International Fraud Awareness Week: South African insurers urged to be more vigilant
It is estimated that insurance crime – including insurance fraud, theft, money laundering and cybercrime – costs the insurance industry around R3/4 billion a year, according to the South African Insurance Crime Bureau (SAICB). Santam reported 78 cases to the value of R11.2 million to the SAPS for criminal investigation between January and September 2015.
“Santam has a zero tolerance towards criminal conduct, but reducing this high figure will only happen if there is collaboration between insurance companies and their employees, intermediaries, suppliers and policyholders, and law enforcement agencies and industry bodies,” says Jerry Chetty, manager: forensic services at Santam.
To this end, and in support of International Fraud Awareness Week from 15 to 21 November, Santam will this week amplify its activities around creating awareness of insurance crime. This global initiative is hosted by the Association of Certified Fraud Examiners (ACFE). Santam will host a number of events around the country for staff during the course of the week, including a series of interactive industrial theatre productions.
Perhaps more alarming is an estimate by the South African Insurance Association (SAIA) that around 10% of all claims contain an element of fraud. Chetty says that to combat the phenomenon of insurance crime, all insurance companies need to have appropriate fraud policies and processes, as well as holistic fraud risk management strategies, in place, and provide training to employees to ensure vigilance at all times.
Santam, for example, has upgraded its fraud policy to a new business integrity policy, providing details of the important aspects of insurance crime and outlining the company’s approach to deterring, detecting, preventing, responding and redressing misconduct at all levels of the insurance value chain.
Globally, fraud costs organisations an estimated 5% of their annual revenues, according to a 2014 study conducted by the Association of Certified Fraud Examiners (ACFE). If applied to the 2013 estimated gross world product, this translates to a potential projected global fraud loss of nearly $3.7 trillion.
The significance of this universal fraud problem is why Santam has for a number of years participated in International Fraud Awareness Week to promote anti-fraud awareness, as well as education and training to staff and other stakeholders.
Santam supports the ACFE initiative by raising awareness around fraud risks and fraud scams, and by training staff to be more vigilant in detecting fraudulent claims. The insurer’s current statistics indicate a decrease in fraud-related incidences, mainly due to vigilant staff, effective processes and proactive initiatives such as fraud awareness campaigns.
This year, Santam also partnered with individual motor body repairers and the various motor body repairer associations across the country to encourage them to align with Santam’s ‘doing business with integrity’ initiative, and to raise awareness of crime in their respective environments. There has already been an overwhelming response, with a host of motor body repairers having pledged to continue conducting their business with integrity.
As part of the company’s on-going efforts to fight insurance crime, Santam is a member of the SAICB and supports its various programmes. The company has also done much innovative work over the past few years in partnership with stakeholders such as the South African Police Service (SAPS), the Asset Forfeiture Unit, the criminal justice system and other insurers. Examples include the provision of insurance fraud training to the SAPS and the National Prosecuting Authority (NPA) and the removal of blockages experienced in the investigation process.
“It is important to realise that insurance crime is a phenomenon that the insurance industry cannot counter in isolation. At the same time, the SAPS and the NPA also can’t do it on their own. Insurers need to reach out to stakeholders to curb this costly problem – it is only through a concerted collaborative effort and a strong network that we will be able to achieve success in fighting the scourge of insurance crime. Ultimately, insurance crime affects the sustainability of the insurance industry,” concludes Chetty.