Tricks fraudsters use to steal from insurance firms

Tuesday, May 18th, 2021 00:00 |
Solomon Kithuka Chalo at the Milimani Law Courts where he was charged with five counts of forgery with intention to defraud Jubilee Life Insurance of Sh230,000. He was released on a cash bail of Sh200,000 or alternative bond of Sh300,000. Photo/PD/CHARLES MATHAI

On October 8, 2020 Solomon Kithuka Chalo notified Jubilee Insurance Company of the death of a relative whom he identified as Mutisya Musyoka.

He was then issued with claim forms which he filled and submitted the same day and attached a burial permit and a certificate of the attending physician, purportedly filled by a Dr R. Kariuki of Kathiani Mission Hospital.

He was first paid Sh230,000 through his Buruburu KCB account.

It would later be established that Musyoka was indeed alive and was actively on duty at National Youth Service (NYS) in Bura, Tana River County.

Detectives also revealed that the burial permit was never issued by the chief of Kathiani location and that Kathiani Mission Hospital did not exist.

Besides, Chalo had never purchased any policy cover with Jubilee Insurance Company.

Had Chalo been successful, he would have received up to Sh3 million but thanks to investigations carried out by the company’s investigations department and subsequent referral to the Directorate of Criminal Investigations (DCI), the payouts were never made.

The case is one of the numerous fraudulent claims that cost insurance companies billions of shillings annually.

According to forensic experts, the situation is exacerbated by the contractual turnaround time of payment, which stipulates that part of such death claim payments be made within 48 hours.

“Timely claims processing is crucial for client satisfaction and value. The detection of such fraudulent claims remains the biggest challenge due to the contractual turnaround time,” a detective said.

As insurance companies strive to deal with slow processing of medical claims that causes payment delays and dissatisfaction, fraudsters take advantage of this.

The joint probe uncovered the full extent of the fraud, leading to the arrest of the suspect who was yesterday charged in a Milimani court.

It all started on August 19, 2020 when Chalo filed an application for Family Shield Cover under the name of Musyoka Mutisya as the policy holder, and Chalo as the beneficiary upon death of the policy holder.

The filled application form was presented at the Jubilee Life Insurance Company Nairobi through the company agent identified as Ruth Munyoli.

Chalo had on October 8, 2020 notified Jubilee Insurance of the death of Musyoka, the policyholder for family Shield life cover -number IL202001880986 through a letter dated October 5, 2020.

He was issued with claim documents and advised to fill and return them for claim processing.

He then returned the filled documents on the same day and presented them to Ronald Mochoge, a customer service officer, according to the investigation report.

The claim was processed and a payment of Sh230,000 was made on November 30, 2020 to his KCB account at Buruburu Branch, account number 1251848796.

After the payment, the suspicious transaction was escalated to the company’s internal forensic investigations. It was later revealed the claim was fraudulent as the purported policy holder was alive.

The matter was reported to the DCI who further revealed that the purported policy holder was an employee of the NYS and was based in Bura and had never purchased any policy cover with Jubilee Insurance.   

The burial permit was also found to be fake.

Fake death

“The Certificate of the attending physician purportedly filled by a Dr R. Kariuki of Kathiani Mission Hospital was a forgery as no such facility exists within Machakos County,” an investigation report stated.

The suspect was arrested on May 13 and was yesterday charged with six counts including conspiracy to defraud, forgery, uttering a false document and cheating, among others.

According to detectives, some fraudsters attempt to fake their own death in order to claim insurance money.

The bogus claims also involve fake documents including burial permits, medical reports of the cause of death among others.

The 2020 PwC Kenya Economic Crime and Fraud Survey says insurance fraud cripples the sector as it reduces the profitability and inconveniences genuine customers since insurers are forced to carry out lengthy process of vetting claims.

According to the Survey, in Kenya and Africa, internal parties are the most common perpetrators of economic crime.

Though globally frauds committed by operations staff was the highest attributed to internal actors at 53 per cent, in Kenya senior management were reported to have committed more fraud.

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