The industry and the regulator must take a firm stand to combat the rise of insurance fraud as it poses a serious risk to all financial sectors in many jurisdictions and can be perpetrated by both consumers and providers.
Awang Hj Mohd Rozan bin Dato Paduka Hj Mohd Yunos, Deputy Permanent Secretary cum Acting Director of Financial Institutions Division, Ministry of Finance, yesterday spoke at length on ways to combat fraud at the opening ceremony of the Insurance Claims and Fraud Investigation workshop at the Ministry of Finance building.
"The concept of fraud is that of obtaining gains through misrepresentation and poses a serious risk to all financial sectors in many jurisdictions and can be perpetrated by both consumers and providers. In the insurance sector, it is more often than not, that fraud occurs in the form of fraudulent claims, either staged or inflated, which affect the financial position of an insurer."
"To compensate for this, insurers must raise premiums and this results in higher costs for policyholders. However, this is not to say this in the only method that fraud can take place in the insurance industry. Unauthorised (or unlicensed) agents who prey on the insuring public may abscond with their ill-gotten premiums and leave them unwittingly unprotected," he said.
In combating insurance fraud, the guest of honour highlighted the introduction of the Insurance Order 2006 and Insurance Regulations 2006 in March last year by the Ministry of Finance. They are applicable to both domestic general and life businesses. The introduction of these legislations is part of the ministry's ongoing effort in enhancing supervision of this sector in line with international best practices.
"Another key objective of these legislations is to ensure that our insurance companies remain financially strong, so that the interest of the public as policyholders are properly protected. In turn, it is hoped that this would encourage the general public to also embrace insurance as a key component of their long term financial plans, be it for protection or investment," said Awang Hj Mohd Rozan.
He said insurance fraud is difficult to quantify as much of it is undetected but it is however recognised as a widespread threat to the industry. Recognising the significance of the issues, international organisations have addressed this in their own capacity.
Meanwhile, motor vehicle and fire claims have increased by more than 50 per cent year on year.
"Claims growth in Brunei at the end of 2006 was B$72.5 million. More than half the claims were life insurance. In non-life, motor claims have increased by 54.9 per cent year on year and amounted to B$18.3 million and fire claims increased by 56.8 per cent year on year and amounted to B$4.6 million."
"It was reported recently that the number of road accidents in the first quarter of 2007 was 583 and fatalities increased from seven in 2006 to 16 persons so far in 2007. The Fire and Rescue Department recorded more that B$1.3 million in damages caused by fires in the first quarter of 2007," he said adding, "Statistics such as these reinforce the need for the various parties to come together in ensuring that safety guidelines are met -- either on the road, or at industrial sites or at home." --By James Kon / Courtesy of The Borneo Bulletin |
