Insurance bureau gets thumbs-up

Published: 02 May 2018

THE proposed Insurance Crime Bureau in Zimbabwe must have the power to speedily prosecute cases brought before it because insurance fraud has been on the rise due to economic decay, analysts have said.

The insurance industry is planning to set up the bureau by June in a bid to stem losses incurred through fraud, which, according to the Insurance and Pensions Commission, is pegged at about $165 million annually.

Insurance Council of Zimbabwe technical administration officer Nicholas Sayi told Standardbusiness that setting up a bureau constituted by insurance industry stakeholders would be a major step towards effectively dealing with fraud.

"The setting-up and operation of the Zimbabwe Insurance Crime Bureau will go a long way in effectively dealing with insurance fraud," he said.

"Handling fraud entails key processes, inter alia, prevention, identification and investigation as well as prosecution.

"The bureau will be dedicated to dealing with insurance fraud.

"This is a major step towards effectively dealing with this menace in the industry and will also be a deterrent to fraudsters."

According an insurance expert, who requested anonymity, the level of insurance fraud in Zimbabwe has reached alarming levels and the establishment of an institution to deal with this is a very welcome development.

He said there was need to establish a strong institution with the expertise to tackle sophisticated issues and the power to prosecute.

"We need an institution that is qualified to deal with this special type of crime," he said.

"In many circumstances, culprits are not brought to book due to limited knowledge among prosecuting authorities as this is a specialised area.

"As an industry, I feel we really need to educate the insuring public.

"In some instances, clients are not even aware that they are committing a crime and at times clients do not even appreciate how insurance works.

"There is also need for education on the functions of the bureau and to ensure that its mandate is clear for all stakeholders."

Economist Clemence Machadu believes the weak economy has promoted the proliferation of false insurance claims.

"I think it is long overdue, but better late than never. The issue of fraudulent insurance claims has been with us for some time now, and became rampant when economic conditions worsened in the country," he said.

"We began to see the proliferation of cases involving people making false insurance claims to get compensation and benefits they are not entitled to."

Machadu said since then the majority of Zimbabweans working in the informal sector where medical insurance take-up was low had been taking advantage of weak insurance systems to access medical care.

"In my view, the common instances relate to health insurance, vehicle insurance and property insurance fraud," he said.

"This is mainly arising from the low insurance uptake as a result of low incomes and the poor economic conditions.

"Given, for instance, how 90% of Zimbabweans have no medical insurance, many people are inclined to take advantage of the weak insurance systems to have their relatives and friends access medical care using their policies."

Machadu said cases of insurance company executives abusing funds by giving themselves excessive salaries and benefits using money that should be providing cover to clients must be dealt with by consumer protection organisations such as the Consumer Council of Zimbabwe.

"I think it will greatly improve the insurance sector if all players pooled their resources together to tackle the scourge of insurance fraud," he said.

"This will also help small players, who have weaker systems and little funds but are still vulnerable to fraud.

"But it is important for individual companies to invest in technology that strengthens their investigation capacity and insurance systems by proactively detecting fraud or preventing it from happening.

"Some major players in the health insurance sector, for instance, have invested in biometric systems that ensure that the person receiving the benefits is the owner of the policy.

"Players should also utilise the bureau to lobby for better insurance fraud laws that bring sanity in the sector."

Financial expert Persistence Gwanyanya said it was important to expedite the initiative.

"An insurance crimes bureau would be important to deal with organised insurance crimes and fraud as well as to create awareness of these nefarious activities," he said.

"This initiative comes at times when these criminal activities are increasing much to the detriment of the consumer.

"Insurance companies are equally affected by these activities. However, what would be important is to expedite such initiatives."
- the standard

Tags: Insurance,