Insurance Fraud

Insurance fraudline could help to reduce car insurance fraud

Written on August 11th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Claims, Car Insurance Crime, General Information, Insurance Fraud

fraud Car insurance fraud is one of the contributing factors increasing car insurance premiums.

Too many false claims are submitted – and much more needs to be done to prevent these fraudsters. Car insurance companies have their own investigators – but they can be well assisted with support from the private sector and individuals from society.

We would like to reflect for a moment on one of these initiatives to prevent insurance fraud:

DELOITTE—INSURANCE FRAUDLINE

Deloitte Tip-offs Anonymous is proud to be associated with the South African Insurance Crime Bureau (SAICB) and the South African Insurance Association (SAIA) for the past 9 years – the last two years under the auspices of the SAICB and the previous 7 years through the SAIA, aiding them in their fight against fraud and crime in the South African insurance industry. Assisting companies in fighting fraud and crime is our core business and therefore our alignment with the SAICB is allowing us to achieve our core objective as well as ensuring that as a team we continue to make a positive difference in our country.

One of the serious current issues facing businesses today is occupational fraud. This was also confirmed by a recent global fraud survey- which included South Africa and other African countries – conducted by the Association of Certified Fraud Examiners where they stated that a typical organization loses 5% of its annual revenue to fraud.

The media is filled with news and reports of scams, fraud and inappropriate behaviour within organisations. But this is only the tip of the iceberg. Unreported or undetected fraud is the real threat, like the 90% of an iceberg which lies below the surface, invisible and dangerous. Discerning captains of commerce and industry throughout the world are fully aware that even the best organisations are not unsinkable as they navigate their course through icy seas where there are many icebergs. But it doesn’t matter whether you’re the captain or the most junior crew member – hitting an iceberg could mean disaster for everyone.

According to Nicholas John, Chief Executive Officer of Deloitte Tip-offs Anonymous, statistics indicate that commercial crime reported had increased by nearly 30 percent since October 2009. John pointed out that people across the board were ―living on the edge‖ as a result of the recent economic downturn that began to impact South Africa towards the latter part of 2009, so vigilance especially now was critical.

Deloitte Tip-offs Anonymous facilitates the insurance fraud and crime hotline service for the SAICB, which is a powerful, low-cost, 365-day a year, 24-hour fraud and crime-reporting subscriber service in a number of languages, which allows the general public and stakeholders of member company, government departments or state-owned enterprises to report incidents of fraud and crime in an anonymous and confidential manner.

The service provides an independent third-party toll-free telephone, fax, email, website and freepost address which enables the general public and stakeholders to report unethical, criminal or other inappropriate behaviour in their organisation or observed/experience about other organisation/s or people. A report is then forwarded to the subscriber for action, in this instance the SAICB.

The Fraudline has been an integral part of the SAICB’s service to the industry and to date, reports from the Fraudline has resulted in two cases being investigated by the SAICB and valuable information on possible fraudulent activities by individuals sent to the industry to review.

Recent economic trends in SA show that as GDP growth decreases, commercial crime in-creases. This indicates that there is very little money to put towards the economy which leads to consumers in debit and under stress to consider committing fraud and crime in greater numbers. In the current economic situation this trend is bearing out and the vigilance of the public and affected organisations is vital in turning the tide.

The present and future partnership between Deloitte Tip-offs Anonymous and the SAICB is an essential cog in the fight against insurance fraud and crime in the country.

[Information from the South African Insurance Crime Bureau] SnipImage(16)

Also view:

Blow the whistle on insurance fraud?
Be alert to the types of Car Insurance Fraud
South African Insurance Crime Bureau tackles insurance fraud

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Tags: blow the whistle on fraud, crime, fraud, fraudline, South African Insurance Crime Bureau
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What are the methods used to smuggle vehicles across South African borders?

Written on May 18th, 2010 by admin
Categories: Car Insurance Crime, Insurance Fraud

We have given much attention to the risks of vehicle theft and the need to protect ownership through the correct vehicle security systems. We have also provided some insight to the large quantities of vehicles illegally crossing our borders in the hands of thieves and hijackers. But how do they do it?

The South African Insurance Crime Bureau has revealed how criminals use a variety of methods to take vehicle across the borders of South Africa – and we would like to share this information with our vehicle owners:

Not crossing official border posts

In some instances, vehicles are driven across the long borders without going through an official border post. Some border lines between South Africa and its neighbours are only defined by long stretches of cattle fencing that can easily be cut or flattened to allow vehicles to cross.
Criminals simply cut the wire around the bigger poles, drop the smaller poles and drive through. Patrolling this type of terrain next to the border fence is tough due to the inaccessibility of the area, and the fact that the Government stopped the SANDF from patrolling the area. (Fortunately it seems that soon the SANDF will be patrolling our borderlines again.)

Crossing the Border posts

A variety of methods is used to smuggle vehicles through the border post itself:

The first involves the fraudulent removal of vehicles from South Africa with the permission of the vehicle owner. Once the vehicle has crossed the border it is reported stolen or hijacked in South Africa.
This form of crime often involves bank and insurance fraud as the owner will claim insurance for the “theft”.
Another method involves the use of duplicate documentation. In such cases, a vehicle will be stolen or hijacked and then taken out of the country using duplicate documentation that does not belong to the said vehicle. The duplicate documentation actually belongs to a vehicle with the same model and make as the one being smuggled out of the country, and often belongs to a vehicle that has either been scrapped or disassembled.
This form of crime often takes a fairly experienced eye to detect. This is especially the case when the engine and chassis numbers have been tampered with and the original numbers are difficult to detect.

Using criminal contacts / Partners in crime

Stolen or hijacked vehicles can be re-registered with relative ease by using contacts working in the Licensing Department.
The false registration documentation will then be used to smuggle vehicles across the borders.
There are also known cases where people from a neighbouring country may order a stolen vehicle in advance. In such cases, the vehicle may be pre-registered in a neighbouring country before or immediately after it has been hijacked or stolen. The stolen vehicle will then be taken across the border by using the new registration papers of the country from where it had been ordered.

Where vehicles are smuggled through border posts, as opposed to across border lines, it is common practice to use export permits or temporary import permits. In these circumstances, the networks rely on identified weaknesses in systems at border posts, lack of compliance with procedures at border posts, or corrupt officials stationed at these posts.

During a visit to Lebombo Port of Entry/Exit it was found that some criminals even go as far as to carry motorcycles in suitcases or bags across the border.

[Information accredited to the South African Insurance Crime Bureau]

Conclusion and Advice to Vehicle owners

You might not be able to do anything to improve our border control of prevent fraud at our licensing department or border posts. What you might be able to do is to protect your vehicle from ending up in the hands of criminals.

We would like to urge all vehicle owners to view the following sections:

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Tags: car theft, crime, hijacking, smuggle, vehicle theft
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Cross-border vehicle theft makes car insurance a necessity in South Africa

Written on May 11th, 2010 by admin
Categories: Car Insurance Crime, Insurance Fraud

It was recently revealed in the media that approximately 100 vehicles are stolen and taken over the border to Mozambique every month! We shared this comment on Facebook and soon a few of my friends commented that they believe their vehicles might have been relocated to Mozambique as well!

Crime is one of the most important factors contributing to increased car insurance premiums. Vehicle theft and hijackings increase the risks of vehicle loss for car insurers and is one of the reasons why South African vehicle owners have to fork out much more for car insurance premiums.

But how big is the risk that my vehicle might get stolen and taken across our borders?

The South African Insurance Crime Bureau has revealed fascinating research results on this topic in the latest newsletter, and we would like to share some of this information:

During the 1980s the police identified the smuggling of vehicles across Southern African borders as a problem.
In 2005, researcher Irish stated that South Africa is the major source of vehicles that are smuggled within the SADC region.
According to Interpol statistics, South Africa accounts for between 96% to 98% of all vehicles acquired illicitly within the region.
In 2003 the police revealed that more than 20% of stolen or hijacked vehicles were smuggled out of the country into neighbouring states by organised crime groups.
In 2007 Burgers et al stated that approximately 30% of all stolen or hijacked vehicles are exported illegally and undetected from South Africa, via Ports of Entry/Exit and border lines.
In June 2009 Business Against Crime South Africa (BACSA) said that 20% vehicles are exported to neighbouring countries.

How easy is this cross-border theft for criminals and how many vehicles are recovered?

Burgers (2007) stated that during 2006, approximately 27 000 vehicles left the country.

These vehicles are taken over border posts and from major harbours. Facts on harbour and border posts are:

There are 53 land border posts across approximately 5800 km of borderline.
There are eight major harbours.

It is believed that the recovery rate for these vehicles from most countries in the region back to South Africa is less than I% of those seized in joint operations between the SAPS and police in such countries. At an average value of R80 000 per vehicle, a conservative estimate of the direct financial loss to South Africans as a result of the illegal export of stolen and hijacked motor vehicles is R2.I6 billion per year.

This information emphasizes the need for vehicle owners to protect themselves from vehicle loss. On the car insurance blog we have also added information not only about finding car insurance – but also on the need to have the correct vehicle security systems installed!

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Tags: crime, vehicle theft
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South African Insurance Association (SAIA) launches new industry Code of Conduct

Written on April 7th, 2010 by admin
Categories: Insurance Fraud

On 16 March 2010, the South African Insurance Association (SAIA) launched its new industry Code of Conduct at the Johannesburg Country Club, Woodmead.

The South African Insurance Association (SAIA) represents the short-term insurance industry in South Africa at all levels and with all stakeholders to ensure a sustainable and dynamic short-term insurance industry for the benefit of all involved.

The SAIA acts as the spokesperson of the industry seeking to constructively work with all relevant stakeholders including consumers and users of short-term insurance, Government, the media and other relevant entities.

Purpose of the Code

The purpose of this Code is to: Promote high ethical standards and good business practices in the short-term insurance industry by giving specific guidance on acceptable and unacceptable practices in all the phases and relationships of short-term insurance business; and Give current and potential customers of short-term insurance products a clear indication of the self-imposed guidelines followed by SAIA members who provide such products to them.

Although the guidelines in this Code extend to the associates of SAIA members, the purpose of the Code is to regulate the services offered on behalf of SAIA members by their associates, and not to regulate entities outside the SAIA member base.

The Code therefore forms the basis for resolving any conflict which may arise between consumers and insurers and their associates – while acting on behalf of insurers – that relates to the requirements of this Code.

The sections in the Code relevant to the South African Insurance Crime Bureau are as follows:

11. Fraud and improper conduct
Members of the SAIA are unequivocally opposed to fraud and improper conduct, and will do everything in their power to identify, verify, investigate and prevent such behaviour. SAIA members will follow the following standards in this regard:
11.1 Insurers
All insurers are expected to participate in combating fraud and improper conduct.
11.1.2 Should an insurer cancel a contract with an associate due to the fact that that associate was found to have acted fraudulently or in an improper manner, the following procedure will be followed by the insurer: The insurer will inform the customers of the associate about the cancellation of the contract between the insurer and the associate, as well of the options available to the customers including retaining their current policies with the insurer directly or through another associate, or moving their business with the Associate; Inform the South African Insurance Crime Bureau (SAICB) of the cancellation of the contract with the associate and the reason for it;
11.1.3 Should an insurer be approached by an associate with a book of business, the insurer will establish with the SAICB whether another insurer has notified it about the cancellation of a contract with that particular associate due to the fact that that associate was found to have acted fraudulently or in an improper manner. Should the insurer find out that that associate had in fact been referred to the SAICB, the insurer should not accept business through that particular associate.
The SAICB has put in place systems to incorporate this function into its overall strategy. For further information on this or assistance, please feel free to contact Melanie Pillay on melaniep@saicb.co.za or Hugo van Zyl on hugovz@saicb.co.za
We would like to urge all role players in the car insurance industry to combat insurance fraud!!
[Information from the Newsletter of the South African Insurance Crime Bureau]

Also view:

Blog Posts on Fraud and Car Insurance

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Tags: Insurance Fraud
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What is car insurance “fronting”?

Written on March 18th, 2010 by admin
Categories: Car Insurance Advice, Insurance Fraud

Some car insurance clients neglect to make full disclosure to their insurance providers, whilst others take this even further through “fronting”. Not everyone understands what fronting is – A UK survey has revealed that many vehicle owners are confused about fronting, with 57 per cent unaware that it is illegal – 26 per cent think that it is, while 31 per cent say they do not know one way or the other.

We would like to discuss “fronting” in a bit more detail, explain what it is and why it is such a dangerous and illegal practise.

What is “fronting”?

Vehicle owners regard fronting as a method to get a better deal on their car insurance. Parents with children who drive are the biggest culprits for fronting, and do so in an attempt to cut the cost of young drivers’ car insurance.

This is also used by young and new drivers confronted with expensive car insurance premiums. By allowing an experienced driver to become the main driver on their insurance policy, they find that they pay significantly lower car insurance premiums.

Why is fronting illegal?

Fronting amounts to car insurance fraud as it amounts to a fraudulent disclose of the facts to the car insurer. You are presenting a much higher risk for the insurers than what they have quoted you for. To the insurer the main/ regular driver should be the one using the car most of the time and any additional drivers should be driving occasionally.

An experienced driver is less likely to be involved in an accident than a young driver and will be entitled to cheaper car insurance premiums. If the young driver uses the car more than the main driver, it will be called fronting in car insurance terms. It amounts to giving false information when getting car insurance quotes and is regarded as car insurance fraud.

Difference between fronting and incomplete disclosure

There is an important difference between mere neglect to disclose correctly on the one side – and fronting on the other. Where the vehicle owners allows another person to drive the car regularly without disclosing the facts – there might be no insurance premium saving. I have earlier this week added an addendum to my car insurance policy – a friend is experiencing financial difficulty and will be driving my old 1986 bakkie for a few months. He is of the same age as myself and will be driving in the same area etc. There is no change in the car insurance premium and all that is required is an addendum to add another driver as regular driver.
When vehicle owners are fronting the fault on their part is to be found in the “intention” when they purchase the car insurance policy. They KNOW that the facts disclosed on the policy are incorrect and the INTENTION to BENEFIT from paying a cheaper car insurance premium and then submitting a claim for the damage in the event of vehicle loss or damage will result in car insurance fraud.

In both these cases the car insurance company may dismiss the insurance claim – but in the event of fronting may also charge the client who submits the claim with insurance fraud!

Car insurance companies will investigate all suspicious claims and may question neighbours, friends and colleagues to find who has been driving the vehicle the most. It is simply a risk not worth taking!

Consequences of fronting

Fronting is extremely risky to both the vehicle owner and the young driver. We would like to share a few of the consequences to consider:

Fronting is more than a harmless white lie – it is actually car insurance fraud!
The policyholder may be charged and prosecuted with the crime of insurance fraud.
Committing insurance fraud will invalidate your car insurance policy.
In countries where the law requires car insurance, the young driver may be charged with driving without valid insurance.
Having invalidated the car insurance policy car insurers may look to reclaim third party damages if drivers on a fronting policy are involved in an accident.
Fronting will be bad on your insurance record [insurance database], making it difficult to get insurance in the future, or considerably push up the cost of premiums.
Fronting could delay the young driver from building up his own no claims bonus.

Advice to vehicle owners

We would like to urge vehicle owners to review their car insurance policies from time to time. Check the facts and whether they are still as true as disclosed at the time of purchasing the car insurance policy. These facts fall in the domain of the vehicle owner and can only be disclosed by him. We cannot blame the insurer for dismissing a claim when the accident claim and driver details are not constant with the disclosures made!

Make a full disclosure to the car insurer – you do not want to lie on your accident claim. Rather consider other ways to find cheaper and affordable car insurance premiums. Your integrity is worth so much more!!

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Tags: Car Insurance Advice, fronting, Insurance Fraud
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Are car insurance companies fair in raising car insurance premiums?

Written on March 9th, 2010 by admin
Categories: Insurance Fraud

Car insurers are often perceived to be the “meanies” – companies collecting premiums and then refusing to make payment when insurance claims are filed, or as companies unfairly raising car insurance premiums. I have spent some time reading about car insurance claims and have come to an interesting finding…we should spare a thought for car insurers and the constant battle they are fighting. We should perhaps rather blame some of our fellow vehicle owners for not receiving immediate or swift payment when our claims are submitted.

Car insurance companies are betting on difficult odds. Clever actuaries need to work the numbers and calculate the risk of vehicle loss or damage in a specific area. This is a rather complex process with many variables such as location, vehicle type, owner and driver behaviour etc.

Many of these risks are not easy to predict and historic data might not be able to provide guidance. On Friday we have found many visits coming to the Car Insurance Blog from searches on Google about hail damage. Horrific stormy weather in Australia resulted in hail damage to many vehicles and many owners were searching the internet to find if their car insurance covers them for hail damage.

There is nothing we can do to prevent these forces of nature or “Acts of God”. Human intervention- or the lack thereof is further adding to the pressure of increased vehicle claims.

In South Africa these variables include the rapid deterioration of roads and damage to vehicles from potholes and damage to windscreens from loose gravel and stones near road works. There has been a significant increase in claims from vehicle damage from potholes and these volumes of claims might not have been predictable last year.

Perhaps the biggest threats to car insurers have been the high levels of vehicle related crimes. Tough financial conditions have motivated crime and hijacking syndicates to target vehicle owners with hijackings and vehicle theft.

As if this is not enough of a threat, there have been numerous reported cases of car insurance fraud.
Car insurance companies are threatened with a wide variety of risks to vehicle damage and vehicle loss. They have only one primary tool in their arsenal to combat these risks – the ability to raise car insurance premiums – a measure that they are heavily criticized for.

Perhaps next time when we are confronted with escalating car insurance premiums we might consider the challenges confronting the car insurers as well!

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Tags: hail damage, Insurance Fraud
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Can Hi-Tech technology help to curb car insurance fraud?

Written on March 2nd, 2010 by admin
Categories: Car Insurance Claims, Insurance Fraud

On the Car insurance Blog we have warned about the dangers of car insurance fraud. We have also discussed the importance of blowing the whistle on car insurance fraudsters and alerted the online community to the work done by the South African Insurance Crime Bureau!

How can technology – and more specifically Hi-Tech solutions assist in combating and reducing car insurance fraud?

Hi-Tech Security Solutions spoke to the Chief Operating Officer of the South African Insurance Crime Bureau, Hugo van Zyl. This interview appeared in the February 2010 edition of Hi-Tech Security Solutions and we were given permission to share these insights with our readers on the car insurance blog.

In a bid to address the matter of short term insurance fraud in South Africa, the South African Insurance Crime Bureau (SAICB) came into being in July 2008.

In the short 18 months since its inception, the bureau can give testimony to the fact that organised crime and fraud are rife in the industry.

Hi-Tech Security Solutions: Can you expand on the challenges that you have had to face as well as the rewards?

Hugo van Zyl: The acquisition of data has been the biggest challenge. However, we have put in place measures to ensure that we will have the necessary data in our system by early 2010. The cooperation of the member companies and industry as well as the policing organisations has been phenomenal. We are seeing results with savings for the industry topping the R2 million mark already in preventive measures and cases to the approximate value of R60 million to date.

Hi-Tech SS: What is the role that the SAICB’s 11 member companies play and who else have you partnered with?

HvZ: The SAICB was formed to address the problem of syndicated and repeat offenders committing fraud in the insurance market, ie, organised crime. The need to adopt a unique approach was essential, because multiple companies are normally involved in this kind of fraudulent activity. The SAICB is a not-for-profit company so funding comes entirely from its member companies. Our data comes from the member companies who share their underwriting and claims information with us. In addition, we have other information part-ners like Tracker, South African Police Service (SAPS), Johannesburg Metropolitan Police Department (JMPD), National Prosecuting Authority (NPA), South African Fraud Prevention Society (SAFPS) plus others that work with us by sharing infor-mation to assist with investigations.

We also work closely with the South African Banking Risk Information Centre (SABRIC), the South African Insurance Asso-ciation (SAIA), the Financial Intermediaries Association of South Africa (FIA), who are important in ensuring that we can make a difference in the fight against crime and fraud.

Hi-Tech SS: How do the SAICB and its partners intend to change the dynamic of fraud in the sector?

HvZ: Through the sharing of information, we are able to identify and track fraudulent activities and syndicates over multiple companies. Through our investigative unit we can coordinate the resultant investigations incorporating all the relevant companies and policing authorities. The investigations are coordinated from investigation stage through the policing authorities and prosecution, with our investi-gators overseeing the whole process to ensure all the relevant information is submitted to facilitate successful prosecutions. We have very close ties with the relevant SAPS divisions and the NPA to help us achieve this. Our approach is aimed at discouraging fraud syndicates from operating in the insurance and financial space, by letting them know that we can and will identify their activities and that we will prosecute to the full extent of the law. The industry is very serious about zero tolerance when it comes to fraud, and even though the SAICB is focused on serial offenders and syndicates, we are also assisting the member companies in identifying opportunistic fraudsters.

Hi-Tech SS: How has the sharing of criminal intelligence with the central information management system worked out?

HvZ: We are using Memex, which is an intelligence data mining system that is able to take information in multiple formats, but allows you to search for very specific information. The SAICB has written about 50 business rules, which allows us to search the information for very specific trends that we know indicate syndicated behaviour. The resultant information is analysed by our analysts and verified by the member companies. Our investigators then take over the cases to coordinate the investigation and collection of the relevant information; they liaise with the relevant policing and prosecution organisations once the cases have reached the stage of prosecution.

Hi-Tech SS: Is the technology effective?

HvZ: The technology is effective because it is able to take in data in any format. Because of how it searches the information, it allows us to very effectively check our information and identify the patterns and trends that indicate fraudulent activity. It then allows us to map the links between the parties involved, to build the cases in Memex, so we can show how the case developed, plus its auditing process allows us to justify the processes. All in all, the whole process ensures that we can build the whole case in Memex, ready for hand over to the police and prosecutors for finalisation.

Hi-Tech SS: What is the technology revealing?

HvZ: This technology shows that the problem of insurance fraud is as far reaching and elaborate as we expected it to be, and that it needs to be addressed as a matter of urgency.

Hi-Tech Security Solutions: Are companies responding well to this?

HvZ: The cooperation received so far has been extraordinary.

Hi-Tech SS: What else has the SAICB initiated to curb fraud?

HvZ: We have begun to receive commercial information and will be receiving life information shortly. We are also developing a staff dishonesty database to identify staff members involved in assisting fraudsters with their activities.

Hi-Tech SS: What are insurance companies themselves doing to control the problem?

HvZ: Most insurance companies have their own internal investigative units that deal with opportunistic fraud. Syndicated and repeat offenders require a different approach because multiple companies are normally involved. This was why the SAICB was formed, to address this specific problem.

Hi-Tech SS: So often we talk of fraud committed by policyholders. But are brokers and insurance companies not sometimes also guilty of perpetuating fraud? Is the law doing what it should be doing with regards to irregular activities within institutions?

HvZ: We cannot answer this, but the involvement of brokers and staff are definitely investigated and to some extent form part of our investigations.

Hi-Tech SS: Does this crime run far deeper into the tentacles of organised crime and big business than meets the eye?

HvZ: We are currently busy with investigations into this issue and will only be able to answer this in the near future.

Hi-Tech SS: What impact is fraud having on the insurance industry in this current economic downturn?

HvZ: Fraud is having a very bad impact on the industry at present. Some member companies experienced a 27% to 36% in-crease in fraudulent burglary/robbery claims, an increase of up to 12% in fraudulent hijacking and vehicle theft claims and about a 10% to 15% increase in the so-called smaller claims (theft of cell phones, laptops, cameras, binoculars, jewellery, watches, etc).

This interview appeared in the February 2010 edition of Hi-Tech Security Solutions – Thank you to Leigh Yorke-Smith for permission to use this article. For further information please contact her on: yorkesmith@worldonline.co.za – website: http://www.securitysa.com

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Gauteng arrest should warn all car insurance fraudsters!!

Written on January 18th, 2010 by admin
Categories: Car Insurance Advice, Insurance Fraud

On the car insurance blog we have warned fraudsters and urged the public to blow the whistle on those who commit insurance fraud! We are pleased to report that the public has blown the whistle on one such fraudster!

A Gauteng man’s attempt to defraud his insurance company with a faked hijack report backfired when police found he had hidden the car, a police spokesperson said on Thursday.

Inspector Happy Nate from Kliprivier said the man claimed to have been hijacked and robbed of his Opel Corsa bakkie in November, but a tip-off led investigators to where he had stored it. Kliprivier police officers arrested the man after they found the dismantled vehicle – stripped of its engine and wheels – in a nearby settlement.

Investigating officer Inspector Rassie Erasmus said what was left of the vehicle was without any value.

“The bakkie has been dismantled and has no engine. It is gone and finished,” he said.

The 50-year-old man would be charged with perjury and fraud. The police has emphasized that hijacking is a serious offence and reported cases are treated with urgency.

The insurance firm was contacted about the case and was conducting its own investigation.

Why do we report car insurance fraud?

We would like to urge the public to report any such instances of car insurance fraud. These criminals are not merely trying to improve their financial wellbeing. Car insurance fraudsters do much more harm:

They waste important Police resources through their own selfish greed for money!
By sending the police on a false trail they prevent police from investigating other serious crime such as murder, rape, child molestation etc!
Through their fraudulent claims they increase our car own insurance premiums.
Their fraudulent claims place our legitimate insurance claims in a weaker position where we are also treated with suspicion and extra caution!

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Tags: Car Insurance Advice, Insurance Fraud
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To what extremes would you go to claim from car insurance?

Written on December 29th, 2009 by admin
Categories: Insurance Fraud

mazda-fail 2009 has been a challenging year for most of us. Even though there might have been positives, most of us are looking forward to 2010 and are praying for an upturn in the economy. Too many jobs have been lost and most people have struggled with debt and acquiring loans from banks and other financial institutions.

In these turbulent times it has been more important to check financial portfolios and curb spending. Consumers have been more price sensitive and brokers have struggled to market and sell additional investment products or life cover. On the short term insurance side pricing has become one of the primary factors considered in financial decisions. Consumers have been searching more for ways of finding cheaper car insurance.

But how far would you be willing to go to make a few extra bucks? Would you ever consider crime as an option? I have come across an interesting story by Emily Friedman and Vanessa Weber titled “Bad economy leads to burnt cars and insurance fraud”. This details perhaps the worst type of insurance fraud.

In their article the authors reveal how across the US, desperate Americans are lighting their own cars on fire when they can no longer afford the payments. They then report the vehicles stolen and try to collect the insurance money.

Disturbing trends of burnt vehicles and car insurance claims

Rather disturbing trends reveal that:

So many cars are getting lit up in Las Vegas that the city’s Police Auto Theft Unit patrols the roads for burned out cars.
The driving factor behind these burnt-out vehicles is the weak economy.
During 2009 on one stretch alone, police say they’ve found the charred hulks of at least 70 torched cars.
Police helicopters find other abandoned vehicles hidden in crevices and on peaks in the middle of the desert.
Police said since the drive to desolate sections of the desert is a one-way mission over harsh terrain, the bottoms of these vehicles are usually torn out before the burn even begins.

Police in the US have pleaded with the public to be aware of the immense dangers of putting their vehicles on fire, saying that the risk of bodily injure far outweighs the potential financial gain.

Examples of insurance fraud

Reference was also made to 2 interesting cases of insurance fraud:

A Nevada man suffered second and third degree burns on his arm and hand when he burned his girlfriend’s car when she wanted out of her car payments. He was charged with – amongst other charges – arson and insurance fraud.
In California a man could not handle the burden of car payments and then hired a man to steal and burn the vehicle to collect the insurance. He claimed to police that his car had been stolen from a local golf course.

What are the risks in South Africa?

In South Africa vehicle owners are not obliged by law to insure their vehicles. The consumer who struggles with car insurance payments would merely stop paying the car insurance premium and risk all the dangers of driving an uninsured car. It is however also a risk in South Africa that the vehicle owner who struggles to make his monthly payments to the bank could opt to exit this contractual agreement by committing the criminal act of insurance fraud.

The insurance industry will need to be cautious and alert to these disturbing trends from abroad. We will need to create more awareness of insurance fraud, the consequences thereof and the efforts to investigate, find and bring offenders before the full force of the law!

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Tags: Insurance Fraud
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South African Insurance Crime Bureau tackles insurance fraud

Written on November 24th, 2009 by admin
Categories: Insurance Fraud

insurance_crime The Car Insurance Blog is pleased to share an important update on the fight against insurance fraud in South Africa. The South African Insurance Crime Bureau [SAICB] has, at the start of November, reviewed a year of operations and provided insight in the efforts to reduce insurance fraud threatening the insurance industry!

Objectives in establishing the SAICB
The SAICB was launched on 30 October 2008 and was established to address the ever escalating problem of insurance fraud and crime in the short term industry, and especially organized/syndicated insurance fraud.

Membership of the SAICB
The SAICB was the result of many years of investigation, research, debate and fact finding missions by the short-term insurance industry through the South African Insurance Associations’ (SAIA) Fraud Committee and Task Team. The SAICB currently has eleven member companies including Santam, Mutual & Federal, Hollard, Zurich, Lion of Africa, Regent, FRSTIA, Absa Insurance, Standard Insurance, Telesure and MiWay.

A year in review
Mr Servaas du Plessis, Chair of the SAICB Board commented on the very difficult and successful first year of the SAICB. “We anticipated challenges and some teething problems, but our challenges and setbacks were way bigger than what we expected. The true potential and ability of an institution is however revealed in difficult times. We had to go back to the drawing board, revisit our initial strategy and we had to amend our original business plan with the lessons learnt,” he said.

“Through sheer determination of the SAICB staff, the support from management and the member companies, we can report today that the SAICB is established, functional and producing results. Although we still have a very long road ahead, the SAICB has made massive strides in indentifying fraudulent activities from opportunists, syndicates and service providers servicing clients in the short term industry,” he added.

Mr Ronnie Napier, Chairman of the SAIA Board commented, “We are proud and excited about the first year of the SAICB and the strides they have made in bringing the industry together in this fight, and the successes they have already achieved. I am also particularly proud of the SAIA and SAICB member companies for the commitment they have shown in making this initiative a success, and for their willingness to embrace the concept of sharing their information to achieve the desired outcomes. The SAICB is testimony to the fact that the short term industry will do whatever it takes and is committed to the fight against crime and fraud and that we will be successful.”

Dr Graham Wright, Chief Executive Officer of Business Against Crime SA, added, “The SAICB has enabled the short term insurance industry to identify and investigate fraudulent and criminal events across multiple insurers through the analysis of shared information. This facility has enabled the formulation of joint industry approaches to the management and analysis of information held by the industry members, as well as improving liaison between the industry and government departments and other business sector entities. The capabilities set up by the industry through the SAICB have not only improved the ability of the industry to root out fraudulent activities, but have also strengthened government’s hand at dealing with crime within the country.”

The consensus in the short term insurance industry, partners, policing authorities, government and business associates is that the SAICB is and continues to be a valuable tool and institution in the fight against insurance fraud and crime, and will only go from strength to strength.

Hugo van Zyl, Chief Operating Officer of the SAICB, commended the industry for embracing the SAICB and its challenges, and commented, “The success of the first year of the SAICB is directly linked to the level of cooperation received from our member companies, stakeholders and partners, and especially the committed cooperation of the policing and prosecution authorities. The relationships built within the short term industry in particular and the broader financial industry, and other related companies and associations addressing crime and fraud, has further enhanced what we have achieved and will achieve in the future.”

The SAICB is currently staffed by 10 employees, and is fully operational. Through proactive initiatives, the SAICB has saved the industry approximately R2 million, and is working on cases to the value of approximately R55 million.

It is expected that many more cases of insurance fraud will be investigated by the SAICB. As more consumers become aware of the successes by the SAICB, we will find many more reports and also awareness by the consumers that crime does not pay – that fraudulent claims will be investigated and fraudsters brought to face justice!

The Car Insurance Blog would like to share this information with the objective of creating more awareness of the efforts to curb insurance fraud. May we be able to reduce fraudulent claims in the best interest of all car insurance policyholders!!

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