New mafia group targeting some of the biggest companies in South Africa
The South African Insurance Crime Bureau (SAICB) has warned that organised criminal syndicates are increasingly targeting South Africa’s insurance industry.
Fraud cases are now being linked to more serious crimes, including hijackings, vehicle theft, murder and cybercrime.
This is the feedback from SAICB CEO Garth de Klerk, who said there was a misconception that insurance fraud was a victimless crime because large companies could absorb the losses.
“I think a lot of people see insurance fraud as being victimless, and it’s not the case,” De Klerk said in an interview with The Money Show.
He added that insurance fraud was often connected to physical crimes, which ranged from staged vehicle accidents and hijackings to kidnapping and murder.
“Insurance fraud is not victimless, and there’s always a cost. Even if that cost is only monetary to the insurance industry, that cost is then passed over to the insurance companies,” he said.
According to De Klerk, vehicle-related crime accounts for a significant portion of fraud in the short-term insurance sector. This includes staged hijackings, staged incidents, vehicle theft and vehicle cloning.
On the life insurance side, the SAICB is also seeing cases where people allegedly take out insurance policies on the lives of relatives or other people with criminal intentions.
“You can insure my mom-in-law, my cousin, my auntie, and then bump them off for the benefits of an insurance policy. Unfortunately, we’re seeing a rise in those types of murders,” De Klerk said.
He said increased collaboration between insurers and law enforcement was also leading to more of these cases being detected.
The SAICB acts as a central point for information from insurers, receiving claims and intelligence from major companies across both the life and non-life sectors. It also operates a fraud hotline that receives anonymous tip-offs and whistleblower reports.
“We take all of the information, we look for commonalities, we run algorithms, AI on top of it, and we look for the syndicates committing the fraud,” De Klerk said.
Social media is becoming an important source of evidence
The organisation then investigates suspicious cases and works with law enforcement and prosecutors to build cases against alleged criminals.
The organisation also examines a claimant’s wider history. A recent policy or unusual claim may raise questions, but De Klerk stressed that it was not automatically evidence of fraud.
However, he added that investigators could check whether someone had claimed the same loss from multiple insurers.
“That’s unjustified enrichment, so it’s illegal,” he said. De Klerk said insurance crime was also moving into increasingly sophisticated areas, particularly cybercrime.
“When we get into the cyber environment, the ballpark changes. You’re talking about a different level or quality of criminal.”
He said the industry was seeing an increase in cyber-related incidents, including phishing scams, romance scams and sextortion, requiring investigators to develop new skills to track perpetrators who may be based anywhere in the world.
Social media is also becoming an important source of evidence. De Klerk said investigators could examine photographs, timestamps, geolocation information and other digital clues when building cases.
“Bad actors talk too much on social media. It’s lovely. We really appreciate it, we enjoy it and long may it continue,” he said.
The SAICBnoted that tackling organised insurance crime requires cooperation between multiple sectors. De Klerk said criminals often use proceeds from insurance-related crimes to finance other illicit activities.
“They use the funds that they get from these illicit activities to fund other illicit activities, whether it’s drug smuggling, human trafficking, money laundering, whatever it might be,” he said.
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