The Effect of Forensic Accounting Services on Fraud Prevention in the Insurance Companies of Kenya

Abstract

Fraud is one of the major problems facing insurance industry in Kenya and it impact negatively to the whole insurance sector. Fraud risk in insurance companies is complex matter which affects both insurer as well as policy holders. Frauds increase the cost of insurance resulting to uncompetitive business and at the same time results to policy holders paying high premiums. This study aims at exploring the role of forensic accounting services in combating frauds in the insurance industry in Kenya. The study targeted all 49 insurance companies as listed by Association of Kenya Insurers register of 2013. Primary data was obtained with help of well-structured questionnaires. The data collected was coded and analysed with statistical package for a social science (SPSS).Inferential analysis was done using inferential statistics. Regression model was run to test the effect of forensic accounting in prevention of fraud in insurance companies. Two variables were tested on fraud reduction in insurance companies. The independent variables were investigative services and litigation support services offered by forensic accountants. The study revealed that application of forensic accounting services reduces the number of fraudulent activities in insurance companies.