Prime Insurance Company has settled a K192.4 million insurance claim by Kalikuti Hotel which was gutted down in September last year following an electric fault.
However, the company has bemoaned the increase of fraud in the insurance industry which is estimated at 40 percent of all claims settled annually.
Chief Executive Officer of Prime Insurance Albert Mbawala described the claim as complicated, saying that was why it took time to conclude.
Mbawala said fire claims are difficult to investigate.
“We experienced logistical challenges during our processing of the claim and normally fire incidents are difficult to investigate and since there is a re-insurer involved there were other processed as well,” said Mbawala.
The K192.4 million, according to the insurance company, covers the damage that was assessed which includes all conference rooms, kitchen, restaurants, reception and other places apart from the rooms.
Kalikuti Hotel Manager Misonje Musumba said works to renovate the hotel will resume as soon as possible but hinted that the devaluation of kwacha will affect the insurance cover since the value covered has been eroded.
“It is a substantial amount that we have received from the insurance cover but since there are things like devaluation of kwacha which we have no control over we might need additional resources but that will be known as we go along,” said Musumba.
According to the hotel manager, the fire incident has rendered over 130 people jobless while as the company they have lost substantial amount of business this far.
On the insurance fraud, the Prime Insurance CEO said a lot of fraud is happening suspecting the current economic situation as many clients, especially the motor vehicle policy holders are making fraudulent claims.
“About 40 percent of the total claims are fraudulent and this is affecting insurance companies so much since these are claims that are not supposed to be paid,” he said.
He further said the devaluation of the kwacha has eroded the buying power of many Malawians hence many are failing to renew their policy.
“We are no longer profitable as we were due to the economic factors. Many of our clients are struggling financially and are failing to renew policy,” Mbawala said.