South African Insurance Crime Bureau estimates N164.6bn as P&C fraud

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By Favour Nnabugwu

South African Insurance Crimes Bureau’s estimates, property and casualty insurance fraud to cost the South African market 7 billion ZAR (N164.6bn) in 2019.

That is 20 percent  of the total claims reported which amounted to 35 billion ZAR (N823.1 bn).

Fraudulent activities are manifested by misrepresentations of the risk when underwriting contracts or by false claims upon the occurrence of a loss. Insurance fraud can also be unintentional.
According to Christelle Colman, insurance expert at Old Mutual, the financial pressure that consumers are facing in 2020 due to the pandemic could increase fraud attempts.
South Africa has a relatively high insurance penetration rate when compared to its emerging market counterparts and in relation to the sizes of their economies.
Insurance penetration, which comprises life insurance and non-life insurance products, is calculated as a percentage of gross domestic product (GDP). It enables the comparison of different sizes of economies.
South Africa, at 12.89 percent has the highest insurance penetration of the emerging markets under review, far exceeding China at 4.2 percent which came in second on this measure.
Of the frontier markets Namibia is the standout country, with a penetration rate of 7.25 percent while Morocco’s rate is 3.88 percent, and Tunisia’s is 2.14 percent
In Africa, Morocco, Nigeria and Zimbabwe experienced positive total premium growth in 2018 overall.
South Africa experienced stagnant growth in its total premiums, but this is in line with the stagnant economic growth and high unemployment rates.
For Morocco and Nigeria, this was mostly driven by an increase in life premiums.
The boost in life insurance in Nigeria is due to an increase in savings and protection-related financial products in that country,
Kenya experienced low premium growth mostly due to the country’s low insurance penetration levels (0.63 percent); which also stems from its low levels of urbanisation.
When comparing the insurance industries of different markets around the globe, investment analysts also look at the gross insurance premiums written (GPW).  Africa’s GPW accounts for 1.56% of global GPW, according to the report.
South Africa is the leader on the continent, with its GPW accounting for 0.93 percent of global GPW.

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