Of fake claims, double claims, money laundering in the insurance sector

Of fake claims, double claims, money laundering in the insurance sector

Noah Kupeta

HARARE, The insurance and pension industry is sometimes faced with serious problems such as fake claims, double claims and sometimes money laundering. But why do people commit themselves to such crimes? Does the insurance and pension industry have control mechanisms of transparency and accountability? What does the law say on fake claims, double claims?

The insurance industry is open to abuse by criminals, including money launderers. Fraud and financial crime in the insurance industry has risen sharply in recent years.

The 2018 Global Economic Crime Survey shows that 62 percent of the global insurance community had their firms exposed to fraud or financial crime within the previous 24 months, compared to 37 percent in 2016 and 35 percent in 2014.

Policy holders with various insurance companies in Zimbabwe expressed mixed views on why they commit themselves to fake and double claims.

Tecla (38) (not real name) confirmed that poverty, the desire to benefit after years of contributing premiums, treachery and ignorance among other factors has led her into duping her insurance company.

“I feel prejudiced after years of contributing my premiums but haven’t got any value, so I feel entitled to my money.

“Since 2000, I have been contributing educational premiums and savings for my daughter and she hasn’t yet started benefiting, the money is now too much, so I need to benefit in this hyperflation,’’ she said.

Information obtained from the Insurance and Pensions Commission (IPEC) website shows that the regulatory body is currently training pension fund trustees on management of insurance funds and premium contributions.

“The Insurance and Pensions Commission (IPEC) is training pension fund trustees throughout the country to capacitate them with skills to effectively and efficiently manage pension funds.

“Trustees are responsible for ensuring that pension fund schemes are run professionally, honestly and efficiently and in the best interest of the members.

“They are the custodians of pension funds’ assets and they have responsibility to ensure value creation and preservation of assets supporting liabilities to scheme members,’’ said IPEC.

University of Zimbabwe economist Professor Albert Makochekanwa said the insurance and pension industry need to increase their security system to curtail and combat fraud, fake and double claims as well as money laundering.

“I know the health sector, I don’t know whether it is all but some what do they call them? These pharmacies, when I go to a Doctor, after that I go to a medical aid, they now want my finger print to cross check whether the medical aid, if I am the actual person. In case ,let us say my mother has fallen ill and I now want to cheat the medical aid company to get drugs pretending it is me who is sick.

“So I am saying one thing is to upscale their security system in as much as they can make use of information technologies so that the person who is claiming is the actual person.

“They also need to ensure that they their systems are centralised, when someone makes a claim in Binga, it should reflect across all the branches throughout the country so that the same person cannot come and make a claim maybe the following morning in Harare or in another branch across the country.

“They need also to ensure that the authorisation system, well we can’t say decentralise but there is need again for those that authorize claims if possible to make use of biometric system because it cannot forge.

“In other countries they make use of biometric system, it is easy to trace people who make double allocations,’’ explains Professor Makochekanwa.

Criminals have developed new and innovative tactics to penetrate their crimes in the insurance and pension industry.

The Insurance Council of Zimbabwe (ICZ) is currently working on an independent bureau modelled along the South African Insurance Crime Bureau to address organised crime in the industry as well as a number of educational efforts aimed at the public to create awareness of insurance fraud scams.

An official from ICZ only identified as Richard Chrinda confirmed that preparations are now at an advanced stage saying “ Yea we have a project of that nature at advanced level, but the best person to comment on that is Public Relations, get in touch with them’’.

The European Union (EU), for instance, has introduced a number of new financial regulations such as the Fourth and Fifth Anti-Money Laundering Directives (AMLD4 and 5), the Payments Services Directive (PSD2) and the updated Markets in Financial Instruments Directive (MiFID II), among others to address illicit financial transactions.

Last year, IPEC reported that the local insurance industry was losing close to $165 million yearly through duplicitous activities.

In the same period, there was a case of syndicate insurance fraud involving a National University of Science and Technology student attached at a local insurance firm, who was implicated in $12 000 motor insurance fraud.

In 2016, Old Mutual Assurance Company suffered from insurance fraud caused by a nurse, who preyed on terminally ill-patients admitted at Kwekwe General Hospital in cahoots with her boyfriend.