Latest Press Releases and Articles

SAP / SAICB COOPERATION LEADS TO SYNDICATE ARRESTS

NINE ARRRESTED BEFORE COMMERCIAL COURT FOR FRAUD

After a five month investigation by members from the Port Shepstone DPCI : Organised Crime unit and South African Insurance Crime Bureau (SAICB), nine people, believed to be part of a fraud syndicate, were arrested on 21 September 2011 afternoon and evening, for Fraud. The syndicate comprising of members from the same family, and who were operating in the Escort and Phoenix areas, were exposed as a result of intensive investigation by SAPS, SAICB and the assistance of the National Prosecuting Authority (NPA).

The accused bought vehicles from salvage yards from one of the syndicate family members and then the vehicles were registered in the names of other members of the syndicate in order to "create a record" for the vehicle. Corrupt officials assisted to register the vehicles which were not roadworthy. These vehicles were insured at various insurers (SAICB members) and accidents were staged with the syndicate members which resulted in multiple claims submitted. The industry's loss amounts to approximately R2 million.

On Wednesday 21 September 2011 "Operation Facelift" was launched and DW/OFF Sydney Stahmer from Port Shepstone DPCI arrested the nine accused. Desmond Pillay, Bruce Pillay, Devon Pillay, Leona Pillay, Sarika Pillay, Magana Thulsi, Reshan Mohan, Jemaine Munilall and Sanphharam Jagesur appeared in Durban Commercial Crime court on the morning of 22 September 2011 and were released on bail. The case was remanded to 13 October 2011 for further investigation. More arrests are expected.

Hugo van Zyl, Chief Operating Officer of SAICB, is pleased with the investigation. He is particular proud of the co-operation between the SAPS, SAICB and the NPA which resulted in the positive results for the short term insurance industry.

Released jointly by the South African Insurance Crime Bureau and the South African Police, for more information please contact us.

SAICB CASES UPDATE

April and May 2011 have been exciting months for the SAICB with many of our cases going through the courts with successful outcomes. This Newsletter will cover the successes of the SAICB over these months and the article on page 3 showcases the successes the UKIFB (UK Insurance Fraud Bureau) has had as well. The successes of both these insurance fraud bureaus are an indication of the commitment of these organizations to make a positive change in our respective countries in the fight against fraud and crime and that the processes and relationships we have put into place are now paying off. Watch this space for future successes and positive outcomes of our cases.

SAICB CASES UPDATE

Case 1: The suspect was found guilty on 3 December 2010 in Cape Town for submitting fraudulent claims and sentenced to R20 000,00 or two years in prison—R10 000,00 and one year was suspended for 5 years on condition that she is not found guilty of fraud or theft during the suspended period.

The suspect committed fraud again and on 3 May 2011, she was found guilty again and sentence to 12 months imprisonment, 6 months suspended for 5 years. Potential lost of R14 000.00

Case 2: Incident 1 The suspect claimed that he was involved in accident with the vehicle (BMW M6) on the 16 March 2010. Inception date of the policy was 18 December 2009. The vehicle was insured by a SAICB member company, who declined the claim based on dishonesty and the policy was cancelled.

Incident 2: The same vehicle was insured by another SAICB member company and was allegedly involved in an accident in 4 December 2010, policy inception date— 1 July 2010. During the SAICB investigation, it was noted that the vehicle had a repudiated claim at another insurer and that the damages in the current claim were found to be exactly the same as with the first incident.

When client was confronted with the facts, he admitted that he could not afford to have thevehicle repaired and had insured the vehicle with another insurer. The suspect kept the car for several months in his garage at home and had it towed from there to the repairer. He even arranged for a fraudulent inspection report from a glass service provider, which cost him R500. The towing service provider was also involved in the whole fraudulent incident. Suspect was arrested and was sentenced on 19 April 2011 to 3 years imprisonment wholly suspended for 5 years. Potential loss R361 000.00.

Case 3: Suspect claimed for 3 Harley Davidson's and a bakkie and trailer. Vehicles were never stolen, but stored at storage facility. The suspect did not pay for the storage facility and SAPS was called in when the contents of the container were noted. The SAICB was contacted by SAPS to assist with the identification of the vehicles and who they were insured by. Trailer and bakkie claims had been paid out by two SAICB member companies, and the other insurers involved had repudiated the claims for the bikes. Total loss approximately R1,1 million. The suspect was arrested, convicted and sentenced to 8 years suspended for 5 years. He paid back the monies to the insurers for the payments already made, as part of his plea bargain agreement.

Case 4: Wrecked vehicles were purchased from a salvage yard and vehicles were repaired to a certain extent and insured. The suspects staged accidents with each other, their roles in these incidents varied. In one claim, suspect A was the driver, in another claim he appeared as a passenger in the vehicle, and in another was a witness etc. The syndicate was identified by the SAICB and the investigation completed and handed to the NPA in April 2011. The first arrest was made on the weekend of the 21 May 2011 and further arrests are expected before the end of May 2011. Value of loss is estimated at R2,1 million.

TO NOTE:
As mentioned in most news mediums over the last few weeks, the Dräger breathalyser results are being contested in the Cape High court over the next two weeks. The SAICB will keep its members updated on the results of the case as soon as judgement is delivered.

The SAICB financial year end approaches and the SAICB will begin to implement the changes identified in the last strategic meeting as the new financial year begins. To this end the office will be expanding again to accommodate at least 6 new staff members, over the next two years. The position for an Operations Manager has been advertised and several promising candidates have applied. The final selection process will begin next week,. The new IT integration specialist will begin on 1 June 2011.

The SAICB would like to welcome Alexander Forbes as the newest SAICB member. Alexander Forbes will be joining in the new financial year, beginning 1 July 2011. The Memorandum of Understanding has been signed and the data sharing is currently being discussed, to be finalised before end June.

The SAICB is excited about our successes to date and changes and additions taking place in the new financial year and will keep the industry appraised as the future successes and changes happen.

UKIFB—EIGHT CONVICTED AFTER CAR INSURANCE FRAUD SCAM UNCOVERED

A total of five men and three women, from across the UK, have today been convicted at Leicester Crown Court for their part
in a car insurance fraud scam worth tens of thousands of pounds.

Fraudulent claims were made for damage and injuries from four collisions in Leicester and Birmingham. Out of the four collisions
only one was proved to have happened but still the claim made did not reflect the damage.

The investigation began in 2008 when police discovered that Hooman Jaffari, 37-years-old from Leicester, was going to be
involved in one of the set up and false collisions

Enquiries soon lead officers to a fraudulent claims company owned by Jaffari in Birmingham, Accident Experts Limited.
Leicestershire Constabulary worked with an independent collision investigator and it was then that more cracks began to
appear. It was found that the damage to the vehicles involved in the four collisions did not reflect the claims made. Jaffari acted as the intermediary between the supposed claimants and a claims company based in Lancashire, which was unaware of the fraudulent nature of the collisions. Jaffari managed to earn approximately £36,000 in commission through the scam.

In total the defendant's, including Jaffari, gained nearly £50,000. Without the police investigation and conviction they stood to gain approximately double that. By March 2010 all eight defendants had been arrested and charged. Detective Constable Dave Jackson, the investigating officer, said: ―This two year investigation was incredibly complex and detailed because of the large number of people involved. Without this investigation the defendants could have gained tens of thousands of pounds worth of compensation.

Jaffari set up three of the collisions and gained the most from the scam, but all defendants had their part to play. I hope that the results of this trial will act as a stern warning to anyone considering taking part in such fraudulent activity, no matter how small your role is you will be caught.

I would like to thank all officers involved in this case and would also like to thank the UK Border Agency for their help and support during the investigation, which led to today's convictions."

Glen Marr, Director of the Insurance Fraud Bureau comments: ―This is another successful joint operation in collaboration with law enforcement. Together with the police and our insurer partners, we will continue to find, expose and pursue those criminals. It demonstrates the power of the industry collective and the ability of the industry to work with the police to bring fraudsters to justice.

"The cost of insurance fraud adds on average £44 to every policyholder's insurance premium annually.

We would urge anyone with information on any type of insurance fraud to call the IFB's free and confidential Cheatline on 0800 3282550 or Leicestershire Constabulary on 0116 222 22 22.

Jaffari has been remanded into custody and the seven other defendants have been released on bail until sentencing in late May.

Names and addresses of defendants and their sentence:-

• Hooman Jaffari 15/4/73 (Male) - Found guilty of four counts of fraud by false representation
• Jeffrey Joseph 15/5/71 (Male) - Found guilty of four counts of fraud by false representation
• Mehri Ashkboos 12/2/66 (Female) - Found guilty of four counts of fraud by false representation
• Kiranjit Mand 24/10/79 (Female) - Pleaded guilty to one count of fraud by false representation
• Mati Irannezhad 3/11/61 (Female) - Pleaded guilty to one count of fraud by false representation
• Alfred Bezchello 23/5/71 (Male) - Found guilty of four counts of fraud by false representation
• Mosen Assadigohar 6/9/64 (Male) - Found guilty of four counts of fraud by false representation
• Mahmoud Hajtakhani 27/12/82 (Male) - Pleaded guilty to one count of fraud by false representation

The Dark Side of the Internet: Cybercrime

By the end of 2010, an estimated 1,97 billion people around the world were using the Internet. Of these, about 111 million were in Africa.

With the recent events in Tunisia, Egypt and Libya, this number is likely to have grown substantially in the past few months. Close to 18 million Africans were using Facebook by August 2010 – this constitutes 16% of the total number of Facebook users worldwide, according to http://www.internetworldstats.com

As many as 68,5 million people use twitter on a daily basis. In the third week of January 2011, 122 319 crisis related tweets were sent from North Africa and Yemen, by the following week this number had increased to 1 317 233.(‗How Egyptians used Twitter during the January crisis', http://mashable.com/2011/02/01/egypt-twitter-infographic). And 2,8 million emails per second are sent out every day, an estimated 70% of which are spam.

The power of the Internet is undeniable: most sectors of society rely and depend on it. The ‗digital divide' between the developed and developing world is increasingly ‗bridged'. It is therefore important to examine the implications of the radical growth of the Internet, social networking sites and email platforms on computer-related crimes.

The nature of computer-related crimes has changed since the introduction of transistor-based computers in the 1960s. Back then, criminalisation of offences focused on the physical damage of computer systems and stored data. By the 1970s, there was a shift from property crimes against computers to new forms of crime relating to the use of computers. This included the illegal use of computer systems, the manipulation of electronic data and computer-related fraud. With the introduction of personal computers and the wider distribution of computer systems in the 1980s, computer technologies and software grew in importance. Tied to this was the emergence of software piracy and patents- related crimes. The growing interconnection of computer systems enabled criminals to conduct criminal business without being present at the crime scene. Myriad new forms of crime followed when the World Wide Web hit computer screens in the 1990s.

The distribution of child pornography morphed from a physical exchange of books and audiovisual materials to online distribution through website and Internet services. Most importantly, the Internet gave computer-related crimes a transnational dimension. Cybercrime today comprises a collection of offences ranging from illegal content to some forms of economic crime. Hacking, phishing, spamming, cracking, sniffing and the production and dissemination of malicious code were unknown before the computer age. Meanwhile ‗ancient' crimes such as fraud, identity theft, economic crime and the distribution of child pornography have increased incrementally, aided and abetted by various platforms on the Internet. According to the United Nations Office on Drugs and Crimes' Terrorism Prevention Branch, terrorists use the Internet to propagate, recruit, train and finance their activities. Increasingly, criminals and terrorists use Internet – based email interfaces and social media for covert communication.

What is the extent of the problem? International crime analysts rely on national crime statistics and surveys but these fail to reflect the international dimensions of the problem. Moreover, statistics only list crimes that have been both detected and reported. There are valid concerns that the number of unreported cases may be significant. Consider the example of advance fee fraud where the victim is tricked into advancing sums of money with the hope of realizing great financial gain. Also known as 419 scams (the number ‗419' refers to the article of the Nigerian Criminal Code dealing with fraud), the scams depend on the likelihood that victims are too embarrassed to report the crime.

Financial institutions and banking institutions tend to under-report computer-based fraud, industrial espionage, viruses and hacking as this may negatively affect their reputation. As a result there is less data than there should be on cybercrime in South Africa, the region and the continent. A report released by the Southern African Banking Risk Information Center (SABRIC) in 2010 ranks South Africa as the 3rd most victimized country, after the US and UK, with regards to online banking manipulation or phishing. Nigeria is considered the source of most malicious Internet activity in Africa.

Cyber crime is now recognized to be a priority crime by law enforcement agencies, business and banking associations in the region. The Directorate of Priority Crime Investigations (the Hawks) in South Africa regards it as a priority crime, as does the Southern Africa Regional Police Chiefs Cooperation Organisation (SARPCCO). The United Nations Office on Drugs and Crime has been commissioned to conduct a comprehensive study on the problem of cybercrime, which may lead to the drafting of an international convention on cybercrime.

When it comes to combating cybercrime, legislative, investigative and judicial shortcomings have been noted. The effective investigation and prosecution of cybercrime may require the establishment of new offences. As the cybercriminal could be anywhere in the world, international co-operation is critical. South Africa's Electronic Communications and Transactions Act of 2002 only empowers so-called ‗cyber inspectors' to search, seize and arrest within the borders of South Africa. They cannot act beyond the borders of South Africa. The outlook for the rest of Southern Africa is as bleak with most countries lacking basic legal frameworks against cybercrime.

As a basic step, law enforcement officials need to cooperate with the inventors and patent holders of computer technologies such as computer hardware and software companies, reformed hackers and others. Computer users have to be educated on the risks as the lack of awareness and negligence of end users is propelling cybercrime. Data protection and personal responsibility for what is communicated in cyberspace may assist in curbing the tide. While it is necessary for states to implement measures against cybercrime, a careful balance has to be struck between policing cyberspace and allowing freedom of expression, access to information and basic privacy rights. We should condemn any attempts by the state or criminals to shutdown the Internet, or specific domains lest there be evidence of a serious threat. In borrowing from a controversial campaign for a different criminal activity: the fight against cybercrime starts on our own computers, laptops and handsets.

Annette Hübschle, Senior Researcher, Organised Crime and Money Laundering, ISS Cape Town Office Thank you to Liese Louw Vaudran, Editor of the. african.org for permission to use this article in our newsletter. For further information please contact her on This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

DATA INTEGRITY CAN REDUCE FRAUD IN THE INSURANCE INDUSTRY

The Insurance industry is constantly bombarded with growing levels of fraud and new technology enhancements have made crimes such as identity theft and claims manipulation easy to commit and hard to detect. With figures that allude to the notion that as much as 10% of claims are fraudulent and as little as 20% of these are detected, and in turn repudiated, fraud is a crippling factor to the industry at large. But where does it start and how can it be stopped in its tracks?

The answers lie in the quality of the data and integrity of the information currently housed in your technology and business systems. Disparate systems and silo-ed data stores make it nearly impossible to view claims and interpret data from suppliers and third parties, which in turn means that data can be unreliable, incomplete and will yield false positives when being used.

In order to become proactive in the fight against insurance fraud, an organisation needs to start taking its data seriously, it is the very foundation of your business and should be treated as such. Data integrity and security should therefore be made a priority at board level. It should be spun into the very culture of an organisation and built into every process and anti-fraud policy and be a key element of internal controls and audits and risk management.

By adopting an approach to improve data integrity you need to develop a series of rules around data management, storage and collection that need to be made policy by the business. Only once this is implemented will you be able to better analyse, improve and control the flow and quality of data. Remember data integrity is not just hinged around data quality, it is an allencompassing process that reviews quality, collection processes and rules that dictate where data is stored, how it is interacted with and who is allowed to access it.

With this in place you can ensure that your users have access to the data that they need, to be able to process claims and check their viability, that the data reaches its intended recipients timeously and that it is accurate. In addition validated and accurate data will also ensure that your organisation is in a position to meet mandatory regulatory compliance requirements demanded by governing bodies.

Other benefits of data integrity are the ability to enhance and assure the credibility of your data which will in turn facilitate proactive fraud identification, through the ability to immediately recognise and act on false positives. It will improve investigation efficiencies and allow you to perform interactive queries across a myriad of systems and departments.

There are a number of consequential benefits from ensuring that your data integrity is in check. Customers will stop receiving duplicate mailings, as a result of misspelt names or addresses, account information will be accurate and up to date, and this will lend itself to an improved customer experience that should bolster customer loyalty and beef up the bottom line. Accurate data will also help with your marketing efforts and enable your organisation to identify and target more granular target segments in its campaigns. This will assist your clients in better decision-making as they are armed with only information that is relevant to them.

According to the FBI in the US ―The total cost of insurance fraud (non-health insurance) is estimated to be more than $40 billion per year. That means insurance fraud costs the average US family between $400 and $700 per year in the form of increased premiums. This is a staggering figure that is taken from merely one area / country, in what is today a global problem. Effective fraud identification comes from analysing data by making use of an integrated data quality and data management system, which is the cornerstone of fraud detection and risk management. Should you then opt to implement a Master Data Management (MDM) solution you will then also be able to take advantage of matching customer records and segments by deploying an automated and real-time rule engine that accesses data accordingly, and is able to spot anomalies as they happen and then push alerts to you..

So if your goal is to decrease fraud losses, reduce false positives and increase investigator efficiency, then you need to know your customer better. Data integrity and the deployment of a proper MDM system will assist with gaining an understanding of your customer, as well as offer detection and alert generation of real-time suspicious activity. Coupled with advanced analytics, you will then have the ability to segment data to uncover certain relationships that are red flags for fraud-related losses.

In short, data integrity should be deployed, not just as a means to remove duplicates from your mailing list, but as a quintessential component of any risk strategy that aims to not only reduce fraud, but detect and prevent it in the short and long term.

To learn more about data integrity, MDM and data analysis contact Derek Dreyer on +27 11 713 3400 This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Fraud-Fighting Over The Next 5 Years: The Future Of Claims Investigation

National Underwriter P&C April 4, 2011 By Thomas Mulvey

The Explosion of Social Networking
Whether communicating via Facebook, Twitter, Tumblr, YouTube or other social networking sites, consumers are opening up their lives—and possibly revealing details that could be helpful to claims adjusters and fraud investigators. The trend has already begun, for example, with workers’-compensation fraudsters posting pictures and messages online, revealing that their health is much better than they had led claims administrators to believe.

The Rise of Information Everywhere
Where are news, entertainment and e-mail accessed? Today, the answer includes TVs, desktop computers, laptops, iPads, smart phones and even gaming systems. While many of today’s information technologies are entertainment-oriented, in the not-too-distant future the entire claims process could well be carried out on these devices. The old model of sitting at a desk to do work is changing, as work moves with people to their cars and even to their pockets.

The impact for claims adjusters is significant. The current claims-analysis systems tied into desktop and mainframe systems will be available as mobile applications that will allow on-site claims information gathering as well as instantaneous claims-data analysis. We already see evidence of such trends in mobile access to estimating data for auto and property.

Telematics
Today it’s possible to locate people by triangulating their position via their cellphone GPS. That technology is a useful tool in crime investigations. The next-wave technology in a similar vein is telematics. When telematics devices are installed in vehicles and transmit data, insurers know not just where but how drivers are operating their vehicles. The data provided by telematics devices can inform underwriting decisions and reduce misrepresentation of fact in auto accidents.

New Uses for Satellite Photography
Today, satellite photography is used primarily for assessment of weather conditions and to assist scientists in measuring global change. Image resolution is getting sharper, however, and the range of available images is getting larger all the time. The impact for property-claims evaluation will be significant. In the future, checking the validity of property claims may be as easy as accessing high-resolution photographs of the property before and after a loss event, all done virtually—from anywhere in the world.

Expanded Uses for Weather Data
Weather data has greatly improved meteorologists’ ability to predict storm systems. And the accuracy with which weather events can be measured has also significantly increased. Today, technology allows the detection of lightning strikes within a two-mile radius. In the future, data will be even more precise, affecting property claims in which unscrupulous property owners try to fake structural damages to receive payments. Weather forensics—such as detecting if or when there were lightning strikes or wind damage in the vicinity—will become easier in the future, helping investigators catch property owners and unscrupulous contractors who wish to take advantage of local weather events.

Data-Driven Investigations
In today’s claims investigation world, claims adjusters collect information, and if something seems irregular, they alert the SIU staff. The investigator then makes phone calls, hits the street and knocks on doors to discover the facts of the case: a time-consuming and laborious process.
In five years, this model will be turned on its head. As soon as claims data is input, the system will begin searching through multiple channels of information to seek out suspicious data and behaviors. The explosion of information currently being generated—through social networking, news outlets, weather data, telematics devices, satellite photography and other data-gathering systems—will be accessed instantly, with each aspect of the claim being checked for possible fraud.

Predictive and network modelling will look at data to identify which claims require special handling or investigation. The data will tell investigators whom to pursue: the clinic that always bills just up to the threshold that won’t trigger an investigation; the claimant who uses four Social Security numbers; or the auto-repair shop that bills the insurance company for new parts but installs used ones.

In 2016, the speed of investigations will seem lightning fast in comparison with current methods. Once a suspicious individual or business is discovered, the investigator will be able to drill down with just a few clicks to put the case together. The old days of hitting the streets will be replaced with hitting the device. And in 2016, investigations will be as mobile as the personal communications routines of today.

Point-Of-Sale Perimeter Defence
A decade ago, insurance applicants came into the office to apply for a policy, and the agent could actually get to know the applicant. Today, the personal interaction is being replaced by an online application—and what’s frequently lost is the ability to evaluate the applicant in a personal way. In five years, applicants will still be applying online, but the decisions of agents and underwriters will be supported by rigorous pre-screening technology.

From the moment applicants begin to research an insurance product online, the screening system will begin to analyse their identities and their insurance and loss histories. The system will also look at other available records, such as whether there is a criminal or insurance-related fraud background. By the time the application is submitted, the system will already have gathered and scored information to know much about individual applicants and the risk of fraud. Insurers will be able to stop would-be fraudsters well before they become actual policyholders.

Implications
In the next five years, developments in communications, information acquisition and analytic techniques will allow underwriting and claims staffs to collect better data, perform better analytics and make better business decisions. The implications for insurance-claims handling and fraud fighting will be both exciting and challenging. Companies that move forward with technology but still maintain a collaborative relationship among the underwriting, claims and investigations staffs will have a leg up on the competition.