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Short-term insurers take the fight to organised crime

20 July 2011 Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

There are a number of factors eroding the profitability of short-term insurers. Repairs and write-offs due to road accidents still account for the bulk of claims, with losses due to vehicle theft and hi-jacking playing a major part too. The South African Insurance Association (SAIA) has been at the forefront of initiatives to curb these losses. Most notable among these is their ongoing support for Business Against Crime South Africa (BACSA). Each year, beginning 2003, SAIA has handed over a cheque to BACSA to be used in various crime-busting initiatives. And 2011 was no different.

On 11 July this year SAIA chairman, Ronnie Napier, handed over a cheque for R1.8 million to BACSA chairperson Yedwa Simelane. The latest donation brings the total contributed by the insurance industry in support of BACSA initiatives to more than R15 million! “We thank SAIA for this significant contribution and the insurance industry’s ongoing commitment to the collective fight against crime, as prompted by former President Nelson Mandela in 1996 with his call for business’ support to government in addressing crime,” said Simelane.

Mobilising the short-term industry to fight crime

SAIA is continually mobilising the insurance industry (through its members) to effectively resolve common challenges, from vehicle crime to road safety. The success of the various joint-venture anti-hijacking projects reflect in the reduction in motor vehicle theft and hijacking statistics from more than 17 vehicles per 1,000 registered vehicles in 1998, to approximately eight vehicles per 1,000 registered today.

This ratio should improve going forward thanks to ongoing efforts to ‘tag’ South Africa’s vehicles. BACSA observes that ongoing efforts to secure vehicle identities have finally paid off after the bulk of local vehicle manufacturers committed to mark vehicles with Microdot technology at the OEM level. “This is an important component of the national anti-theft and anti-hijackings initiatives and the limitation of the illegal disposal of motor vehicles,” BACSA said. After many years of lobbying among industry stakeholders the technology – which involves spraying new vehicles with thousands of microdots containing critical vehicle information – could be legislated as early as this year.

Among the various joint-ventures embarked upon by business and the SA Police Service is an Automatic Number Plate Recognition (ANPR) technology initiative. Since inception a variety of mobile and static ANPR installations have checked more than 10 million vehicles, resulting in hundreds of wanted vehicles being identified, and the arrest of many suspected criminals. It’s a numbers game, and BACSA reports that the system can check vehicles against 20 government and business databases. SAIA is playing their part by offering to implement and maintain five ANPR sites over the next three years. These sites can assist police in reducing vehicle and other priority crimes… The first SAIA-sponsored site went live in January 2011 and has thus far assisted police in recovering 38 vehicles, including vehicles with an insured value of more than R4 million!

Tackling insurance fraud head on...

“BACSA and SAIA have a long-standing and close relationship dating back to the creation of BACSA in 1996,” concludes Simelane. “This association yields tangible benefits for the insurance industry, and the national effort to curb the scourge of crime, and is typical of the strength of relationships that BACSA has with the many business sectors and industries. We look forward to continuing this valuable partnership in our efforts to stamp out crime.” And Napier agrees: “We are proud of our strenuous efforts as an industry, which have greatly assisted in the general reduction of motor vehicle crime. Our focus now, with BACSA, is to reduce all crimes across the board and to attempt to set a strong foundation for the future with crime levels lower than the present unacceptable figures.”

The short-term industry, assisted by SAIA, has also targeted insurance fraud and corruption through the establishment of the SA Insurance Crime Bureau (SAICB), which continues to produce impressive results. Over the next couple of years the challenge will be to get all short-term stakeholders to share policyholder data freely.

Editor’s thoughts: SAIA works at an industry level driving through national initiatives which impact on all stakeholders in the industry. At the moment the SAIA is trying to reintroduce mandatory third party insurance for all vehicles owners, among other initiatives… But brokers can also play a role in reducing insurance fraud. How would you go about reducing short-term insurance fraud at policyholder level? Please add your comment below, or send it to gareth@fanews.co.za

Comments

Added by Christelle, 20 Jul 2011
At MUA the SAPS recoved 3 of our stolen vehicles yesterday alone! Your opinion piece comes at the right time and does contain some really good news for our industry. What I still find amazing, is that when we as underwriters try and combat fraud at claims time, we are still met with sometimes huge resistance from our brokers and clients. We recently starting using multi-layer voice stress testing on those claims where we have reason to suspect some fraudulant acitivity. The results cannot be used to repudiate claims, but can indeed point us in the right direction i.e. was the armed robber staged by the insured and then we investigate this specific aspect of the claim. We are trying to combat fraudulant claims but yet there seems to be great resistance to our efforts. If you as a claimant have nothing to hide, why would you not be prepared to answer question in respect of your loss truthfully?
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Added by Nancy Bowring, 20 Jul 2011
By educating the consumers at school level. My son had an accident with an employer's vehicle - fortunately the employer reported it to his insurer. 1 day short of prescription (3 years later) Alexander Forbes tracked my son down 1 month after he joined a company whose pension fund is administered by Alexander Forbes to summons him for the repairs to their insured's vehicle. My son thought that everything had been settled between the insurers 3 years ago. Fortunately the broker Collin Taggart sorted it all out quickly. Everyone needs to know to report accidents whether amicable agreements were reached at the time or not. Also my sons thought that vehicles were like personal effects and paid out at replacement cost . It is also the general public's opinion that insurers go out of their way to repudiate claims. So how do we change this perception?
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