29 July 2011: South African insurance companies must start working together in order to stamp out insurance fraud, in line with similar initiatives currently being developed and piloted in other insurance markets around the world. Such a move is not only essential for the sustainability of the industry but would also lead to cheaper premiums for consumers.
This is according to Helen Szemerei, CEO at IntegriSure, who says that while there is no firm data on the cost of fraud to the local insurance industry some estimates have suggested it could be as much as R4bn a year. "This is a shocking figure and one that the consumer ultimately ends up paying for through higher insurance premiums.
Szemerei says the local industry can look to the UK for an example of a practical solution. "The British insurance industry is working together to deal with the issue and has collected £9m (about R90-million) from key players to fund a police unit that will combat the estimated £2-billion problem of insurance fraud in the UK."
The police unit has been tasked with investigating insurance fraud and bringing high-profile cases to trial and is also expected to identify measures to stop fraud, such as false claims and so-called 'cash for crash' scams, from taking place.
Szemerei says it is critical that South African insurers take note of such efforts and aim to replicate a similar model in South Africa. "The South Africa Insurance Crime Bureau (SAICB) has engaged a number of insurance industry role players to assist with various crime fighting initiatives and has also been trying to encourage stakeholders to work together on these initiatives."
Crime fighting initiatives being introduced by the SAICB include a focus on cloned vehicles (where more than one vehicle has the same identification number), as well as training to identify stolen vehicles at border posts and automatic number plate recognition software at shopping centres and toll gates.
Szemerei says one of the key aspects to combating organised crime is the sharing of data. "Organised crime, including syndicates, often have affiliations with industry stakeholders and other large service providers to the insurance industry. As a result, it is crucial to deal with this at a high level in order to root out insurance fraud and corruption."
"Some industry role players are hesitant to share their data, not because they oppose crime fighting initiatives, but rather as a result of data security. However, SAICB is very sensitive to this issue and is putting the necessary confidentiality contracts in place to ensure all role players have peace of mind regarding the use of their data."
"It is in the interest of all that industry role players and consumers participate in fraud-prevention measures, as a successful collective effort should definitely result in more affordable insurance premiums."
Media enquiries: Bruce Nortje – bruce@integrisure.co.za