Nakuru accident
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Fake claims making matatu risky business for insurance firms

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Police at the scene of an accident in Nakuru County on November 10, 2023.  

Photo credit: John Njoroge | Nation Media Group

A cartel of lawyers, valuers and traffic police officers has been blamed for the growing public service vehicle (PSV)insurance fraud in the country, with players in the industry estimating annual losses at over Sh3.2 billion.

Some matatu owners believe the cartel also loops in doctors and judges to fake medical reports and give award hefty awards against unsuspecting PSV insurers.

As a result, a high number of insurance companies have over the years kept off PSVs, saying the venture is too risky and full of fraud, with some in the past pushed into insolvency.

Over time, insurance companies have been forced to establish investigative departments run by criminologists and private investigators to probe claims. One investigator shared an experience with the Nation.

In 2021, a complaint was raised at the Insurance Regulatory Authority (IRA) that Invesco Assurance Company Limited had failed to pay a client money awarded to her by a magistrate’s court in Eldoret following an “accident”.

The CEO of the company was summoned by the commissioner and on arrival handed to the complainant— who claimed she had been involved in an accident in 2014 and awarded over a million shillings in damages—some cash. 

“The lady was paid Sh50,000 for transport back home as I kicked off the probe which largely included verifying the authenticity of the documents used to file the case as well as the report filed at Eldoret police station following the accident to establish its nature,” Daniel Muteshi, the private investigator hired by Invesco to probe the matter said.

In the course of his investigations, he discovered that the incident recorded at the station was not an accident but an incident where the driver of the PSV in question had gotten into an altercation with some passengers over the amount of fare demanded for travel between Eldoret and Iten.

“We established that after the incident, the car was towed to the police station and the owner was forced to refund the passengers the amount demanded and the car returned to him. It was surprising that the same incident had now morphed into an accident whose case had been heard and determined in court without the knowledge of the matatu owner and his insurer,” recalled Mr Muteshi.

In her sworn affidavit, the woman had told the court that she boarded the matatu on the Eldoret-Iten road next to Kipchoge Keino stadium around 8.50pm after leaving work.

She added that on the way home, some passengers noticed the driver was not sober and complained, demanding that he stop so they could alight and take another vehicle but he refused.

“Immediately after the railway crossing, he told us that I will show you what you have never seen. All of a sudden, he drove towards the swamp and the vehicle hit the water tunnel and rested in the swamp. A good Samaritan came and rescued us. I was taken to Moi Teaching and Referral Hospital where I was treated on my forehead, cheek, face, abdomen and on left hip. I later developed subsequent miscarriage where I lost my twin babies,” the affidavit states.

Mr Muteshi, however, discovered that the alleged victim had forged a P3 report claiming she lost her twin pregnancy in the accident. This is after the hospital denied having treated her.

She had further fraudulently obtained a police abstract— whose contents were later established to be fake—with the help of an officer.

“With the findings, we filed a report at Uasin Gishu County Directorate of Criminal Investigations Office and shared the evidence (our focus being the fake medical report and OB) . The matter was then forwarded to the Office of the Director of Public Prosecutions (ODPP) for prosecution. On October 13, the ODPP wrote back to the DCI Eldoret recommending that she be arrested and charged with three counts of forgery, including making a document without authority and uttering a false document,” said Mr Muteshi.

Since then, he has been following up on the matter to make sure the suspect, who is out on police bond, is charged.

Mr Peter Muindi owns a fleet of matatus in Makueni county, a bitter-sweet business he has been engaged in since 1996. During that period, he says tens of his PSVs have been impounded over fraudulent claims.

“In some instances, I have been forced to pay from my pocket and recover from the insurer later because of the pressure coming from the claimants and their legal representatives.

In other instances, I have lost millions to auctioneers coming after my property over unpaid fraudulent claims because they come for the individual and auction personal property when the claim is defaulted,” he said.

Mr Muindi says the government must intervene or else all PSV insurers shall close shop and the matatu industry will not be profitable.

“Once risk has been passed to the insurer, I should be at ease. There should be no revisiting,” he said.

With an estimated 40 per cent of motor insurance claims being fraudulent, matatu owners are now calling on the government to introduce specialised insurance courts to address rising fraudulent claims that are sending firms into insolvency.

“We are also requesting the government to order an investigation through the DCI because insurance companies that work with PSVs are really in trouble,” Matatu Owners Association President Albert Karakacha said.

On the evening of October 30, 2015, a 28-year-old man was killed by a matatu that run over him while he was crossing Jogoo road at Kaloleni estate.

His brother sued for compensation arguing that the area is highly populated thus requiring careful driving by motorists. He told court that based on the impact and the fatal injuries sustained by his brother, the matatu must have been driven at speed and recklessly.

His lawyer demanded that the family of the deceased be awarded Sh6.3 million as compensation for loss of expectation of life, pain and suffering, special damages and loss of dependency.

The amount is above what is provided for by the Insurance (Motor vehicles Third Party Risks) Act that says in Section 5 that there should be no liability of any sum in excess of Sh3 million arising out of a claim by one person.

On his part, the driver argued that the deceased erred by crossing the road when it was not safe to do so, and failed to use a footbridge that was available at the time. He further argued that the deceased’s brother had not proven that the accident was caused by his negligence or act of omission.

Sh1.2 million compensation 

The court ruled that the family of the deceased be compensated Sh1.2million.

 “The case clearly shows that these ambulance chasers’ lawyers are only after cash, it is not about the deceased or the dependants, that is why they exaggerate the amount,” said George Githinji, the owner of the matatu in question.

This ambulance chasing  explains why a single law firm can file several accident claim in court, some even seemingly representing the occupants of a whole bus that was involved in an accident.

“One wonders how they got into contact with all the passengers, but it’s a survival tactic. When there’s less work in the office, accident cases become an avenue for some as they are easy to navigate; not much is required of the lawyer other than opening the claim, filing the case and waiting for it to be heard and the judgement rendered,” a Nairobi-based lawyer who sought anonymity said.

While PSV insurers seem to find fault in lawyers, police officers and other key enablers of fictitious claims, they too have been accused of abetting the vice by not paying claims on time.

Criminal lawyer Dola Magani said while some law firms are to blame for taking up fake cases, insurance firms have also abetted the fraud by failing to offer compensation without being forced by the courts.

“Accident victims deserve compensation, if they were getting it automatically without having to go to court, Kenya would do away with word ambulance chasers,” he explained.

“Secondly, the insurance industry is riddled with corruption and it is not well regulated, which further aids in the fraud that occurs with PSV claims. Why is it then that they take money from clients and default claims?,” Mr Magani asked.

Law Society of Kenya President Eric Theuri said they have not had cases of fraudulent cases being made through lawyers.

“We have not had such cases and in any case it would be difficult for them to be valid as the assessment of the injuries and awards to be compensated to a victim would ordinarily be done in court. The court awards based on precedence and valuers, lawyers are not involved. The complaint maybe arising from not understanding how accident compensation works,” he said.

Police spokesperson Dr Resila Onyango had not responded to our inquiries by the time of going to press.