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Insurance firms tighten noose on car fraudsters

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Insurers have moved to break an elaborate motor
Insurers have moved to break an elaborate motor vehicle fraud scheme that has been bleeding the industry millions of shillings through fake multiple claims. FILE PHOTO | NMG 

Insurers have moved to break an elaborate motor vehicle fraud scheme that has been bleeding the industry millions of shillings through fake multiple claims.

Using a technology known as the Integrated Motor Insurance Data System, the firm will be able to know in real time details of a new motor vehicle being insured, including its previous covers and claims history.

The cartel has been thriving, thanks to the lack of data-sharing among the underwriters, hence allowing individuals to insure and claim multiple times.

The Association of Kenya Insurers (AKI) said all its members are now active in feeding the system with the data that has seen several cases of attempted fraud nipped in the bud.

“We have ensured all our members are active in using the system by keying in accurate and complete data to make it even a bigger success going forward. Once we have this fully adopted, double or triple claims on motor vehicle insurance will be a thing of the past,” AKI executive director Tom Gichuhi told the Sunday Nation.

The fraud scheme mainly targets high-end motor vehicles, which are insured multiple times and then said to be stolen or written off from accidents.

The syndicate involving motor vehicle owners, assessors and insiders within the cover providers, traffic police, garage owners and spare parts dealers is deeply established in the motor vehicle insurance business.

Because of lack of data to verify whether a vehicle has been issued elsewhere and the need to sell insurance covers amid the competition in the industry, one would take a Range Rover worth Sh18 million, insure it thrice with different companies, fake an accident or robbery and claim the vehicle thrice.

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Since February when the data-sharing system began, some five high-end cars have been detected attempting to get cover more than once.

A lorry, a Toyota Prado, and Land Cruiser V8 and Mercedes Benz are among the cars the fraudsters tried to claim multiple times in what could have bled over Sh25 million in lost revenues from the insurers.

“It will be very easy to raise suspicion immediately one tries to insure their cars more than once and that is essentially arresting the problem before it happens. Once we run your car detail and find that it has been insured elsewhere or it has had several claims in a short period, it means we have a reason to worry,” Mr Gichuhi said.

An earlier case involving a Range Rover vogue whose claim was processed as a write-off ended up hitting four insurers in a classic scheme used to fleece underwriters.

Insured in May 2014, the car was reportedly damaged from an accident six months later and taken to a garage where an assessor recommended it for a write-off. The same car was claimed in two other insurance firms as write-offs.

To maximise the gain, the owner bought the salvage, retained the original log book in the first and the second case and even retained it after buying the salvage in the third.

Unsatisfied with the hefty compensations, the greedy fraudster secured two more covers for the car still in the garage and promptly claimed for write-offs. He succeeded in one.

In the second one, the assessors were shocked to find the Range Rover they had recommended for a write-off three months earlier was the same one the owner was pushing for claim.

The Sunday Nation has previously reported the existence of a demolition den along Thika Road where fraudsters take their cars for specialised crushing before being towed to a garage for write-off and claim.

Some of the cars crushed have vital parts removed supporting a lucrative second-hand car spare parts business in downtown Nairobi and Mombasa.

The existence of a system to tame insurance fraud, according to AKI, will also be critical in providing information for the police cracking down on car thieves who take advantage of insurance firms as easy laundry for their high-end cars imported fraudulently and those stolen from overseas.

The money from the fake claims is used to buy cars through proper channels.

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