Fraudulent insurance claims were costing South African consumers a staggering R3bn a year, Jonathan Holden, executive at Lion of Africa Insurance, said late last week. Widespread fraud means a continued steep increase in monthly premiums in the insurance industry, which has been under pressure in the past three years as consumers surrendered and cancelled their policies due to tough economic conditions.
According to Standard Bank, short term insurance fraud accounts for almost 15% of South Africa''s premium cost. Holden said three cases of fraudulent activity were recently recovered amounting to about R580000. There are also a further 16 cases, totalling about R36m, that are currently under investigation.
South Africa''s high profile insurance fraud case is the one that was allegedly committed by Radovan Krejcir, who is wanted by the Czech authorities on charges of tax fraud and conspiracy to commit murder.
Krejcir has been charged with fraud following a R4.5m insurance claim he made last year. Earlier last month, a Johannesburg-based urologist admitted falsely diagnosing cancer in Krejcir so the insurance claim could be paid. It is understood that Liberty, South Africa''s third biggest insurance company, has already paid out the claim.
Holden said local insurance industry bodies needed to work with authorities to identify and prosecute the perpetrators of the fraudulent claims. "With potential insurance premium increases on the horizon, the industry at large needs to come together, share information and act fast in order to safeguard and protect consumers financially," Holden said.
He also said new organisations such as the Crime Bureau of South Africa were going a long way to identifying and eliminating illegal activities. The bureau makes use of highly sophisticated technology to track fraudulent activities in the industry. Holden urged insurance companies to join initiatives such as the bureau in order to see a potential reduction in insurance premium increases.
Established in 2008, the bureau currently consists of 10 member companies. These include Lion of Africa Insurance, Santam, Mutual & Federal, Hollard, Outsurance, Momentum, Absa, Regent and Miway. The bureau collects claims from all member insurance companies and works very closely with the South African Police Service, the Hawks, the South African Revenue Service and the justice system to identify areas of fraudulent claims.
Holden said affiliation with the bureau had enabled Lion of Africa Insurance to cross-check claims with recent police reports from road blocks and spot checks in order to assess the credibility of certain vehicle claims.
"For example, we can track whether or not a driver was under the influence of alcohol at the time of an accident by cross-referencing the claim with data captured by the police from road blocks in the area," Holden said. "Based on this, the insurance company can take the decision to restrict the policy or raise the premiums."
Another proactive initiative by the Crime Bureau led to the recovery of about 350 vehicles from two separate police pounds in KwaZulu-Natal.
Source -http://thenewage.co.za
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