Insurance claims climbing a $billion a year

IAJ, police to set electronic traps for motor vehicle insurance fraudsters

By Alphea Saunders
Observer senior reporter

Monday, December 10, 2018

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With motor vehicle claims speeding past $9.4 billion last year, the Insurance Association of Jamaica (IAJ) is partnering with revenue authorities and the police to roll out a database early in the new year, aimed at dragging down insurance fraud.

The Insurance Vehicle Information System (IVIS) is one of the major strategies being established by the industry, to detect and deter motor vehicle insurance fraud.

Last year, out of gross general insurance claims of $13.2 billion, insurance companies paid out $9.4 billion - the bulk - in motor vehicle claims.

Executive director of the IAJ Orville Johnson disclosed in a Jamaica Observer interview that worried insurers were “putting together an information system on motor vehicles...What will happen is that when you go to license your car, the tax department won't rely on the papers you present; they will go into a database which will be fed directly by the insurance industry”.

“Similarly, the police will rely on that when they stop you on the road rather than ask you for the paper. A lot of people have been very clever [with]counterfeit cover notes and insurance certificates. You won't be able to use that, so you will have bonafide [information] coming from a database from an insurance company which will be uploaded almost on a real time basis and they will rely on that, because they (the police) can access it from their smartphones,” Johnson said.

The IAJ executive director pointed out that the industry faced similar issues of fraud in other areas, such as staged accidents, for example. Insurance companies covered 380,000 vehicles annually, “but depending on who you talk to, it's about 500,000 cars on the road”.

He said that the association had not been able to quantify in monetary terms the amount of claims that were fraudulent, since estimates varied widely. “The problem with the figures is that you can't tell. People do all kinds of estimates,” he said.

Meanwhile, the IAJ is making a renewed call for Jamaicans to desist voluntarily from engaging in insurance fraud, and is to mount an awareness and fraud-reporting campaign this month. Johnson noted that the association had also partnered with Crime Stop to enable persons to call in with tips on fraudulent insurance activities.

“You have people who feel that if I take money from the insurance company it's not fraud. people don't see it as a crime — but it is a crime,” he remarked.

The executive director also pointed to issues with fraud in the health insurance sector. “There are also people who have the notion that if they have their health card, even if they're not sick they need to use up the card before the year finishes…What happens is that people try to get other people to use their cards, illegally…There should be no conspiracy with anybody in the health sector to try to utilise that [benefit],” he urged.

These fraudulent activities and claims, he said, led to higher payouts for insurers, and ultimately impacts premiums. “Last year we paid out over $18 billion in health claims for policy holders, a third of which is for prescription drugs. The previous year it was $17 billion and the previous year it was $16 billion, so it has been moving. We don't have a problem with people using their health cards for genuine purposes, but we have reason to believe that in some instances people have 'tried a thing' with it,” he said.

The payout for individual life in 2017 amounted to $21.3 billion, or four per cent over the amount paid out in 2016. Categories included death, $2.8 billion, up six per cent; policy loans $877.54 million, down nine per cent; surrendered policies, $4.1 billion, down three per cent; encashments, $12.6 billion, up seven per cent; critical illness, $649.44 million, up 16 per cent; and others, $4.98 million, up 30 per cent.

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