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Taking the fight to insurance fraudsters

09 April 2009 Gareth Stokes

The South African Insurance Crime Bureau (SAICB) is the latest insurance-led initiative to combat the country’s spiralling crime. FAnews Online spoke to Melanie Pillay to find our more about the organisation. The SAICB was established in July 2008; but the idea for an independent cross-company insurance database was hatched some four years previously. A the time the South African Insurance Association (SAIA) fraud committee was finding it increasingly difficult to combat cross-company fraud due to a reluctance of member companies to share data.

After four years of careful planning, including assessments of insurance fraud bureaus in the UK and Sweden, the section 21 company was born. It has the backing of 11 member companies that account for approximately 90% of market share in the short-term insurance industry. Members include Santam, Mutual & Federal, Hollard, Zurich, Lion of Africa, Regent, Telesure, ABSA Insurance, Standard Bank Insurance, Outsurance and MiWay. “Insurers recognised a need and are putting their money behind the programme,” says Pillay. The SAICB will also work closely with partners (SAIA, Transunion, Fraudline and Memex) to create the best possible crime fighting platform.

Creating a ‘super’ database

The SAICB comprises a board committee, special points of contact committee and fraud committee. SAICB will use a ‘super’ database compiled from shared information to flag suspicious transactions for further investigation. Cases will be built with input from the police and the national prosecuting authority with the aim to ensure an investigation to prosecution outcome. This should send a stern warning to any organised criminals who openly abuse the short-term insurance industry.

With the operational aspects handled early on, the next step was to create a database from which leads could be generated. Pillay says the process of “customizing the Memex system to the special needs of the insurance environment and the specific function of detecting possible fraudulent behaviour from the data,” is almost complete. Once the database is fully operational its as simple as keeping Memex ‘fed’ with the latest industry information provided by SAICB members. There has been “a huge willingness to share information,” says Pillay.

The SAICB isn’t going to chase after one-time offenders and other isolated incidents. Instead, the focus will be on syndicated fraud, repeat offenders and cross-company fraud. Pillay says one of the organisations ongoing investigations already spans eight insurance companies. The idea is to get to grips with the organised criminal elements blighting the short-term landscape.

Potential for expanded operations

Although the SAICB was established as a short-term insurance crime bureau there is scope to expand its influence in future years. Perhaps we’ll see similar initiatives in the long-term and healthcare industries in the future. Pillay says that discussions are underway to create databases of industry employees and third party suppliers. This will further assist members in dealing with their day-to-day operational requirements. The goal is “to reach a stage where people realise it’s extremely difficult to defraud an insurance company,” says Pillay. And while the SAICB is never going to be as visible as Business Against Crime, we’re sure the insurance industry will welcome any initiative that can work behind the scenes to pounce on insurance fraudsters when they least expect it!

Editor’s thoughts:
We believe there are numerous areas where short-term insurers could clamp down on ‘fraudulent’ activity – tighter administration at policy inception and rigorous monitoring of claim submission and settlement spring immediately to mind. But when it comes to organised or syndicated crime they need all the help they can get. Have you come across any claim activity which could be linked to an insurance fraud syndicate? Add your comments below, or send them to gareth@fanews.co.za

Comments

Added by Quinten Knox, 09 Apr 2009
Hi Gareth. Who makes up the remaining 10%? If I have to render the best advice that I can, as FAIS requires, then I need to know who the companies are that do not want to support a national crime combatting initiative undertaken by the other 90% of the market. I want to know the reasons for these insurance companies' stance in the matter so that I can inform my client sufficiently to make an informed decision. I have a moral and a legal duty to do so. Who are they? Regards, Quinten.
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