Role of industry bodies in combating insurance fraud

the role has mainly been limited to running fraud awareness campaigns and recommending review of security features on motor vehicle insurance cover notes. in south africa they have established the south african insurance Crime bureau (saiCb – 2008). its role is to address organised fraud and crime in the shortterm industry.

nonetheless, insurance industry share clients and service providers with other sectors and hence ultimate objective is to create a joint initiative for financial services sector (www. saicb.co.za). in Canada, there is the insurance Crime prevention bureau which collects information and carries out investigations.

in the british Columbia there is the traffic statutes amendment act 1997 which says that any person who submits a motor vehicle insurance claim that contains false or misleading information may on the 1st offence be fined C$ 25,000, imprisoned for two years or both. on the 2nd offence the insured may be fined C$ 50,000, imprisoned for two years or both.

in the united Kingdom, a major portion of Financial services act 1986 was intended to help prevent fraud while there is also the serious Fraud office (1987) whose aim is to improve the investigation and prosecution of serious or complex fraud cases.

The Fraud act of 2006 also specifically defines fraud as a crime. penalties for fraud include likely imprisonment of up to 10 years, a fine or both. The fullest proof method of combating this fraud menace is by means of a shared national or even better international database.

These should contain data on all reported claims as well as information not only on persons found guilty of fraud, but also on suspicious cases and on modus operandi of known criminal syndicates. For it is in market-wide co-operation that criminals beat us. They have better resources, better technology, and share information amongst each other. We on the other hand are reluctant to share information with competitors. Yet co-operation amongst us as insurers, with the involvement of law enforcement agencies, will avoid unnecessary duplication of effort and ensure more efficient use of limited resources.

in conclusion the issue of insurance Fraud and fighting it is not easy but a very costly exercise. The cost of insurance fraud comes through when the effects of the acts of the few are felt by many through increased premiums, reduced profitability of insurers, corporate or insurance failure, insurance bankruptcy amongst several.

Fraud also adds to the cost of doing business and disadvantages the insured.