Insurance Crime Bureau: The insurance industry comes under fire as the cost-of-living crisis increases

The insurance industry comes under fire as the cost-of-living crisis increases.

The world is currently facing one of the harshest economic climates experienced since the 2008 Global Financial Crisis, one of the worst financial crises in modern history. This raises concerns that more people may turn to fraud to address the financial pressure they are experiencing.

"Rising inflation and the current war in Ukraine are two major contributors to an increasing cost of living crisis. This is putting many people in a difficult financial position; reports out of the United Kingdom show that people are increasingly considering turning towards fraud to relieve this pressure," says Manie van Schalkwyk, CEO of the Southern African Fraud Prevention Service (SAFPS).

Recent international fraud tactics

Research by the Insurance Fraud Bureau (in the UK) points out that as many as one in four young adults now say they would 'likely' consider an act of insurance fraud if they were struggling financially, which is a marked increase when compared to the same survey results taken last year.

The 2023 survey found that if struggling financially, one in four (27%) 18-24-year-olds would think about lying on an insurance application to save money. In 2022, this statistic was one in five (21%) in 2022. Further, one in five (22%) 25-34-year-olds are considering this type of crime in 2023. In 2022, one in six (16%) people considered this.

Insurance fraud to make money is also a growing tactic. The Insurance Fraud Bureau points out that one in five (21%) 18-24-year-olds would consider lying on an insurance claim to make money; this statistic was one in seven (14%) in 2022. Nearly one in five 25-34-year-olds (18%) would resort to the same measures; this statistic was one in seven (13%) in 2022.

The research points out that, across all age groups, one in ten people said they would consider making a fraudulent insurance application or claim if struggling financially. Nearly two in every five (38%) respondents also said they felt financially desperate, specifically due to the impact of the cost-of-living crisis.

Will these stats be replicated in South Africa?

Garth de Klerk, CEO of the Insurance Crime Bureau (ICB), points out that while the ICB does not have access to the same kind of information that the Insurance Fraud Bureau does when it comes to the likelihood of insurance crime increasing within specific age groups, he points out that the ICB is aware of the current economic climate and the overall impact that it has on the insurance industry.

"While we don't keep the same kind of statistics as to the profile of offenders in South Africa, it is fair to say that there probably is an increase in the same age brackets where youngsters are feeling economic pressure and unemployed. If you have a look at the unemployment rates in South Africa, they are very high in the age brackets discussed in the Insurance Fraud Bureau statistics," says De Klerk.

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