Abstract:
his study seeks to assess the drivers for involvement in fraudulent insurance claims in
public service vehicle industry in Nyeri County, Kenya. The study was guided by the
following specific objectives, to determine the involvement of policyholders, insurance
intermediaries, employees of insurance companies and insurance claims investigators and
adjusters in fraudulent claims of 2NK Sacco in Nyeri County, Kenya. The research
concentrated on a registered public transport service provider in Nyeri Town, Kenya
officially known as 2NK. It has recorded one hundred and eight one claims since 2010.
Target population for this study was 181 policyholder from 2NK. The study used simple
random sampling as its sampling design whereby 124 respondents who were 69% of the
target population were considered. A self-administered, questionnaire was used to collect
data from the target respondents. The study achieved a response rate of 66.1 %. Data
analysis was conducted using statistical package for social sciences (SPSS) to generate
descriptive and inferential statistics. The results indicated that involvement of insurance
policyholders, insurance intermediaries, insurance employees and insurance investigators
and adjusters have a positive effect on insurance fraud at claims processing stage. The
study findings revealed that policy holders perpetrated fraud when procuring police
abstract and when seeking medical assistance incase of any injury. In addition, being in
contact with policy documents, appointment of loss adjuster, choosing the garage to be
used, assessment points and the place where the vehicle was assessed had a positive and
significant effect on insurance fraud during claim settlement processes. The study
recommends that policyholders should be investigated to determine whether the claims
they forward for processing involves fraudulent dealings. The study further recommends
that insurance intermediaries should be interrogated to establish whether they could be
involved in fraudulent dealings. Future research could focus on a comparative study to
determine whether the findings of this study also apply to other insurance policies.
