A private-initiated investigation has busted an organised syndicate that has been producing fake Malawi Police Service (MPS) abstract reports and defrauding insurance firms billions of kwacha every year.
Limbe Police Station spokesperson Aubrey Singanyama confirmed the development saying the crackdown resulted in the arrest of two suspected kingpins.
“I can confirm we arrested two suspects and they already started appearing before the court in Blantyre. They are currently on remand,” he said in an interview.
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The suspects have been identified as Matthews Biliwita, 29, from Thawale Village in Traditional Authority (T/A) Nkoola in Machinga and Yohane Dzapite, 35, from James Village in T/A Nsamala in Balaka.
Police apprehended Biliwita and Dzapite around Kasiya in Lilongwe and Kamuzu Road in Salima, respectively, after they fled their places of operations in Ntaja (Machinga) and Balaka.
Singanyama said the suspects were charged with the offences of making a false document (forgery) contrary to Section 353 (a) as read with Section 358 of the Penal Code and uttering a false document contrary to Section 360 of the Penal Code.
“But we are anticipating more arrests within the coming days as investigations are still ongoing because it would appear there is so much into it,” he explained.
The syndicate, coordinated by alleged road accident claims agents, has been operating in Eastern Region districts of Mangochi, Machinga and Balaka.
The fraudsters have been fabricating fake police reports, creating accidents and conniving with individuals to defraud the unsuspecting insurance firms.
Over the years there have been growing reports of fraudulent activities within the industry forcing the firms to push the burden to consumers by increasing premiums.
The Insurance Association of Malawi (IAM) reported on July 10 2022 that as much as K10 billion might have gone down the drain in 2020 and 2021 due to fake insurance claims.
The association estimates that 30 percent of all claims for motor vehicles are false and that for 2021 alone, the industry lost K5 billion.
So last year, working on a tip regarding the false abstract reports, Prime Insurance Company Limited engaged Mbeya Private Investigators (MPI) .
The private investigators found that the reports had numerous inconsistences, including mismatched dates and places of the alleged road accidents as well as names of fabricated police formations where the reports were purportedly issued.
“We carried out an independent investigation which led us to the source of the fake police reports. So we provided recommendations to our client [Prime Insurance Company Limited] based on our findings,” explained MPI managing partner Golden Mbeya.
According to MPI, the suspects had been producing the fake reports to some unsuspecting lawyers who would then institute claims for compensation against various insurance companies.
Mbeya said the suspects would produce the fake reports and give to selected clients (alleged accidents victims) who would press fabricated accident compensation claims against the insurance firms.
Following MPI recommendations, Prime Insurance reported the matter to Limbe Police Station who upon conducting their own probe arrested the two suspects.
According to Prime Insurance chief operations officer Gabriel Kamanga the timely intervention and busting of the syndicate has saved the company from bogus claims.
“Before we received the claims for compensation for would-be alleged injuries we were tipped by a patriotic citizen of the fake police reports,” he said.
Kamanga said while the company has no official assessments, losses are obvious due to exaggerated claims for injuries or deaths which attract huge court awards.
Asked why all of a sudden fraudsters have targeted the insurance industry, Kamanga said he believes the claimants find it easy to get insurance compensation, especially by using courts.
“And most suspicious claims, if not well handled, quickly end up with executions [enforcement orders] to get paid quickly.
“Additionally, the involvement of road accident claims agents has complicated the claims for almost each and every road accident ends up at legal firms and courts, sometimes without the knowledge of the victims,” said Kamanga.
In a written response, IAM vice-president Wales Meja said insurance fraud in Malawi, particularly involving alleged accidents, has been a significant concern for the industry.
He said: “Insurance fraud remains a serious issue that affects the entire industry, leading to financial losses, higher premiums, and eroded trust among stakeholders. No insurer is immune to its impact, but with collective efforts, the industry will significantly reduce its prevalence.”
Meja said in 2023 the industry faced a combined underwriting loss, with 60 percent attributed to motor accidents including fraudulent ones.
According to Meja, the high volume of claims processed daily increases the likelihood of fraudulent one’s going undetected.
Additionally, the involvement of multiple parties—such as insurers, garages, hospitals, policyholders, assessors, among others—creates opportunities for collusion and manipulation.
