Insurance Regulatory Authority - 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 now urging the public to cooperate with the new police unit under the authority to ensure that passengers' claims are valid in the event of accidents while travelling in PSVs.

Makove cited a case in December in which a Mombasa bound bus was involved in an accident over the Christmas holidays and though some passengers even lost their lives, none of those affected were legible for claims payout as the insurance cover sticker issued for the vehicle was fake.

"As we speak now, a fleet of matatus operating on the Kayole route have been grounded thanks to the insurance fraud investigations team because 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 acting finance minister Njeru Githae as well as CEOs of insurance firms and intermediaries in the industry.

IRA chairman Steve Mainda said fraudulent claims that are detected 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 what has been detected as others go unnoticed. "At the moment we cannot tell the actual amount lost through insurance fraud because the crime is designed to escape detection," noted Mainda.

He called on amendments to be made within the law to have specific penalties for insurance fraud as is the case in some countries, to deter this crime.

Fraud in the PSV sector has been one of the reasons why underwriters in this class of insurance have struggled financially with several others collapsing under the weight of financial burdens.

Githae lauded the move to set up the insurance fraud unit adding that it would help a in reducing risk and costs of PSV insurance and hence 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 because of reduced fraud."

By Lola Okulo

Nairobi Star/22/02/2012