Old Mutual, however, averted Sh193.6 million in losses in fictitious claims riding on technology and data analytics. Last year, the regional insurer disclosed deployment of artificial intelligence (AI) and machine learning models to save 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.

“Risk drivers included weak customer data validation, duplicate vendor records, ineffective Anti-Money Laundering screening, one-time password (OTP) control weaknesses, credential exposure, system override capabilities, and inadequate segregation of duties,” added the insurer.

The firm, whose Kenyan unit has subsidiaries in Uganda, Rwanda, South Sudan and Mauritius, recorded 69 new fraud incidents last year with a reported value of Sh50 million.

Fraud is a major concern in the insurance industry, with insurers citing fictitious and inflated claims as key drivers of insurance prices in the country.

Fraudulent claims are estimated to constitute a fifth of the total claims made, with medical covers being the main target.

Old Mutual paid out Sh10.7 billion in medical claims following processing of 1,312,217 claims.

The firm said it had submitted 177 cases to investigative authorities as it rode on collaborating with other players in the industry to fight the vice.

“The group continues to collaborate with industry fraud networks and law enforcement agencies, strengthening intelligence gathering, investigative effectiveness and deterrence efforts,” said Old Mutual.

The group said it had implemented 37 fraud-related controls last year in Kenya and Uganda, signaling the high costs incurred by insurers to fight the vice.

The controls implemented included automation of policy processes, improved vendor validation, callback verification for high-value redemptions and enhanced separation of duties.

Insurers are turning to AI tools for detection of fraudulent claims in a bid to protect their bottom line from fraudsters.

Jubilee Holdings, which is the only other insurer to have disclosed the financial impact of fraud in its annual report, said actual fraud losses increased to Sh47.25 million from Sh40.82 million.

Jubilee disclosed it averted Sh1.28 billion in losses in fictitious claims, riding on the deployment of AI.

AI compares the doctor’s diagnosis with the prescription, flagging claims that have mismatches for review by staff.

Banks are also turning to AI to curb fraud in the banking industry. Disclosures from banks show fraud losses in the banking sector have been dropping, indicating success from the application of AI.

KCB Group, the largest bank by asset base in the country, last year wrote off Sh760,000 due to fraud and forgeries compared to Sh4.5 million written off in 2024.

Equity Group and Standard Chartered also reported a decline in fraud losses, citing the use of AI as a major breakthrough.