud investigations unit event held at a Nairobi hotel and attended by actingfinance minister Njeru Githae as well as CEOs of insurance firms andintermediaries in the industry. IRA chairman Steve Mainda said fraudulent claims that aredetected by the industry are between 30 to 40 per cent of all claims incurred. He however added that fraud was rife since the 30 per cent minimum is only whathas been detected as others go unnoticed. “At the moment we cannot tell the actual amount lost throughinsurance fraud because the crime is designed to escape detection,” noted Mainda.
He called on amendments to be made within the law to havespecific penalties for insurance fraud as is the case in some countries, todeter this crime. Fraud in the PSV sector has been one of the reasons why underwritersin this class of insurance have struggled financially with several otherscollapsing under the weight of financial burdens.
Githae lauded the move to set up the insurance fraud unitadding that it would help a in reducing risk and costs of PSV insurance andhence lead to a decrease in premiums. Association of Kenya Executive Director Tom Gichuhi however said“it will be a long drawn process before we can say tha claims have come down becauseof reduced fraud.”