Kenya’s insurance industry is grappling with a surge in fraudulent claims, with motor vehicle insurance emerging as the most targeted sector, according to data from the Insurance Regulatory Authority (IRA).
Over the past five years, statistics from the IRA show that insurers have reported 971 fraud cases, with motor insurance accounting for most of these.
Common scams in the industry include fake accident claims, forged insurance certificates, fraudulent theft reports and fabricated medical bills. In the first half of 2025 alone, 85 fraud cases were reported to the Insurance Fraud Investigation Unit (IFIU), with 45 involving motor-related fraud.
However, courts are cracking down on fraudsters with recent rulings highlighting the severity of the issue.
Early this week, the Employment and Labour Relations court exposed a Sh874,000 fake injury claim against APA Insurance after discovering forged medical documents.
Justice Stephen Radido condemned the trend, stating: "Forged documents are increasingly used to exploit the Work Injury Benefits Act."
The compensation claim by an employee of DPL Festive Ltd was for injuries allegedly sustained in a road accident in February 2022.
The claim was based on an assessment conducted by the Director of Occupational Safety and Health in July 2024 of the employee. However, Justice Radido found that the claim was false after the Director, Occupational Safety and Health, Dr James Mithanga, denounced the documents used by the claimant in court.
"Dr Mithanga disowned the Demand dated July 10, 2024 and relied on by the applicant. The demand was a forgery. The applicant must have been behind the forgery or complicit in the forgery. It is regrettable that forged documents are slowly being used by employees to claim awards under the Work Injury Benefits Act," said Justice Radido.
"This developing practice was prevalent in road traffic accident injury claims. The applicant’s action, being based on a forged document purported to have come from the office of the Director, Occupational Safety and Health, cannot be the foundation of an adoption by this court," he stated.
Dr Mithanga appeared in court and testified that the electronic signature on the documents was lifted and impressed on the Claim Form.
At the lower court, on Thursday, a suspect named Ian Njuguna was sentenced to a two-year imprisonment or a Sh600,000 fine for defrauding CIC Insurance Ltd of Sh302,000 through a false road accident.
The convict allegedly furnished the insurance company with false medical documents for Baragoi Catholic Nursing Home (BCNH), including a patient discharge summary and a false police abstract from Baragoi Police Station.
He purported to have been admitted to the health facility after being involved in a road accident on August 23, 2024, along Horr-Sutai road.
He subsequently lodged a reimbursement claim of Sh302,150 to CIC Insurance Company, claiming that it was for the expenses incurred for treatment, which was false.
Upon conviction, he pleaded for mercy, saying he is ready and willing to volunteer crucial information to help detectives bust the cartels that have infiltrated the health sector to steal through insurance fraud deals.
"I have learned the hard way and I have learnt my lesson. I regret my actions and urge this court to give me a second chance," Njuguna pleaded with Milimani principal Magistrate Dolphina Alego.
The mitigation was rejected in view of the seriousness of the case. It was not all for Njuguna as he is facing a fresh case against him for attempting to defraud APA Insurance Company, Sh280,650 as a medical-insurance reimbursement claim compensation.
He faces 10 counts of insurance fraud he is said to have committed August 27 last year in Nairobi. He has since denied the charges and awaiting trial and determination of the case. Data from IRA shows other frequent fraud cases relate to theft by insurance agents while others involve false medical claims and addition of non-members to health insurance schemes.
The fraudulent claims have had a significant impact by draining insurers' revenues, forcing higher premiums. In 2024, the number of fraud cases reported to the IFIU decreased by 15.6 percent to 184 cases, from 215 cases reported in 2023. In 2022 IFIU received 150 fraud cases, down from 124 in 2021, 130 in 2020 and 83 in 2019. However, insurers are fighting back as IRA has rolled out anti-fraud measures, including digital verification of motor certificates, stricter agent monitoring, police training on fraud detection and public awareness campaigns.
Despite the challenges, the latest figures for this year’s Quarter Two period (March- June 2025) show that IRA registered 423 complaints with general insurance business accounting for 78.7 percent of the complaints whereas 21.3 percent were made against long-term insurers.
Only 259 complaints were resolved. The complaints were reported to the authority through various channels which include post, email, telephone calls via IRA toll-free line, walk-ins, and social media platforms such as X and Facebook.
While enforcement is improving, fraud remains a multi-million-shilling headache for Kenya’s insurance sector. Tougher penalties and tech-driven verification may be key to curbing the menace.
