Introduction and the Fight against Insurance Crime
I have recently had the privilege of gaining more information on the fight against insurance fraud in South Africa. Insurance fraud is one of the contributing factors to escalating car insurance premiums – and this battle can only be won by way of public private partnerships.
The South African Insurance Crime Bureau (SAICB), working closely with the South African Police Service (SAPS) and the National Prosecuting Authority (NPA) has made significant and positive strides in addressing fraud and crime in the short term insurance industry and is proof of what can be achieved when business and SAPS works together.
This close working relationship has resulted in several projects being identified and implemented to assist SAPS in achieving their renewed commitment to tackle crime in all its guises, while assisting the industry in addressing the crime and fraud committed against it.
Cases under Investigation
The SAICB has 9 active cases under investigation currently and has taken 3 cases successfully through the courts and recovered R380 000 for the industry to date, with the assistance of the SAPS and NPA. The approximate value of cases under investigation is R120 million.
Other areas, not necessarily in the crime arena, were also identified where the SAICB could assist SAPS and one of the successful pilot projects launched has been the cleanup of the pound in Isipingo -KwaZulu Natal.
To date over R8 million has been recovered and over 350 vehicles uplifted by the industry. In addition to the industry vehicles identified, the SAICB and SAPS also assisted in identifying nearly 200 uninsured vehicles and contacted the owners of these vehicles to inform them where their vehicles were housed.
Insurance Fraud & Successes to Date:
Modus Operandi: Multiple policies at various insurance companies. He used details of clients [ surname / address details/ bank accounts]to initiate the policies. The policies shared three different bank accounts. Numerous small claims were submitted by the accused, whilst he pretended to be the insured. All payments went into the afore-mentioned bank accounts, of which he was the sole beneficiary.
He pleaded guilty on charges of Fraud and Money Laundering on 18/06/2010 in the Bellville Specialised Commercial Crimes Court – five counts of fraud and one of money laundering
He pleaded guilty and was sentenced to two years of correctional supervision, in addition to three years in prison suspended for five years.
He was also instructed to pay back R353 332, of which a once-off payment of R150 000 was made and distributed amongst the involved member companies and the rest of the money to be paid to the individual companies.
Modus Operandi: Multiple insurance policies and claimed from more than one company for the same items at the same time.
De Koker was found guilty and sentenced to pay R20 000, 00 or two years imprisonment of which R10 000, 00 and/or one year was suspended for 5 years on condition that she is not found guilty of fraud or theft in the suspended period. De Koker paid the fine.
De Koker was again arrested for fraud whilst the current case was pending – she is now awaiting sentencing.
Modus Operandi 2nd time: Claimed for trauma from hijacking when no hijacking took place
SAICB INVOLVED CASES:
Modus Operandi: Bikes and vehicles were reported stolen but were stored in a container.
Fraudulent claims on bikes, trailer and bakkie worth R1,1 million
Recovered with the assistance of SAICB. Accused appeared in court and pleaded guilty to 5 charges of fraud and one of defeating the ends of justice and will be sentenced in November.
Modus Operandi: Insured handed vehicle to third party for sale across the border. Reported his vehicle stolen a few days later and received moneys from the sale of the vehicle as well as from the insurer.
Vehicle recovered and claim repudiated. Accused appeared in court and will be sentenced in November – Saving R496 000.
Modus Operandi: Fraudulent vehicle claim where driver reported vehicle stolen and was found driving vehicle – charged with fraud, defeating the ends of justice and malicious damage of property – plea agreement with state and will be paying back member company – R720 000.
Vehicle recovered from paid out fraudulent claim – Member company opened a civil case against accused. Value R250 000.
Three attorneys were arrested in Pretoria on Thursday morning in connection with 54 counts of fraud amounting to about R6m, Gauteng police said.
Nine people have been arrested in Pietermaritzburg and Chatsworth for defrauding the Road Accident Fund (RAF) of nearly R5 million.
I recently had the privilege of attending the year overview of the Insurance Crime Bureau. This review revealed what has been done and still needs to be done to curb the crime of insurance fraud in South Africa!
Background to Protection and Legislation in the Insurance Industry
Every time that the Finance Minister announces his Budget or Medium-Term Budget Policy Statement, South Africans take note.