Kenya races to phase out old insurance certificates

Motorists in Kenya will be required to upgrade their insurance cover certificates to digital copies by March.

As this digital move begins to take shape, below is a guide on the new virtual insurance certificates:

What is a virtual insurance certificate?

This is a soft copy of the motor insurance certificate which is issued to customers via digital platforms such as email.

How is it different from the current physical certificate?

The details in the virtual certificate will basically be the same. The only different approach will be the mode of transmission whereby customers can receive their virtual certificate wherever they are and at any time via email.

The new certificates issued by the Association of Kenya Insurers (AKI) will have on them a QR code. This bar code system will allow a police officer to scan the code on their smartphones and hence give the status of the insurance as either active or cancelled. This process will take about thirty seconds to two minutes.

Why the change?

Over the years, many insurers have attributed fraud and predatory pricing to their poor performance.

“Motor insurance business has been affected by increasing cases of fraud. This, coupled with other factors such as predatory pricing has seen the business struggle to make profits over the last five years,” Association of Kenyan Insurers (AKI) senior manager in charge of general insurance business Birian Akwir said.

In 2018, profitability in the insurance industry dropped from Sh9.2 billion to Sh3.5 billion with the motor vehicle and medical claims taking the lion's share of this loss.

 A survey done by AKI, moreover, showed that 22 percent of motor vehicle insurance policies could not be authenticated and a further 12 percent of the covers do not exist in the underwriter's books despite payment of premiums for the cover.

To curb this, AKI developed the virtual certificate to ensure that only one motor insurance certificate is issued per vehicle. This will go a long way in impeding fraudulent claims in the motor insurance sector.

The rollout program will be carried out in two phases. The first phase, which took effect in September 2019, was for motorcycles. The second phase will cover Public service vehicles, motor private and motor commercial vehicles. The latter phase will run concurrently with the physical certificates until March after which the transition will be completed.

“Motor insurance customers should not be alarmed when they are issued with the usual physical certificate, we are phasing them out and by mid-year, we will have completed the transition,” said Akiwir.

What are the benefits of the virtual certificate?

As eluded to earlier, the transition to digital certificates will help curb motor insurance fraud by ensuring that only one motor insurance certificate is issued per vehicle.

“Cases of double insurance, fake certificates and stolen insurance certificates will be eliminated. The virtual certificates will save insurance companies the cost of physically delivering the certificates to their customers.” AKI said in a statement.

Traditionally, insurers had to import certificates from the United Kingdom which was a costly move but with the digital shift the sector will be able to cut cost.

Furthermore, by dialing *352# or via the AKI Vehicle Insurance Certificate App, customers will be able to query the status of their insurance. The verification will provide information regarding the insuring company; start and end date of the insurance; vehicle details and the status, whether genuine or fake.

Traffic police officers will be able to do a real time confirmation of the authorized use of an insured vehicle and passenger capacity. This contrasts with the previous situation which took a long time to verify.

Despite the transition, motorists will still be required to display their certificates on the windscreens of their vehicles.

During an interview with KTN News, Akiwir emphasized on the importance of sensitizing all traffic polices to be conversant with the new method of verification to avoid harassing some members of the public who have already adopted the new move.