Despite being in the business of risk mitigation, insurance firms themselves are often subject to risk in the form of insurance crime.

Last year, the Association for Savings and Investment South Africa (ASISA) found that South African life insurers detected 4,287 fraudulent and dishonest claims worth R787.6m across the board.

This is a notable increase from the previous year when fewer than 3,500 cases of fraudulent and dishonest claims to a value of R587.3m were uncovered. Statistics for insurance crime in the short-term insurance industry is not readily available.

The Insurance Crime Bureau estimated that the short-term insurance industry lost about R7bn in 2019 due to insurance crime namely 20% of the R35bn worth of claims paid out. As the risk landscape changes, insurers must keep up to date with developments in fraud risk-mitigation strategies if they are to reverse this process.

Through their research, South Africa’s largest short-term insurer, Santam, has pinpointed some of the areas in which insurers are facing challenges and how they can be combatted.

The reasons claimants lie

The Fraud Triangle, a model developed by criminologist Dr Donald Cressey, explains why people violate trust relationships. Much of the rise in fraudulent and dishonest claims has been driven by three factors collectively called the “fraud triangle”:

Opportunity: Fraud cannot happen without an opportunity to take advantage of. Unfortunately, these opportunities can be difficult to mitigate...

Read Full Story: https://www.bizcommunity.com/Article/196/357/229070.html