Broad approach: insurance crime and fraud

Industry players are taking an increasingly broad approach to combat fraud in the short-term insurance market.

Individual insurers often have their own fraud and investigation units. For example, Mutual & Federal has a Specialist Investigation Unit dedicated to combating fraudulent claims. With 18 branches across South Africa and 47 highly trained staff members, the unit has been highly successful to date. Some of the most significant successes have been achieved in the investigation of theft and hijacking of motor vehicles, housebreaking, arson, robbery and theft.

Industry-wide approach

"Our relationship with the short-term insurance industry, the South African Police Services (SAPS), National Prosecuting Authority (NPA) and the South African Fraud Prevention Services (SAFPS) will ensure that fraudulent claims are reduced or eliminated to a great extent," says Sedick Isaacs, executive general manager for Claims at Mutual & Federal. "Nevertheless, the industry as a whole recognises that fraud needs to be addressed as a unified force to have maximum impact. For this reason, Mutual & Federal and other short-term insurers have pledged their support to the South African Insurance Crime Bureau (SAICB)."

Significant progress

SAICB was formed last year to address organised fraud and crime in the short-term insurance industry. Since its inception, SAICB has made a significant impact in identifying possible fraudulent activities through pooling vital information into a single data base using the Memex system.

The first SAICB multi–member company investigation has now reached a critical stage and is under discussion with the relevant authorities including SAPS, NPA, SARS and the NPA Assets Forfeiture Unit, for final review. "The cooperation and dedicated participation of the member companies involved have set the stage for a comprehensive and detailed case, which we hope will lead to our first successful prosecutions," says Hugo van Zyl, Head of Operations for SAICB.

Beyond the industry

In addition to the major investigations, the SAICB has also been working through the many lists and queries received from the industry and external partners. Lists involved include stolen or hijacked vehicles that were recovered with the co-operation of the tracking companies. This has resulted in many successful hits off Memex, but the net is spreading even further. SAICB has also entered into an agreement with other organisations to pool crime and fraud information. This means that the fraud prevention footprint in South Africa will spread across insurance and financial services.

Protecting clients

"Technological advances in the investigation techniques related to the short-term insurance industry are making it possible to identify and eliminate fraudulent claims from the industry," says Isaacs. "Mutual & Federal has adopted a zero-tolerance policy towards fraud and every individual caught will be prosecuted to the full extent of the law, to ensure that our valued and honest policyholders are not forced to pay higher premiums due to an increase in fraudulent activity."