Dilemma facing Kenyans with life insurance covers

Heartless relatives are driving life insurance cover customers into a dilemma on whether to make the information known and risk their lives or keep it a secret and risk losing the money as unclaimed assets in case of death.

The greedy relatives keen on making quick money from the lucrative insurance covers have now worried the industry after it emerged that they kill their kin to make money.

Association of Kenya Insurers (Aki) Executive Director Tom Gichuhi said the trend of relatives placing life covers on others, then killing them and claiming compensation in collusion with insurance officers is a scary development, which will hurt the industry.

“This killing for profit is not new, but now it’s becoming common driven by falling morals in the society. What it ends up doing is that it makes one torn between telling your nominated beneficiaries about the cover or keeping it a secret, which means they may never benefit from it in case you die,” Mr Gichuhi said.

BIGGER JOB

A year after Nation reported a startling case of a former insurance unit manager who took two life insurance covers for a poor nephew, planned his murder and had his body dumped in Kangundo before rushing to lodge claims, it has emerged that the suspect got a bigger job at another insurance firm.

ICEA Lion Group has since dismissed the suspect, Mr Evans Masaku Kasyoki, but his exit leaves behind a stronger shock wave in an industry struggling with low penetration and a panicking middle class whose life covers can now turn out to be a threat.

Several people who spoke to Nation expressed concerns that they may not reveal to their spouses or nominated beneficiaries information about their life insurance covers, a move insurers say may only continue to leave beneficiaries without expected support when an insured member dies. Investigators had intimated to Nation that the suspect, who has since been arrested, raised suspicion after he piled undue pressure for compensation saying he needed the money to travel to Australia.

PREMIUM PAYMENT

The former insurance staff had taken a Sh10 million cover for his nephew aged 27 and another one for Sh1 million at a separate insurance firm. He had only made one premium payment before the murder happened.

Even more worrying is that the investigators wrote to both ICEA and the Aki, but the suspect was still employed as a manager.

A confidential investigations report seen by Nation linked the suspect to the murder of his nephew whose call data revealed they were together moments before he disappeared despite him denying in sworn statements.

“The beneficiary’s recorded statement with CID Kangundo police indicates that the beneficiary was not together with the deceased on the material day. However, call data report for the two, with the DCI officer confirmed that the deceased and the beneficiary were together all afternoon through to 10pm on the material day,” reads the report.

An autopsy report indicated that the young man died from severe head injury caused by a blunt object. “Based upon the findings, it’s evident that there’s a lot of indication to support murder for profit fraud being perpetuated by the claimant/beneficiary,” investigators concluded in their findings in June.

POOR SCRUTINY

Fraud investigators say the vice is on the rise, with many people taking advantage of poor scrutiny through collusion with insurance staff to process fake claims as the sector bleeds millions in lost revenues.

Insurers are now grappling with the dilemma of making sales and creating a sieve for those seeking covers to demonstrate why they would place such high premiums on relatives without demonstrating insurable interest — the value attached to a person/property insured.

The insurable interest, however, is a vague concept as one only needs to prove that the person being insured has present or future value attached and their death has financial impact on them hence the need for insurance. Insurance firms will also most likely take up such lucrative cover to boost business.

POOR DATA

Poor data sharing among the insurance firms has also enabled the fraudsters to take multiple covers and make millions of shillings from a single individual. It also takes a while before one is recorded as dead in the registration database hence allowing the criminals to hit multiple times with fraudulent claims.

Data from the Insurance Regulatory Authority's Insurance Fraud Investigation Unit shows only three cases of fraud valued at Sh2.2 million were confirmed in 2015 despite a 21.8 per cent rise in reported incidents, a sign that firms are reluctant to report.