cost the largest economy in the world (U.S. economy) more than US$80 billion annually and result in more than $96 billion in yearly premium increases
False insurance claims or inflated insurance claims are filed with the intent to defraud an insurance company. There are no statistics available as to the probable cost to Botswana, the short term insurance industry in Botswana or the insuring public as a result of insurance fraud but some statistics are included from South Africa and the United States to emphasise the problem that is being faced by the short term insurance industry worldwide.
Botswana Insurance Company is the first short term insurer in Botswana to inspect or require inspection of motor vehicles prior to issuing cover. Our basic reason for this was the findings of a programme to inspect insured motor vehicles conductred in South Africa over a period of 12 months using a 15,000 vehicles sample. Of the vehicles that were inspected, a staggering 34 percent, or 5,100 vehicles, had obvious existing body damage requiring panel-beating or new parts. Of these 5,100 vehicles, 3162 cars or 62 percent had glass damage, and 2040 or 40 percent had other obvious body damage including the paintwork. The results of this programme confirmed that motor insurance fraud is crippling the insurance industry and also contributing significantly to large annual increases in insurance premiums. The initial sample also indicated that fraudulent activity is highest in areas where potential policyholders evaded inspections and also propositioned vehicle inspectors more frequently, not to mention pre-existing damage.
To highlight public awareness, BIC has offered speakers for schools, the police force and the consuming public.
In addition BIC has introduced an Accident and Assessing Centre just over one year ago to help tackle the fraud that takes place when vehicles involved in accidents are taken to a repairer for quotes.
Vehicles insured with BIC are taken to this centre, located in Gaborone West and motor vehicle repairers are required to come to the centre to quote. This ensures that all quotes received are genuine quotes.
BIC also appoints qualified assessors to assess damages and verify the validity of part prices using the Audatex system.
Cash Rewards: BIC now also offers cash rewards for information leading to an arrest or the laying of charges against individuals involved in insurance fraud against our company. The rewards range from P5,000 to P50,000
Training of Employees: BIC have arranged in-depth training courses and workshops on fraud detection and curtailment for their producers, underwriters, and claims professionals.
Greater Cooperation with law enforcement and consumer groups: BIC is working closely with law enforcement personnel at local level to address the problem of insurance fraud. In addition, any suspected cases of fraud are reported to the Botswana Police and regular meetings are held with the Police to ensure that these cases do result in arrests and convictions, however long this might take.
