| By Gareth Stokes |
| Change, the only constant Writing in his CEO Message, Garth de Klerk advocated for ‘constant change’ to stay ahead of the game. “By proactively restructuring processes and cultivating a culture of continuous improvement, we believe that we can unlock significant additional benefits for all our stakeholders,” he said, before commenting on the role that insurers play in tackling crimes like insurance fraud, money laundering and terrorism financing. “The insurance industry plays a vital role in combatting crime and supporting law enforcement efforts, going beyond mere risk management,” he said. Although difficult to quantify, the ICB reckons it has generated over R4.5 billion in aggregate financial returns for its members over nine years. This includes over R1 billion in life insurance industry savings and a variety of motor recovery related ‘wins’ such as R87 million in cloned vehicles returned to members; R428 million in vehicles returned to un-insured owners; and R1.44 billion in vehicles returned to members from pounds. But it does not end here, as the ICB explains: “Fraud and organised crime are evolving threats costing the insurance and financial services sectors billions of rand annually; in South Africa the financial impact of fraud and financial crime on the industry is staggering. Collaborative approach to complex crime, fraud In a refreshing approach to annual report writing, the ICB peppered its 18-page summary with comments from the industry stalwarts serving on its Board of Directors and in various committees. “In an age where the insurance industry is increasingly confronted with sophisticated threats of fraud and organised crime, the ICB remains steadfast in its commitment to safeguarding integrity,” said Gary Slater of Old Mutual Insure. He singled out a collaborative approach between insurers, law enforcement agencies and regulatory bodies as a key to responding to the challenge. In his message, Hugo van Zyl, COO of the ICB, focused in on collaboration and stakeholder engagement. “Over the past year, we’ve reached new milestones in stakeholder engagement, strengthening our connections with key partners such as our members, the South African Police Service (SAPS), Hawks, National Prosecuting Authority (NPA), the Road Traffic Management Corporation (RTMC), FIC, Special Investigation Unit (SIU), SARS, Homeland Security Investigations, Department of Transport and many others,” he said. It is a long list that affirms the complex nature of crime fighting, especially when dealing with criminal syndicates. Securing support from law enforcement is non-negotiable in a country so blighted by violent crime. According to the ICB, crime remains a persistent issue in our country, with high rates spanning a wide range of offences and impacting society significantly. Their annual report contained a chilling snapshot of SAPS statistics for the year ending 31 March 2024. It was a year in which businesses and households endured a staggering 1.6 million serious crimes measured across 17 categories. There were 678701 total contract crimes including murders (27621); sexual offences (53285); carjackings (22735) and residential robberies (23614). Tackling corruption at source The ICB Annual Report shone the light on issues specific to the non-life and life sectors. Under its non-life operations feedback, the bureau reported on its ongoing education and training initiatives in both the private and public sector. The focus of these interventions is to educate those on the frontline of enforcement and vehicle recoveries about the complexities and finer points of vehicle crime investigation, with the aim being to improve prosecution outcomes. Another focus is on “addressing the proliferation of cloned vehicle records”. Fixes include systems changes and identifying corrupt users across the vehicle registration and licensing value chain. According to the ICB, the rise in digital and cyber-enabled fraud is a serious concern. “Criminal enterprises are leveraging technology to deploy rapid, coordinated attacks, exploiting everything from personal data breaches to poor security protocols in various financial systems,” they wrote. In the personal insured space, this trend exhibits through identity theft and the compromise of personal data used by criminals for fraudulent claims. The bureau noted that criminals were using sophisticated false supporting documentation and inside knowledge of the industry red flags and business rules to make their crimes harder to detect. To illustrate the extent of the problem, the ICB shared details of a linked investigation that had ‘flagged’ 98 unique, illegally obtained identities for submitting fast-track claims at multiple insurers. Overall, this criminal syndicate had submitted claims against 69 policies, using 59 different bank accounts for pay-outs. As Cloud Saungweme of Bryte noted: “Insurance fraud is an ongoing challenge in our industry, making it crucial to stay vigilant through good corporate governance, innovation and accountability for any corruption within our businesses. Collaboration with government, law enforcement and industry is key to overcoming this.” Seven murders to defraud 12 insurers Life insurance related crime fighting efforts led to some shocking news headlines this year, as criminal syndicates orchestrated murders to get their hands on funeral and life insurance pay-outs. “In [these cases], the insured individuals were killed shortly after their life insurance policies began, with syndicates specifically targeting life and accidental death coverage,” noted the ICB. “The victims were chosen based on their status and connections, with the murders orchestrated by a family-run syndicate occasionally enlisting outside help.” The investigation spans seven murders; 12 insurance companies; and a combined exposure of over R18 million. In another reported matter, the ICB investigated a so-called ‘Paper Children’ fraud in which a single offender submitted multiple fraudulent claims between 2007 and 2017. This type of fraud involves the creation and use of fake dependents or beneficiaries to exploit insurance policies. And in this case, the suspect confessed to working with a home affairs official to obtain false birth certificates, and an undertaker to produce false death certificates. “A total of 45 policies across nine companies were uncovered, amounting to R850 000; the claims involved between R10 000 and R20 000 to stay under the radar, providing the suspect with a steady income every other month,” the ICB said. A high-tech game of cat and mouse Absa’s Kagiso Mogale commented: “Fraud today is a high-tech game of cat and mouse, and we are right in the middle of it. |
