Concerted industry efforts yield success in fighting fraud and economic crime

Commercial Lines

Concerted industry efforts yield success in fighting fraud and economic crime

Published: 26 September 2014

South African Police Services Minister Nathi Nhleko announced an overall increase of 46.7% in commercial crime over the past 10 years from 2004/5 to 2013/14, however the category decreased by 13.6% for the period April 2013 to March 2014.

Santam has up to end June this year reported a total of 63 cases of economic crime with a total value of R9 million to the South African Police Services.

Santam classifies inflated claims, false claims, underwriting fraud, false invoices, theft of premiums, etc. as economic crime.

Santam's data for the 2013/2014 period shows:

  • A 10% decrease in reported commercial vehicle theft claims
  • An 11% increase in reported vehicle high jacking claims
  • A 11% decrease in reported personal lines vehicle theft claims
  • A 15% increase in reported business burglaries (Burglary refers to when there is no contact at all between a victim and the perpetrator)
  • A 6% increase in reported business robberies

Helen du Toit, head: Audit and Forensic Services at Santam says the industry has prioritised vehicle crime as a focus area: "70% of the industry claims relate to motor vehicles and we have noticed an increase in theft and hijacking claims in certain areas. Motor vehicle claims also make up a significant portion of Santam's claims. The industry, working with the South African Insurance Crime Bureau (SAICB) has set up numerous initiatives in conjunction with SAPS and other stakeholders to address this matter," notes du Toit.

"Economic crime within the insurance industry affects the sustainability and affordability of insurance as a compensation mechanism and it is therefore crucial that insurers reach out to stakeholders within SAPS and the criminal justice system to ensure effective measures are implemented to counter and curb this scourge. Furthermore, we are encouraged that the National Prosecuting Authority considers economic crime within the insurance sector as a crime against society. This is very positive as it raises the seriousness thereof, we have been lobbying for this for some time now," adds du Toit.

Du Toit continues: "Santam's Economic Crime Forums (ECF) in Cape Town, Johannesburg and Durban has over the past four years achieved positive results in terms of the innovative work done to reduce economic crime in partnership with various stakeholders including the SAPS, the Asset Forfeiture Unit, SAICB, the criminal justice system and with other insurers. Examples of this work include insurance fraud training to SAPS and the NPA and removal of blockages experienced in the investigation processes."

The 2014 PwC global economic crime survey released earlier this year found that 69% of South African organisations had experienced some form of economic crime in the past 24 months, compared with 37% globally.

In a startling statistic, senior and middle management are now the main perpetrators of economic crimes - collectively amounting to 77%.

Other shocking findings in the 2014 South African report are that bribery and corruption have been the fastest-growing economic crime category since 2011 and that the percentage of South African respondents reporting fraud has increased since the 2011 survey, for the first time since inception thereof.

"While it is alarming that we're the country most affected by economic crime, it is positive that the penny has dropped and the industry now understands the severity of the problem and is taking steps to rectify the problem.

"We're reaching out to stakeholders in our quest to curb the problem because we realise that a concerted effort through a strong network can achieve success in fighting fraud and economic crime," du Toit concluded.

Santam regularly shares advice and valuable safety tips with business owners and operators, encouraging small business owners to take all necessary precautions to avoid becoming victims of crime.

According to Santam, underinsurance is still common among South African small businesses.

Unforeseen setbacks could cost business owners dearly, if they are not adequately insured. Wherever businesses operate, owners would do well to always ensure they have adequate and appropriate insurance in place.