Insurance firms wary of fradulent accident claims

The Insurance Association of Malawi (IAM), a grouping of insurance firms, says continued fraudulent activities could force firms to push the burden to consumers by increasing premiums in the long run.

The warning on Tuesday by IAM president Donbell Mandala, who is also chief executive officer of Nico General Insurance Company Limited, comes in the wake of revelations that 30 percent of claims that insurance firms receive are false.

He said the premium cost could be hiked to cover up for the cost that the market is losing  through false claims.

Said Mandala: “As a market, we have been there for more than 20 years and the trend we have seen is that the system is getting bigger and bigger, everybody is trying to swindle the market.

“ The market is becoming more complicated and more complex as a result many claimants are being victimised.”

A statement the association released last week indicated that  these fraudulent acts are denying legitimate claimants, especially under liability claims, to get their compensation.

It said the market has also observed that some lawyers are involved in the malpractice and has warned that once the culprits are found they will face the law.

The statement stated that scammers are preying on the claimant’s ignorance of insurance-related issues.

To illustrate the point, Mandala said if someone is from Chitipa and his car has been involved in an accident, someone might just come with the papers to collect, for instance, K3 million for the victim from an insurance firm.

“And because the person doesn’t know anything about insurance, they might be given K300 000 only from the K3 million,” he said.

In a response to a questionnaire yesterday, Malawi Law Society (MLS) secretary Martha Kaukonde backed lawyers, saying when they work on insurance claims, they strive to be professional and ethical.

“In those circumstances where some members are engaged in unprofessional and unethical conduct, disciplinary measures are implemented and we ensure that the legal practitioner concerned either makes amends by paying out the agreed funds to their clients or is punished in accordance with set sanctions,” she said.

The insurance industry says the communiqué serves as a warning to those involved in the misconduct.

To lessen fraudulent claims, IAM has encouraged its customers to go directly to the insurers to claim liabilities which would be settled with minimum delays. n