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Chomi Makina

Walter Muchinguri in NYANGA
The insurance sector should come up with measures to mitigate fraud cases in the industry being perpetrated by clients, insurance firms, assessors, and panel beating companies, an insurance risk and loss consultant has said.
Malvern Mudzingwa of Hillcrest Loss Consultancy told delegates attending the Insurance Institute of Zimbabwe’s 2014 winter school that one of the key factors in the fight against insurance fraud was to come up with clear statistics on insurance fraud.

“At the moment we are all agreed that insurance fraud is rampant, but we do not know the extent of the problem and we need to come up with accurate data to determine the extent of the problem before we start addressing it,” he said.

Mudzingwa said countries such as South Africa, the United Kingdom and the United States, have agencies responsible for collecting data on insurance fraud.

Mudzingwa, who was making a presentation on insurance fraud, noted the insurance fraud was being fuelled by economic challenges and the high reward-low risk proposition for the perpetrators. Other factors included declining moral and ethical standards as well as compromise on underwriting practices.

“We have had very few convictions in terms of insurance fraud and part of the problems is that 90 percent of cases are referred to the police at claim settlement stage at which time most of the evidence will have been lost,” he said.

Mudzingwa, however said the problem was not peculiar to Zimbabwe as it was also common in other countries such as South Africa, where the rate of conviction of perpetrators for insurance fraud was also low.

He said that in South Africa, the institution that deals with insurance fraud had managed to expose many cases, enabling insurance firms to save 650 million rand. However, of the 900 cases that the body reported to the police, only 20 resulted in convictions.

He said common cases of insurance fraud in Zimbabwe included arson, stage managed road traffic accidents, insuring assets damaged prior to the commencement of the insurance contract, insuring non-existent assets and multiple insuring.

He called for the establishment of an institution in the mould of the credit bureau for the insurance sector to help flush out fraudsters.
Meanwhile, the IIZ president Chomi Makina, who officially opened the four-day winter school, challenged participants to use the winter school to come up with new strategies to take the industry forward.

“Some of you are new in the industry, you should profit from the knowledge that you will acquire here and ensure that you bring in new ideas that takes us forward

“As an industry, we should not remain stuck in the past but should move with the times,” he said.