The conversion to the multi-currency system in 2009 has seen a spike in the number of fraudulent insurance claims, further tightening the already difficult market conditions for insurance companies, a leading industry executive said.
NicozDiamond MD Grace Muradzikwa told businessdigest this week it was unfortunate that corruption had reached such alarming levels, adding the notion of gentleman or lady was long gone.
“The insurance business is one based on utmost good faith and that insuring people are honourable ladies and gentlemen, but the moral decay has almost destroyed this,” said Muradzikwa.
Insurance companies have had to grapple with an upsurge of false and severe claims which are often backed by fake documents resulting in them paying more than the actual loss or for no loss at all.
She said in the past insurers assumed that potential policyholders were honest and that when they purchased insurance products, the information they provided was correct and truthful.
However, the growing scourge of corruption and the ongoing economic hardships make it impossible for insurers to just rely on clients’ information.
The companies now carry out inspections of insured property to verify information provided by clients in an attempt to pre-empt potential fraudulent claims.
Insurance companies now take extra measures such as taking pictures of vehicles for instance, for purposes of assessing future claims.
NicozDiamond head of internal audit Jabulani Mbengo said his company had identified about three types of consistent fraudulent claims.
These included the inflation of claims, claiming insurance where there was no cover and the use of financial guarantees to fleece insurance companies.
“We have had cases of people inflating the amount claimed (on damaged vehicles) by colluding with panel beaters and other service providers who then provide ridiculous quotations to support the fraudulent claims,” said Mbengo.
“However, when the actual assessment is carried out, the claimed amount will always come down showing that initial claims were inflated.”
He said insurance assessors were sometimes bribed to back these fraudulent claims and once an assessor was roped in by the fraudsters, insurance companies were then forced to pay even if they suspected fraud.
The other form of fraud involves claiming insurance where there was no cover.
In this instance, the fraudster would get a policy after the vehicle had already been involved in an accident.
He would then proceed to alter dates of the accident and actually obtain a fake police report to support the claim.