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
FRAUD AND SUSTAINABILITY
CIRCUMSTANCES UNDER WHICH FRAUD IS COMMITTED
incentive or pressure to commit fraud, the opportunity to commit fraud, and rationalisation .
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
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.
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
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.
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
FRAUD AND SUSTAINABILITY
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.
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
FRAUD AND SUSTAINABILITY
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.
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
FRAUD AND SUSTAINABILITY
• 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
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
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
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
FRAUD AND SUSTAINABILITYZERO TOLERANCE
WHOLE INDUSTRY TO SPEAK WITH ONE VOICE
SAICB TO DRAFT INITIAL POLICY – SAIAZERO TOLERANCE POLICY TO COVER:
CLIENTSSERVICE PROVIDERSASSOCIATESSTAFF
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
FRAUD AND SUSTAINABILITYWHERE DOES THE SAICB FIT INTO THIS ?HISTORYKEY OBJECTIVES
DECTECTIONPREVENTIONINVESTIGATIONPROACTIVE INITIATIVESSTAFF DISHONESTYFRAUDLINE
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
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
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
SAICB – VISION
INFORMATION SHARING PLATFORMWHOLE FINANCIAL INDUSTRY
FUSION CENTERREDUCING RISK FOR INDUSTRYRECOVERY OF MONEYAFFECTING CRIME AND FRAUD SITUATION IN COUNTRY
SOUTH AFRICAN INSURANCE CRIME BUREAUSOUTH AFRICAN INSURANCE CRIME BUREAU
THANK YOU
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