Agents lead in fraudulent insurance industry deals

Fraud by agents engaged by underwriters was the most common type registered by the Insurance Regulatory Authority (IRA) in the fourth quarter of last year.

According to new data from the IRA, more than half of the fraud cases reported by insurance companies were from the agents, normally paid on commission by the companies.

While the regulator did not indicate the amounts involved, previous data had shown that the agents were not the riskiest link to the industry by value but cases related to motor vehicles.

As at the end of December 2018, there were 15 cases of fraud by agents out of a total of 26 such cases. The second most frequent type of fraud was that perpetrated by employees of the insurance companies at four cases.

Fraudulent motor vehicle and medical claims had three and two cases respectively in the last quarter of 2018. Of the total number of cases reported, 21 are currently under investigation and four are pending in court.

“During quarter four of 2018, 26 fraud cases were reported to Insurance Fraud Unit [of the IRA], out of which 21 cases are under investigation, four cases are pending in court while one case has been withdrawn,” said the IRA in a statement.

November had the highest number of cases compared to the other two of the quarter, amounting to 14 or about half of the total. “Agents and employees are the ones who can easily perpetrate fraud because they can collude or collaborate. It is quite difficult to deal with them because there are so many agents in the industry,” said insurance industry expert Isaac Ng’aaru.

He said that it is nearly impossible to carry out fraud without assistance from insiders.