Intermediaries… be aware

Garth de Klerk, Chief Executive Officer of the Insurance Crime Bureau

In COVID-19 times, crime is rife. FAnews spoke to Garth de Klerk, Chief Executive Officer of the Insurance Crime Bureau about insurance fraud in the wake of the pandemic and lockdown, the trends in both the non-life as well as the life industry when it comes to fraud and crime and the role intermediaries play in the detection and combating of fraud.

Insurance fraud during the pandemic 

“There has been a definite uptick in claims related fraud over the last 12 months, some of these cases are from the ‘usual syndicates’, while an increasing number are originating from individuals who are experiencing financial pressure and are desperate for cash. These fraudulent claims experiences vary per insurance sector. In the life insurance industry, for example, we have seen a dramatic increase in death claims where syndicates have taken the opportunity to attempt to push through claims hidden in the volume of COVID deaths,” said de Klerk. 

“With Work From Home (WFH) and Work From Anywhere (WFA) being the new norm we have had to be cognisant of the resultant stretch in corporate controls, and very quickly evolve the organisation to close gaps and improve detection methods. As a broader insurance industry there have been some really successful interventions implemented to share fraud data, thus ensuring that the false claims are identified, and the perpetrators are legally dealt with,” added de Klerk. 

Trends in non-life and life industry 

“Syndicates are sophisticated, ruthless and well organised. They have members inside organisations who facilitate the bypassing of controls in a number of ways including facilitating identity theft, false financing, a variety of vehicle related crime all attempting to abuse insurance and financial products to derive illegal benefits,” said de Klerk. 

“In the non-life industry, we see a variety of vehicle related crimes such as staged accidents, double dipping, and even false theft or hijacking reports. Also common is the attempt to report the loss of or theft of electronics which would be the claimed on a ‘fast track’ basis resulting in expedited claim payments. In the life industry most of the fraud relates to ‘insured interest’ and the right of the beneficiary to caliom on the deceased. Sadly, we also see cases where murder is committed purely with the intention to claim a financial benefit under a policy,” he continued. 

“Insurers are implementing sophisticated digital solutions, including centralised fraud data pools, to ensure that they are better equipped to quickly identify and mitigate risk attached to fraud and false claims. Insurers are committed to paying valid claims, treating clients fairly as well as protecting the general public by tightening the controls in this area,” he added. 

“Resultant from the above, we are fortunate to experience high levels of success as regards identifying, charging and prosecuting the perpetrators of these crimes. Through our relationships with law enforcement, we have been able to  obtain numerous convictions, mitigating further risk in the environments in which we all live and work,” he said. 

Intermediaries in combating fraud 

“Intermediaries play an obvious and crucial role, as in most circumstances, they are the face of the industry. They understand the policyholder, as well as the products offered and it is possible for them to spot suspicious activities in the early stages of the scam or event,” he said. 

“We encourage intermediaries to always be aware of the fraud and reacted crime risks, and to communicate with the insurers to ensure we maintain a clean and fair environment for all stakeholders,” continued de Klerk. 

“The best way to combat crime is a common cause community. We must share information to create intelligence, working together to ensure fraud and related crime is identified and dealt with effectively. Encouraging and growing an attitude of co-operation is of paramount importance,” he concluded. 

Writer’s thoughts:
There is a saying that goes, ‘two minds are better than one’ which is where the power of collaboration lies. With crime being increasingly prevalent in South Africa, it is commendable that the underpinned key message to combat crime is in collaboration and cooperation because collaboratively, we can drive real change. Do you believe crime in SA could be minimised as a result of collaborative efforts or does something else need to happen in order for us to really see the change? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts - myra@fanews.co.za.