Medical insurance fraud has remained rampant as perpetrators employ various ways to illegally beat
and profit from the system.
The
situation has been complicated by the fact that many of those involved
are experts in the industry. Meanwhile, prolonged court cases continue
to delay the recovery of the stolen funds, which account for up to 30
per cent of the industry’s total revenue.
Underwriting
losses for the industry doubled to Sh1.1 billion in 2018 compared to
the previous year, with only six insurers posting a profit during this
period.
Many of the
insurance companies became focused on revenue generation and failed to
adequately invest in their fraud investigations departments; others have
simply ignored their recommendations.
These
departments carry out investigations, provide evidence, recommend that
the insurer stops doing business with certain persons or service
providers who abet fraud but management refuses to cancel the contracts.
Investigations show that some of the employees might have left company premises when the accident occurred.
Some companies may not be aware of claims lodged on behalf of their employees.
“Some
lawyers are not even known to the company and purport to represent
employees in the firm,” said Mr Zakayo Mwangi, the Group Senior Forensic
Officer at UAP Old Mutual Group and one of the pioneers of the
Insurance Fraud Investigation Unit (IFIU).
A lawyer who was recently put to task to explain 16 fake claims lodged on behalf of employees responded:
“I represent persons who come seeking my services; if I am told that they no longer need my services, I’ll just close the file.”
'EXPLOIT INJURED'
Rampant fraud in the insurance industry necessitated the establishment of IFIU under the IRA.
“Some
lawyers file genuine claims, but after being paid, they exploit the
injured by charging exorbitant legal fees. Sometimes money is paid but
the injured are not paid,” Mr Mwangi said.
Insurers’ investigations also show that their advocates sometimes collude with their colleagues to steal from them.
A
lawyer of an insurance firm, for instance, colludes with the insurer’s
employee to prepare a different set of documents and purport that they
emanate from court. The company’s advocate then enrols a friend to
purport to be the victims’ lawyer.
The documents prepared bear a higher amount of money than what was agreed in court.
PAY FRIEND
The
insurer’s advocate then instructs the firm to pay the inflated amount
to his friend — the victims’ advocate. The extra money is then shared
between the “friendly lawyer” and the insurer’s advocate.
Mr Mwangi said that sometimes names of people who die or are injured in different accidents are sneaked into fresh claims.
In such cases, the money paid to the fictitious claimants is pocketed by the lawyer.
Sometimes
people injured in accidents don’t know how to make claims. In such
cases, crooks privy to insurance matters may prepare paperwork and lodge
claims or ask lawyers to do it on their behalf.
“Most
Kenyans don’t know how to make and follow up on claims or don’t bother
in case of minor injuries. In this case, insurance insiders often
process payment claims,” Mr Mwangi said.
LEGAL DEPARTMENT
Insurance company staff from the legal department also conspire with advocates to prepare claims.
The
payment is initiated, processed, and paid even though the actual case
may still be pending before court. After payment, the insurer’s staff
destroy correspondence and payment documents.
“Once
this is done, the insurer may not be able to know whether the claim was
previously settled or not. This is because they process several claims
on a daily basis,” Mr Kebenei said.
Insurance companies sometimes pay twice or even thrice for the same claim due to such conniving.
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