SAICB History

Overall History

The SAIA Fraud Committee and Fraud Task Team investigated the possibility of establishing a South African Insurance Fraud /Crime Bureau (IFB) for over four years as a possible way of addressing the costly and ever present issue of insurance fraud. Insurance fraud affects all short-term insurance companies.

After the investigations by these committees, it was decided that an IFB should be recommended to SAIA members. It was proposed and accepted that the best way to ensure that a well researched business case is presented to the SAIA Board, was to arrange a study trip.

A voluntary Task Team, consisting of V Pearson (SAIA), G Davies (Mutual & Federal) and S du Plessis (SIAS) went to the United Kingdom to visit the UK IFB, as well as to Sweden to visit Larmtjanst AB, the Swedish crime investigation unit. These two operations were selected because the UK IFB is a fairly recent operation that was established in July 2006, while the Swedish operation had been in place since 1961 in various formats. This combination offered lessons from a new operation as well as from an established operation. These operations also have different strengths. The UK IFB operation is very much based on very modern technological input as a crucial part of its operation whereas the Swedish operation’s strength mostly lies in its investigative capabilities. Both operations also have different models to the South African situation in terms of potential revenue earning.

Evaluation of Study Trip Task Team, and subsequently the SAIA Fraud Committee

• A South African Insurance Crime Bureau (SAICB) needed to be established, with its first focus on insurance fraud. At a later stage, other insurance crime could be included if necessary and beneficial.
• The SAICB should combine the technological approach of the UK IFB together with its approach towards data analysis, investigation and publicity, with the investigative approach of Larmtjanst.
• No proof of concept was needed. The reason for this decision is the fact that the information gathered by the Study Trip Task Team on the UK IFB Proof of Concept, as well as its real value after being established, and the value provided by the Swedish operation Larmtjanst to its members, should be enough to convince members to go ahead. A proof of concept would be a waste of time and money.
• The Insurance Fraudline should be managed by the SAICB.
• We need to use our existing data sources, including sources that are currently outside the control of insurers. Current sources would include IDS, UNICODE, E-Natis info, etc., starting with IDS data.
• An investigative unit is crucial, but a clear distinction should be made between the activities of the bureau and the individual companies’ investigative units in order to ensure co-operation.
• The mix of the staff should carefully be considered.
• The power of publicity as a deterrent tool should not be underestimated.

SAICB - A Business Case

1. Purpose

   This document outlines the objectives, costs and benefits of the establishment of a South African Insurance Crime Bureau, in an effort to improve the way organised insurance crime is detected and managed. The initial focus of this Bureau will be insurance fraud, and particularly organised insurance fraud.

   The paper is aimed at Executives, and intended to form a basis on which insurers can confirm participation in the initial rollout in early 2008.

2. Project Objectives

   The majority of insurers currently manage insurance fraud and other insurance crime using ad hoc detection methods and informal information exchanges. This fragmented control framework is ineffective and fails to make best use of insurer data assets and human resources. It totally fails to address the organised element of insurance fraud and crime, as well as the habitual or multiple claimant, both areas believed to account for a significant portion of insurance fraud and crime. In the UK, the Insurance Fraud Bureau has established that 40% of the hitherto insurance fraud thought to be opportunistic fraud is in fact organised crime.

   This initiative will:
   
   • Leverage existing shared data to detect organised fraud
   • Develop an investigative approach to managing fraud events impacting multiple insurers
   • Provide a platform to improve the governance over the management of shared insurance data, driving short and long term cost savings.



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