News and Views - Fraud, The Fight Is On!
Intermediaries are strategically important in the detection and combating of fraud, as they represent the industry in numerous processes where fraud indicators could be discovered. We were all hoping that 2021 would be miraculously different from 2020, however that dream has been shattered by reality.
Globally, socioeconomic pressures are at an all-time high after experiencing a 4.2% decline in global GDP in 2020. Now economists are projecting a recovery of approximately 4.6% in 2021. The SARB’s most recent 2020 Bulletin shows an expectation of a recovery in “personal disposable income and consumer spending” in quarter two of 2021. This will hopefully underpin an economic revival during the year, however, these are still early days, with several factors at play, so we will have to be patient, persistent, and purposeful in our actions. It is, however, hopeful that in 2021, the focus of investors and policymakers will shift from Covid-19 back to the environment.
The Insurance Crime Bureau, established in 2008 to combat fraud within the non-life insurance industry, has over the last 13 years morphed into an organisation fighting fraud and related physical crimes, in both the non-life as well as the life and funeral industry. Through this journey, it has become clear how imperative it is that we act as a common-cause community with a focus on improving the environment in which we work and live.
Fraud is often associated with physical crime in South Africa, where vehicles are hijacked, homes are invaded, businesses are robbed, and murders are committed, all for some form of financial gain. And these crimes are often related to syndicates intent on financially benefiting from an insurance policy payout. Intelligent actions to combat these syndicates are crucial.
One of the most effective ways to combat crime is to create central repositories of actionable data, accessible by all relevant stakeholders, which allows for meaningful and timeous decisions. The only way to create these databases is if law enforcement, legislators, corporate entities, and the invested public work together. This data would allow for educated decisions when entering into contracts; reviewing and assessing risk; paying claims; investigating fraud, etc.
Crime is a community challenge and no individual or organisation can honestly state that combating crime is not their responsibility. The financial intermediary environment is strategically important in the detection and combating of fraud, as intermediaries represent the industry in numerous processes where fraud indicators could be discovered, intermediaries form a buffer between the consumer and the industry, playing an integral role in fighting fraud.
We must invest more time in networking to ensure that we share experiences and encourage attitudes of “if you see it, report it”.
Considering existing consumer pressure, with consumer behaviour and spend shifting dramatically, the financial services industry will be faced with a challenging future, looking for rapid innovation to retain customers and likely producing some disruptive products. Innovation unfortunately also creates an opportunity for syndicates to test our controls, systems and people, and we will have to be responsive to these increased fraud threats.
Over the next 12 months, the Insurance Crime Bureau will be focusing on the deployment of physical technology backed by digital intelligence, internally and in the broader industry, to underpin our ability as a community to detect, communicate, and combat crime. The objective is to ensure that the information gleaned from this project is intelligently interrogated and made available to all stakeholders in a manner in which we can all make a difference.
We are looking forward to a future filled with growth and opportunity. Leadership in today’s environment is not for the faint of heart, and it will take people working together, and supporting stable and sensible innovation to be truly successful.
Garth de Klerk, Insurance Crime Bureau CEO