Fraudulent claims stalk insurance sector

Despite paying more than 95 percent of the claims received, the insurance industry is troubled by fraud syndicates, Botswana Insurance Company Chief Executive Officer, Newton Jazire has revealed.

Jazire said organised syndicates are depleting insurance industry resources through fraudulent claims, challenging policyholders to raise alarm on fraudsters.

He highlighted that the insurance industry is eventually forced to adjust premiums, as part of efforts to recover from fraudulent claims.

“The more claims we pay, the more premiums we charge. It is the role of every policyholder to make sure that we expose fraud and prevent fraud, so we keep our premiums down, as the insured public,” said Jazire.

Though no statistics is readily available to collaborate Jazire’s assertion on organised syndicates, the veteran insurer said the scourge also affected bigger markets like Australia, and UK recorded 30 percent fraudulent claims, despite having sophisticated fraud detection systems.

“So locally, we are talking of north of 35 percent to 40 percent of the claims we pay being fraudulent and the only defence we have is to put this in our pricing model to recover what we are paying out to these fraudsters,” said Jazire, adding that most of the fraud locally, occurs around the motor vehicle claims.

Meanwhile, Jazire has allayed fears that insurance is gambling, citing that insurance is a well established phenomenal established on sound principles.

He highlighted that the local market needs to heighten financial literacy for people to understand the insurance industry and its benefits.