Police are on the trail of a suspected insurance fraudster who has made millions of shillings in a puzzling case of fake claims targeting multiple insurers, according to a confidential report seen by the Sunday Nation.
The wealthy Kakamega-based tea trader — who we cannot name for legal reasons — is said to have perfected the art of defrauding insurance firms to the extent that he used the multiple compensations to run his business for years until investigators flagged his tricks recently.
The report by insurance fraud investigators, and now the subject of a police probe, detailed how the tea trader made three claims worth Sh7.8 million between January and August 2017 in a scheme said to include assessors who recommended his compensations.
The man has his trucks insured by more than three insurance companies and also ensures the tea he buys from as far as Uganda is equally covered by more than one insurer while on transit.
To make the trade smooth and without any economic risk on him, the tea is sourced either on credit or through a cheque set to mature when the cargo arrives at his Western Kenya factory.
The cargo and the truck then disappear somewhere along the way before he places multiple claims to the insurance firms. The money he receives is used to pay the tea sellers — but the businessman is thought to recover the “stolen” cargo, making a handsome profit.
The suspicion of the investigators was aroused after reports of two “hijackings” on different dates involving the same lorry ferrying different tonnes of tea.
The businessman claimed that on January 27, 2017 his truck was parked at Shreeji Petrol Station in Busia with 15.6 tonnes of tea from Uganda. The driver who resides metres away from the station had just stepped into his house to refresh at around 9pm. Two hours later when he returned, there was no lorry, according to the report.
For this, the businessman was paid Sh2.7 million from ICEA Lion.
He was not lucky at Jubilee Insurance in April of the same year when he detailed how the same truck, now carrying 20 tonnes of tea, had been parked again at Shreeji Petrol Station on April 28, 2017 by a different driver who also went to freshen up at about 9pm and came back in the morning to find the truck and the cargo gone.
For this, he had upgraded his claim to Sh5 million.
As this was being checked, he made a second claim, asking for Sh2.12 million for a different lorry which had reportedly been hijacked at Kapsiret while ferrying 10 tonnes of tea from Kericho. It was then that investigators took a keener interest on the matter.
The hijacking story did not seem to add up. First, the driver and the co-driver “found themselves at Ahero Police Station” and reported the matter — more than 130km away from the alleged scene of crime. In a subsequent contradictory statement, they were said to have been found in Kericho Police Station, raising further questions.
“We established that the insured was able to obtain insurance from different underwriters covering the same period. He has been using different drivers but apparently all seem to live in the neighbourhood of Shreeji Petrol Station in Busia township. We are not certain on how many other companies within the industry he has already or is planning to defraud; and including using different company names to defeat detection,” the investigators wrote.
Even more puzzling was that the same assessor was involved in three of the insurance claims, raising fears that they may have been compromised to recommend payment for the tea dealer who is now being sought by police.
The cases shine a spotlight on the Insurance Regulatory Authority, through its Insurance Fraud Investigation Unit (IFRU), that received the report in 2017 but have failed to act — prompting the involvement of the Directorate of Criminal Investigations.
IFRU head Margaret Apima acknowledged receiving the report on the suspected fraudster whose activities are said to have affected many other insurance firms.
“We received the report on this suspect but we also realised his claim was declined so the only thing we can pursue is an attempted fraud,” Ms Apima said in response to queries on why the case had taken too long to conclude.
Other insurers who spoke to the Sunday Nation in confidence said the unit which receives funding from underwriters is largely underequipped and has few investigators, making it hard for them to match fraudsters who are increasingly becoming smarter.
Through their umbrella body the Association of Kenya Insurers, the insurers recently launched a common database where motor vehicles insured by more than one underwriter can be flagged.