In a bid to help coordinate efforts against insurance fraud and other related financial crimes, the Central Bank has created an anti-fraud forum, bringing together firms and stakeholders in the sector.
The forum, which had its first meeting in June this year, is aimed at strengthening preventive measures in curbing fraud which has often seen the sector lose millions of Francs.
Insurance fraud includes; fictitious and intentionally inflated insurance claims and manipulation of facts at the time of application to lower premiums.
According to the Monetary Policy and Financial Stability Statement, the forum’s mandate will among other thing include; sharing information between and within the financial sector on fraud incidences and promoting awareness about the crimes and prevention.
The forum will also build and exploit improved information and knowledge on fraud to improve prevention as well as address and deliberate any emerging fraud and financial crimes.
Curbing fraud was among the recommendations to the local insurance sector to improve its profitability which has remained vulnerable in recent years especially due to losses in underwriting.
For instance, In June this year, the Rwanda Social Security Board (RSSB) revealed a rise in health-related insurance fraud.
According to RSSB officials, over the last three years, at least 250 subscribers to the medical insurance scheme RAMA and some 15 medical facilities like hospitals, clinics and pharmacies, attempted to abuse the system for their own advantage.
Other private insurance firms have fallen victims to fraud with medical and motor insurance being the biggest avenues.
Commenting on the development, Alex Bahizi, the Managing Director of BK Insurance, said that the forum will promote preventive measures and sharing information on the vice. He said that, so far, the firm had not experienced any fraud-related incidences.
The local insurance industry makes losses from its core business, underwriting as has been the case over recent issues.
In the first half of 2019, the sector made an underwriting loss of Rwf 0.9B. In the first half of last year, underwriting losses stood at Rwf 3B and Rwf 4.7B in the first half of 2017. In 2016 January to June, the losses stood at Rwf 8B.
The sector only makes profits from other investments such as real estate, equities and government securities.
In the first half of this year, the sector made a net profit of Rwf 4.7B.
Further vulnerability is evident in the growing dependence on two premiums Motor and Medical insurance, one of which is mandatory.
The two premiums make about 74 per cent of all covers as the sector continues to lack diversity and innovation.