Local News Tinashe 0 2018-07-26

Zimbabwe will soon set up a unit  specifically to prevent and investigate cases of insurance fraud which  is on the rise in the country, an official has said.

Insurance fraud refers to cases in which individuals lie to an  insurance company to get financial compensation for something they would  not have received had the truth been told.

There are various forms of fraud which include fictitious car accident  or death claims, exaggerated claims and backdating of insurance claims.

A common false claim relates to individuals who only insure a car after  it has already been involved in an accident and then go on to make an  insurance claim after backdating the incident.

Former Zimbabwean representative in the Big Brother Africa show,  Wendall Parson was in 2013 cleared by the courts after he was arrested  on allegations of having made a false claim in which he was paid  compensation for his vehicle which was involved in an accident.

The insurance company claimed the car had been insured after the  accident had occurred.

While exact statistics on the insurance fraud cases are not available,  officials in the industry say there is a general upward trend in such  cases in the country.

In the past few years, it was estimated the industry was losing in  excess of $165 million annually through various forms of fraud.

Estimates put the number of fraudulent claims at between 30 to 40  percent of total claims that insurance companies deal with every year.

Old Mutual Zimbabwe business development manager, Immaculate Musonza  said the insuring public “is not so honest.”

“The moral risk in Zimbabweans is getting very high everyday  unfortunately, maybe it’s because of the economy,” she said.

In an attempt to thwart fraudulent claims as well as to investigate  them in case prevention has failed, the insurance industry has firm  plans to establish the Zimbabwe Insurance Crimes Bureau (ZICB).

Education and public awareness to prevent such cases occurring would be  the major aim of the unit.

“We are setting up an independent bureau to assist the industry to  prevent (fraud) and if they do happen, then investigate the cases,” said  Insurance Council of Zimbabwe (ICZ) technical manager, Nicholas Sayi.

He said it had been expected that the unit would have been operational  by now but was likely to be in operation by the end of the second  quarter of this year.

At the moment, insurance companies are using internal teams to  investigate cases of fraud.

Experts in the industry say those with experience in dealing with  insurance claims can easily identify a potential fraudulent claim by  noting “red flags” in it.

Once a potentially fraudulent claim was identified, Musonza said “we  try to talk to the client first to encourage them to withdraw the  claim.”

If this fails, the case is then taken to the police and goes to court.

Internal investigation units are expected to work hand in hand with  ZICB when it is operational.

Officials in the industry have also questioned the conduct of police  officers, accused of sometimes issuing reports which are used to make  fraudulent claims without establishing the facts.

In the Wendall Parson case, it came out in the courts that a named  senior police officer was singled out for having connived to change  dates in which an accident was said to have occurred to justify an  alleged false claim.

Because of complexities involved in the cases, officials note that in  most cases insurance related crimes have not found their way to the  courts.

Payment of false claims has an overall negative impact on the industry  as it not only increases the cost of insurance to society but also  impacts on the growth and profitability of the sector, Insurance and  Pensions Commission (IPEC) chairperson Tendai Karonga has previously  said.

“Insurers may be left without capacity to underwrite because of this  fraud in the process exposing genuine customers because you will not be  able to pay their claims on time,” he said. – New Ziana