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Category:
Insurance
News /
Short Term
Insurance /
Insurance
Fraud
/ June 2008
Escalating Insurance Fraud Set To Hit Consumers Hard
With consumers and businesses coming under increased cash flow
pressure from higher interest rates and inflation, insurance
companies are noticing a marked increase in the number of fraudulent
insurance claim submissions.
Adam Samie, CEO of Lion of Africa Insurance says that in the UK,
with 1 in 10 claims being fraudulent, fraud costs the industry and
thus consumers BP1.4bn per annum adding BP40 annually to the cost of
insurance premiums.
In
South Africa, the ratio of fraudulent claims is higher costing the
short term insurance industry alone close on 2 billion Rand per
annum.
“In
the current economic climate any further increases in fraudulent
claims will present even more unfortunate and negative predicaments
for honest consumers who will ultimately be bearing the brunt as a
result of higher premiums implemented by insurers in an effort to
recoup their losses” says Samie.
Samie who also chairs the South African Insurance Association (SAIA)
has expressed an urgent need for industry experts and professionals
to address this issue through the recently developed Insurance Crime
Bureau (ICB), an independent industry body aimed at curbing and
preventing insurance related crime in South Africa.
“With the likelihood of insurance premium increases already being
high, the industry at large needs to come together, share
information and act fast in order to safeguard and protect our
consumers” adds Samie.
Noor Osman, Lion of Africa representative to the board of directors
of the South African Insurance Crime Bureau says, “Lion of Africa
have played a pivotal role in spearheading the establishment of the
ICB, where research that we have reviewed has shown the successful
implementation of fraud prevention units abroad in the UK and
Switzerland, where we are confident that our local efforts will show
equally good results.”
According to Samie, fraudsters are not only violating the rights of
the consumer but are corrupting the basic communal principle
governing insurance practices, whereby the losses of the few are
made good (indemnified) through the contributions of the many.
Thus criminals who are caught by the ICB will be reported to the
relevant law enforcement authorities and prosecuted.
“The purpose of insurance is to create structures where the masses
have access to sound recourse to protect their wealth and
livelihoods against the consequences of unforeseen events."
"These criminals are defying this basic truism by creating a corrupt
situation where both the insurer and the consumer, and thus society
at large will suffer harm”, says Samie.
Samie adds that with the current economic pressures already having
inflicted considerable difficulty onto the consumer, the ICB will be
paramount in curbing any additional financial burden on the consumer
as a result of higher insurance premiums.
“The ICB forms one of the many crime fighting units in the country
and we believe that this initiative will play a role in reducing the
economic cost of crime to the country” says Samie.
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
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