NAIROBI – Old Mutual Holdings recorded fraud losses of Sh106.4 million last year, highlighting the systemic financial leakages currently challenging the regional insurance sector.
The losses, reported by the Nairobi-based insurer, include Sh45 million attributed to internal fraud-representing 42 percent of the total-and Sh61 million resulting from external activities. This internal vulnerability reveals a significant gap in corporate governance, staff vetting, and real-time internal audit functions within the firm’s regional operations at a time when regulators are tightening expectations on boards and senior management.
Fraudulent claims in the East African insurance market are estimated to constitute 20 percent of all claims made, with medical covers serving as the primary target. These leakages act as a primary driver for the upward adjustment of insurance premiums as firms attempt to recover lost margins, protect capital buffers, and maintain solvency ratios required by prudential rules.
Old Mutual, which operates subsidiaries in Uganda, Rwanda, South Sudan, and Mauritius, identified several structural vulnerabilities that facilitated these losses:
- Weak customer and provider data validation, including duplicate vendor records
- Ineffective Anti-Money Laundering (AML) and sanctions screening at onboarding and payout stages
- One-time password (OTP) control weaknesses and credential exposure in digital channels
- System override capabilities that allowed manual circumvention of standard checks
- Inadequate segregation of duties between policy processing, claims approval, and payment release
The insurer processed 1,312,217 medical claims last year, resulting in payouts of Sh10.7 billion. Within this volume, the company recorded 69 new fraud incidents with a reported value of Sh50 million, underscoring how a relatively small number of successful schemes can translate into material financial losses when left undetected over multiple claim cycles.
To mitigate these risks, the group implemented 37 fraud-related controls across its Kenya and Uganda operations. These measures include the automation of policy and claims processes to reduce manual overrides, enhanced vendor and healthcare-provider validation, callback verification for high-value redemptions, and a stricter separation of duties embedded in core systems rather than relying solely on policy.
The industry is increasingly relying on the Insurance Regulatory Authority prudential and market conduct guidelines-particularly those on corporate governance, risk management, and fraud controls-to harden defenses through technology and board-level oversight. In line with this regulatory push, Old Mutual averted Sh193.6 million in fictitious claims using data analytics and deployed artificial intelligence (AI) and machine learning models that saved the company Sh253 million in 2024.
“Confirmed fraud losses for 2025 amounted to Sh106.4 million. Internal fraud losses amounted to Sh45 million and external fraud losses to Sh61 million,” said Old Mutual Holdings.
This shift toward AI is mirrored by other regional players. Jubilee Holdings, listed on the Nairobi Securities Exchange, reported an increase in actual fraud losses to Sh47.25 million, up from Sh40.82 million. However, Jubilee leveraged AI to avert Sh1.28 billion in fictitious claims. The technology functions by cross-referencing doctor diagnoses with prescriptions and treatment patterns to flag mismatches and anomalous provider behavior for human review.
The trend of AI-driven fraud reduction extends into the banking sector, where financial institutions are reporting a decline in write-offs. KCB Group, the region’s largest bank by asset base, reduced its fraud and forgery write-offs to Sh760,000 last year, down from Sh4.5 million in 2024. Both Equity Group and Standard Chartered have similarly attributed a decline in fraud losses to the integration of AI-based transaction monitoring, behavioral analytics, and strengthened “know your customer” protocols aligned with central bank and anti-money laundering requirements.
For Old Mutual, the fraud figures are now a boardroom and policy issue as much as an operational one. The company has submitted 177 cases to investigative authorities and continues to collaborate with industry fraud networks and law enforcement agencies to strengthen intelligence gathering, secure successful prosecutions, and build a stronger deterrent effect across the market. Executives say the next phase will focus on embedding AI tools into front-line decision-making while aligning internal controls more closely with evolving regulatory standards on governance, data protection, and consumer protection in the insurance sector.
