Fraudsters change tack, rob insurers billions annually

Thursday, December 5th, 2019 00:00 |
A Police officer Dominic Lusweti Masengeli (right) and an insurance agent David Ichere Maina at Milimani Law Courts where they were jointly charged with 12 counts of conspiracy to defraud and obtaining Sh2.4 million from Pioneer Insurance Company. Photo/PD/CHARLES MATHAI

Insurance companies are losing billions of shillings annually to fraudsters, who have now devised ingenious ways to line up their pockets.

According to investigations, such frauds are usually discovered long after the payment has been processed and wired to the chain of benefactors; policyholders, claimants, service providers, agents — or even company employees.

On Tuesday, one such case cast light on the shadowy dealings in the sector when Administration Police Corporal Dominic Lusweti and Pioneer Assurance employee David Ichere were charged in court with conspiracy to steal more than Sh2.4 million from the firm.

 The officer is accused of seeking compensation claiming his lower and upper limbs had been amputated following an accident in Mwingi in September last year. 

 To execute the fraud, he is said to have roped in an insider, Ichere and together they allegedly  forged a signal purported to have been sent by Mwingi Traffic Base commander and presented  it to one Irene Njagi to back their claim.

They faced several other counts of faking traffic accident abstracts, medical documents, impressed stamp and uttering them to various offices. 

Enhanced surveillance

As indication of the how pervasive the lucrative deals are, the Insurance Regulatory Authority (IRA) managed to block Sh310 million fraudulent claims,especially from motor vehicle owners and insurance agents after enhancing surveillance.

In 2017, the Insurance Fraud Investigation Unit (IFIU) received and detected 168 cases while 91 were reported last year.

In one of the cases currently under investigation, a Nairobi lawyer placed claims of compensation for 14 people to an international insurance company.

But after scrutiny, it was discovered that only three of the 14 claimants were actually employees of Quality Meat Packers on Kangundo Road. 

Shockingly, one of the intended beneficiaries was said to be the lawyer’s client in a traffic case involving a different insurance company.

The fraud was detected after the insurance company had already paid Sh1.8 million. After investigations, it was detected that most claims of compensation were from the company through the same lawyer.

Other frauds are perpetrated with the connivance of insurance staffers and clients’ lawyers. 

In one of the cases investigated by the Fraud Unit, it emerged some lawyers colluded with staff from an insurance firm’s legal department to facilitate a Sh19m fraudulent claims.

The matter ended up in court. In another case that was dismissed, an insurance fell victim to collusion by lawyers and paid Sh566,192 to a different and fictitious law firm.

In a matter that ended up in court, a law firm, which had received Sh945,000 before again paid Sh600,000 by an insurance company after the case was concluded.

Another intriguing incident involving a Namachanja High School vehicle, compensation was paid only for the insurance company to be served with a judgment from court dated July 6, 2018 for Sh2,142,560.

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