In spite of the moral standards many Kenyans put to the fore, most of them would get involved in a fraudulent activity if an opportunity presented itself. Although I pointed out in my last article that most failures of insurance companies are attributed to poor management, there is need to focus on new strategies for managers to prevent the occurrence of fraud and the resultant losses.

With high levels of poverty in Kenya, most Kenyans believe that the rich have robbed them of what would otherwise have been theirs. The wealth, acquired often through corrupt means, is ‘cleaned’ through the formation of mega businesses. The insurance industry is not an exception. If you became wealthy overnight – rightly or otherwise - you will get new friends (probably the equally rich or those after your money) as well as lose others. The friends you will lose are those who are bitter with ‘the system,’ believing that it has robbed them. They believe that the wealthy go unpunished for almost any crime.

This group of ‘system haters’ will go to great lengths to beat the system. They will break any rule to ensure that they acquire wealth, however small.  When a chance to make some quick bucks offers itself, they will run for it. The group includes most lawyers, doctors, judicial workers (Judges, magistrates), loss adjustors, underwriters, investigators, claims staff, rent-seekers and free-loaders among others. Insurance has suffered heavily from such people who feel that insurance companies make ‘free’ money and consequently want a share of it. The insurance industry is a favorite target for fraudsters because it is perceived as unfair. The fact that after 365 days without a claim, what you paid has all gone, is seen by many as an unfair aspect of insurance.

Changing that image must be a key part of any larger strategy to reduce the prevalence and impact of insurance fraud.  If people learnt the insurance model and understood that Insurance is a friend, there would perhaps be less fraudulent activity around it. Education on insurance ought to be included in Primary, Secondary and Post-Secondary Curricular to stimulate interest in the sector and ensure that fraudulent acts are minimized. The course should show the effects of fraud in insurance.

The Association of Kenya Insurers (AKI) should thus lead from the front by changing the industry image and go on to make it better. They should work out short-term and long-term strategies for this.

During an international workshop held by an American organization called the Coalition Against Insurance Fraud to look at emerging issues in this field, it was found that in order to achieve real progress in reducing fraud, there is need to change the way we do things. There is need for a paradigm shift – a basic change in the way the fraud problem is viewed. The public, legislators and regulators, civic leaders, and insurance executives must reexamine their view of the role fraud plays in their day-to-day success or failure. Fraud cannot be considered a victimless prank, a cost of doing business, an unpleasant but unavoidable part of our lives.

We must manage fraud not as a necessary expense, but as a competitor for our personal, governmental and corporate assets. This change in viewpoint is imperative if we are to win the fraud war.

I like the way the Anti-Corruption forces are putting adverts in the local newspapers and on Television showing what a beautiful Country we have and how we should not let corruption come in the way and derail our path to progress. AKI over to you, you may have a leaf to borrow.