SOUTH AFRICAN INSURANCE CRIME BUREAU (SAICB) SAUMA CONFERENCE – 12 OCTOBER 2010 HUGO VAN ZYL CHIEF...

SOUTH AFRICAN INSURANCE CRIME BUREAU

(SAICB)

SAUMA CONFERENCE – 12 OCTOBER 2010

HUGO VAN ZYLCHIEF OPERATING OFFICER

FRAUD AND SUSTAINABILITY

CURRENT SITUATION: ECONOMIC DOWNTURN

OPENS BUSINESS TO RISK WHEN TOUGH ECONOMIC TIMES IMPACT THE COMPANY FINANCIALLY – THIS USUALLY INCREASES THE OPPORTUNITY TO COMMIT FRAUD.

FRAUD IS SOUTH AFRICA’S NO. 1 ECONOMIC CRIME AND FRAUD ACCOUNTS FOR APPROX. 7% OF A COMPANY’S REVENUE LOST WORLDWIDE.

SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU


CIRCUMSTANCES UNDER WHICH FRAUD IS COMMITTED

incentive or pressure to commit fraud, the opportunity to commit fraud, and rationalisation .


FRAUD AND SUSTAINABILITYIMPACT OF ECONOMIC DOWNTURN:MANY COMPANIES NEED TO REDUCE COSTS AND

INSTITUTE MEASURES LIKE: Retrenching reduced training, reduce any pay increases or bonuses and also delay promotions abandoning checks and balances which may be in place, and/or cutting back on internal audits, ETC.

In such conditions, an organisation is susceptible to fraudulent behaviour internally from its employees, as well as from its service providers and

associates.


FRAUD AND SUSTAINABILITYRATIONALISATION

employees feeling resentful and being able to justify to themselves that the fruits of the fraud that they are committing are owed to them.

they may convince themselves that it is acceptable as they are doing it to address a desperate situation or that it is the only option available.

Some even believe that they are just “borrowing” or that everyone else is doing it and thus they are also entitled to do it.



RATIONALISATION Organisations resort to desperate measures to survive. This

may result in the payment of bribes, misrepresentations being made to clients, the favouring of tenders, insurance claims being falsified and/or taking short-cuts.

Employees on the other hand may find themselves falsifying qualifications and references, stealing cash and stock, creating ghost workers, falsifying medical and other insurance claims, resorting to insider trading and/or falsifying suppliers’ details.



More than 80% of the frauds committed by individuals is in one of six departments: accounting, operations, sales, executive/upper management, customer service or

purchasing.



• Insurance fraud costs the industry billions of rands each year. It is internationally estimated that 30% of all insurance claims contain an element of fraud. In South Africa, if only 10% of claims is fraudulent, this translates into nearly R2 billion annually (Short-term industry only).

• Insurance fraud specialists, as well as the South African Police Service and other crime related agencies agree that a significant percentage of crime, including insurance fraud and other insurance related crimes, is highly organised and perpetrated by syndicates

• The UK IFB found that 40% of the insurance fraud its members previously believed to be opportunistic, was also organised


FRAUD AND SUSTAINABILITYHOW DO WE ADDRESS AS AN INDUSTRY?ZERO TOLERANCEINTERNAL CONTROLS AND AUDIT

PROCESSESFRAUD PREVENTION POLICIES AND

PROCESSES risk-management strategy well-drafted economic-crime prevention policies adequate staff training a confidential whistle-blowing process


FRAUD AND SUSTAINABILITYZERO TOLERANCE

WHOLE INDUSTRY TO SPEAK WITH ONE VOICE

SAICB TO DRAFT INITIAL POLICY – SAIAZERO TOLERANCE POLICY TO COVER:

CLIENTSSERVICE PROVIDERSASSOCIATESSTAFF


FRAUD AND SUSTAINABILITYWHERE DOES THE SAICB FIT INTO THIS ?HISTORYKEY OBJECTIVES

DECTECTIONPREVENTIONINVESTIGATIONPROACTIVE INITIATIVESSTAFF DISHONESTYFRAUDLINE


FRAUD AND SUSTAINABILITYPROACTIVE INITIATIVESLISTS – SAPS 13, DRäGER, TRACKERASSISTING SAPS WITH PROBLEM AREAS

PLAGUED BY CORRUPTION AND FRAUD SAPS POUNDS CLEANUP BORDERS ADDRESSING INDUSTRY VEHICLES IN SADC

COUNTRY INDUSTRY STATS TRAINING



SAICB – VISION

INFORMATION SHARING PLATFORMWHOLE FINANCIAL INDUSTRY

FUSION CENTERREDUCING RISK FOR INDUSTRYRECOVERY OF MONEYAFFECTING CRIME AND FRAUD SITUATION IN COUNTRY


THANK YOU

SOUTH AFRICAN INSURANCE CRIME BUREAU (SAICB) SAUMA CONFERENCE – 12 OCTOBER 2010 HUGO VAN ZYL CHIEF...

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