Giving fraudsters a run for their money

The global economic crisis forced many consumers to tighten their belts and as finances come under pressure, some individuals are trying more creative ways of making money by turning to insurance fraud.

Ken Lawrence, General Manager: Claims Technical at Mutual & Federal says the main cause of fraudulent insurance claims is directly related to a need for money and financial desperation, combined with the misconception that the claimant will get away with it.

Firmer focus

Insurance fraudsters should tread carefully. The insurance industry is increasing its focus on fraudulent activity and has already identified several triggers of intolerable behaviour such as misrepresentation, non-disclosures and attempts to include items in a claim which have been specifically excluded from the policy.

"Policyholders who intend letting their policies lapse might try to make one last claim. All these attempts and techniques are completely unacceptable to the industry which is now showing zero tolerance to these types of claims," says Lawrence.

Trained fraud spotters

Fraudulent claims are blind to race, gender and income levels. The lines between fraudulent business claims and personal cover claims are becoming increasingly blurred. But it doesn't matter what avenue policyholders choose to make fraudulent claims, fraudsters will be identified.

The primary gatekeepers are the insurers' employees who are meticulously trained to spot any signs of a possible fraudulent claim. One of the most obvious triggers is an aggressive policyholder who wants the claim expedited and makes threats if this isn't done.

Most honest policyholders accept the fact that there is an investigative process to follow and that claims cannot simply be paid out at face value. The honest claimants are usually patient and co-operative.

Multiple approaches

The South African Insurance Crime Bureau (SAICB) was recently established to address the escalating problem of fraud in the short-term insurance industry. Most insurers have already set up hotlines and anonymous tip-off platforms and have nurtured strong relationships with authorities, including the SAPS and Interpol.

Mutual & Federal leads the way when it comes to vehicle fraud. In most cases vehicles are transported out of South Africa to neighbouring countries and could even find their way to Europe. Recovering these vehicles can prove to be expensive and time consuming. Mutual & Federal is dedicated to bringing the vehicle back into the country and extends its policy of zero tolerance to include corrupt officials.

"If we encounter officials in these countries requesting bribes to accommodate the repatriation process, we will not participate in this practice, even if it means the asset can only be recovered at a later date," says Lawrence.

Significant savings

Reducing the incidence of fraud in the short-term insurance industry can lead to significant savings, which can be redistributed into the premiums of the honest policyholders. "It's unacceptable that compliant policyholders, by far in the majority, should have to finance the fraudulent claims of a dishonest few," concludes Lawrence.