Rooting out insurance fraud
What is the industry doing to stop insurance fraudsters in their tracks? Two years ago the country’s short-term insurers decided to set up an organisation to create a unified front against insurance crime. Their efforts culminated in the establishment of
In the second year the SAICB got down to business. The group channelled its resources into the core business of fighting crime and fraud in the insurance world. The SAICB’s key focus areas – as set out in their recently published Year in Review – include data acquisition, investigations, prevention and awareness. Today we’re going to take a look at some of the successes achieved in the financial year ending 30 June 2010. Perhaps we can suggest some areas where astute insurance intermediaries can be of assistance too.
Knowledge is power
Knowledge is the cornerstone of the SAICB fight against insurance fraud. The company says it now has 131 data sources from member companies and third party information partners. This data is warehoused by the SAICB and “farmed” for leads. The SAICB cross references the data for anomalies in an attempt to spot suspicious activity – a bit like searching for a disturbance in the Matrix (from the Hollywood blockbuster “The Matrix”). They observe: “We continually fine-tune the business rules we use to identify possible syndicates and syndicated behaviour, as well as repeat offenders and their modus operandi.”
The SAICB also distributes a number of lists to its member companies to help them to identify and combat fraud internally. These include the SAPS 13, Dräger and Tracker lists, as well as enquiries from SARS and the NPA Assets Forfeiture Units, short term insurers and related industries.
How can financial services intermediaries assist? Your best line of defence against fraud is to know your customer. If you conduct your business professionally you should always be asking questions of new clients. So – especially when it comes to ‘fresh’ leads – you should add a couple of questions to your repertoire… What happened at your last insurer? Why are you making these changes now? Have you ever had a claim refused? Etc. If you become suspicious of a particular request or instruction you should certainly broaden your investigation.
Tackling organised crime and syndicates
A couple of years ago I sat through a Business against Crime South Africa presentation and clearly remember scoffing at the suggestion much of the country’s crime stemmed from organised syndicates. In recent months my eyes have been opened as I read accounts of testimonies in the fraud and corruption hearing of ex Police Commissioner Jackie Selebi and the murder trial of Glen Agliotti. It seems organised crime has infiltrated the police and private corporations at very high levels. Of greater concern is the willingness of the country’s prosecuting authorities to offer immunity to questionable characters for their equally shaky testimony.
The SAICB plays a valuable role in identifying and investigating syndicated activity in the insurance space, bearing in mind many of these crimes cross over into the world of violent hi-jacking and theft. They are actively involved in efforts to repatriate stolen vehicles from neighbouring countries through their Lesotho pilot project and the Consumer Goods Council project. The SAICB is also working with the SAPS to assist with the identification of vehicles used in mall attacks and the education of border police and car-pound personnel to assist in identifying and returning recovered vehicles to their rightful owners.
Insurance fraud has to be combated from within the industry too. Short-term insurers are already benefiting from the implementation of a Fraud-line and Staff Dishonesty database. “The Staff Dishonesty database ensures that the fraudsters that work within our industry are identified and weeded out, and not allowed to resurface and continue committing fraud and crime in the short-term insurance environment,” says the SAICB.
The things people do
The SAICB mentions some real world examples to show us what they’re up against. In July this year, for example, the SAPS contacted the SAICB for help in identifying items recovered during a routine investigation: three motorcycles, a trailer and a Mazda bakkie. It turns out the complainant (who reported these items stolen in June 2009) rented a storage unit, stored the items there, and submitted claims to four different insurance companies, totalling R951 000. “The ‘complainant’ was arrested and charged with fraud!”
Activities such as these keep the SAICB extremely busy. They have 15 cases under investigation at the moment, with approximately R120 million at stake. They also have three ongoing projects. “Specifics on these cases and projects can unfortunately not be elaborated on as they are ongoing,” says the SAICB. The war against crime is fought on many fronts. It’s clear from the information in their annual review the SAICB is taking steps in the right direction. They’ve enjoyed a successful year and will continue to work tirelessly for the benefit of their member companies and the country as a whole.
Editor’s thoughts: The South African Insurance Crime Bureau is laying solid foundations to tackle both opportune and syndicated fraud in the short-term insurance space. If every stakeholder in the short-term industry plays their part we’ll be able to stamp out insurance fraud once and for all. What can insurance brokers do to minimise instances of fraudulent short-term insurance claims? Add your comments below, or send them to [email protected]
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