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Nexus of fraud mitigation practices and profitability of insurance companies in South Africa

Author

Listed:
  • Masibulele Phesa

    (University of Kwazulu Natal)

  • Thabiso Sthembiso Msomi

    (Durban University of Technology)

Abstract

The objective of this study was to evaluate how measures taken to prevent fraud impact the Profitability of insurance companies operating in South Africa. The study adopted a descriptive research approach and surveyed a sample of 70 licensed insurance companies in the country. Primary sources of data were obtained by engaging claims managers in each of the firms, and descriptive and inferential statistics were used to analyse the data. The results of the study revealed that fraud mitigation measures significantly affect the Profitability of insurance companies in South Africa. The implementation of fraud prevention, detection, and response measures had a positive impact on the Profitability of these firms. Based on the findings, the study recommends that the Insurance Regulatory Authority establish regulations that mandate all insurance providers to collect and report statistics on fraud. Insurance firms should provide their employees with comprehensive training on fraud management and implement strict penalties and disciplinary measures for employees involved in fraudulent activities, as they can undermine the effectiveness of the fraud mitigation process. Key Words:Fraud, Profitability, Insurance companies, South Africa, Fraud mitigation measures

Suggested Citation

  • Masibulele Phesa & Thabiso Sthembiso Msomi, 2024. "Nexus of fraud mitigation practices and profitability of insurance companies in South Africa," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 13(7), pages 379-390, October.
    • Handle: RePEc:rbs:ijbrss:v:13:y:2024:i:7:p:379-390
    DOI: 10.20525/ijrbs.v13i7.3652
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