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Santam Launches Text-based Fraud Hotline

South Africa-based Santam has implemented a text-based fraud reporting system to provide tipsters with an easier, more confidential way to report fraudulent activity.

In another example of how insurers operating outside the United States are finding new and innovative ways to leverage the wide use of cell phones and related technology, Cape Town-based short-term insurer Santam launched a new fraud-reporting program that relies on SMS (short message service) text messaging. Under the new program, Santam (US$1.73 billion in 2007 gross written premium) has partnered with Redwood City, Calif.-based Clickatell to provide a text-based fraud reporting channel to the public. Santam advertises the text-based fraud tip line in local media outlets and on policyholder documents.

Essentially, tipsters can report fraud — such as inflated or false claims by policyholders, stolen premiums by brokers, or phantom repairs by an auto mechanic — anonymously via SMS text messages from their cell phones to the mobile short code 31640. Santam then receives the fraud tips in e-mail form. Clickatell provides the text messaging infrastructure and ensures discreet delivery of the texts to Santam's forensic services team. Santam also works with Clickatell in its claims environment and call centers, using text messages to update clients on the status of their claims and provide basic information to policyholders during peak periods of contact center activity.

Confidential Tips

Santam's head of forensic services, Jerry Chetty, says that while the carrier has noticed an increased use of cellular technology in the South African market, other factors also contributed to the decision to create a text-based fraud reporting channel. "The cell phone market is obviously increasing," Chetty notes. "But we also found that when people want to make a report related to fraud or any unethical behavior, they look for confidentiality and ease of making the report."

Confidentiality has proven to be a key benefit of the text channel in two distinct ways. First, people texting the fraud line are treated anonymously unless they specifically wish to disclose their identities. Perhaps even more important, the very nature of text messaging allows fraud reporters a level of confidentiality that a phone call does not.

As Chetty explains, a person witnessing a fraudulent activity can report it via SMS text message as the offense is taking place, without fear of being overheard. "Sometimes, [fraud] reporters are in an open environment when they notice some form of irregularity," he observes. "It's a problem to pick up a phone because there's a danger that someone else could hear the conversation. Using this system, they can easily SMS the message over to us, without anyone even suspecting where the message came from."

Another benefit of the text program — an unexpected one, according to Chetty — is the influx of additional multimedia evidence included with the fraud tips. "What started out as a purely text-based reporting mechanism ... expanded because people can take video clips or photos [using their cell phones] of the scene of an alleged offense that is taking place," he says.

Quick Uptake

The text channel was quickly adopted by fraud tipsters after its launch in late 2007, Chetty reports. On average, he estimates, Santam's forensic team receives 10 to 15 reports of fraud via text message each month.

Currently, the carrier is working to improve the quality of the information it receives, Chetty continues. To that end, Santam has initiated a campaign to educate the public on what pertinent details need to be provided in a fraud tip. "For some reason, we have found that people make the reports but they fail to give us the precise details," Chetty explains.

As the popularity of the text channel has increased, Santam has seen a decrease in fraud tips coming in via other channels, particularly phone tips, Chetty adds. The shift, he notes, has led to an improvement in the quality of the leads presented to the forensic team. "In terms of capturing the details, it just makes it easier [to receive tips via text message] because we are getting the information 'as is' from the reporter," Chetty relates. "There are no possibilities for the information to be distorted or for the information to be captured incorrectly."

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