November 14, 2002 by Canadian Underwriter
Insurers are ahead of the rest of corporate Canada when it comes to managing fraud and misconduct, according to a survey from KPMG Forensic.
Among the insurance industry’s responses to the survey, 100% said fraud risks are the responsibility of the CFO and head of internal audit, compared with 80% of corporate Canada placing this responsibility with the CEO or CFO, which KPMG says indicates a better understanding by insurers of shared responsibility in managing fraud.
Fraud and misconduct can originate with the most senior officers of the company, notes David Thomson, partner in KPMG’s insurance practice. “Sharing responsibility for prevention and detection is a way to ensure checks and balances and speaks to the heart of preventing the most serious types of corporate fraud.”
Also, 100% of insurance respondents were satisfied or somewhat satisfied that their reward structure was adequately linked to performance, versus 84% in corporate Canada.
Insurers report having a conflict of interest policy in place in 83% of companies, against 73% in the rest of corporate Canada. And 67% of insurers require individuals to sign this policy annually, versus 29% for corporate Canada.
In one area, however, insurers lag behind, with 67% of insurance respondents saying their system for reporting fraud and misconduct requires improvement, versus 55% in the rest of corporate Canada.
“The message is loud and clear, all companies must remain vigilant in safeguarding against losses in fraud and misconduct, and that includes those in the insurance sector,” said James Hunter, partner of KPMG Forensic. “They should get in the habit of performing regular process reviews and implementing preventive measures to protect their interests.”
The annual “Fraud and Misconduct Diagnostic Survey” is based on responses from 136 senior executives, with six representing the insurance sector.