Insurance fraud has increased dramatically in these tough financial times, according to leading authorities in the industry.
Viviene Pearson, of the SA Insurance Association, said insurers had seen "a trend of increased fraudulent claims".
"Types of short-term insurance fraud include claims for events that did not happen, for example theft, burglary and hijacking, as well as inflated claims -claiming for a more expensive item than was actually lost, claiming for more items than were actually lost," she said.
The Association for Savings and Investments SA (Asisa) 2009 mid-year report found that KwaZulu-Natal had the most fraudulent cases, with 42 percent of all fake claims in the life insurance category, followed by Gauteng and Eastern Cape.
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Asisa, which represents most of South Africa's investment companies, said the life insurance industry foiled fraudulent and dishonest claims amounting to R375,9-million last year, the highest since the industry started collecting claims fraud and non-disclosure statistics in 2003.
While statistics showed that the number of claims were down, the value of claims had been higher.
"While the industry has been successful in clamping down on fraud, the value of attempted cases has increased," said Asisa deputy CEO Peter Dempsey.
He said the increase in the value of fraudulent and dishonest claims was of concern, but most claims submitted were honest and legitimate.
But if companies did not try to prevent claims fraud, the claims costs would increase substantially and ultimately force them to recover these losses from customers.
One of the cases involved a policyholder who submitted several fraudulent claims for a monthly disability benefit after neck surgery.
Dempsey said the policyholder claimed that she had not recovered within the expected time and requested an extension to the benefit several times, supported by medical certificates.
"On investigation it was found that all the documentation submitted was fraudulent and that she had returned to work after the initial claim period.
"The case has been reported to the police," he said.
There were 64 cases involving beneficiary and syndicate fraud of just more than R12-million last year.
Dempsey said this was a R10m increase from 2007.
In one case a life insurer reported that the family of a policyholder submitted a death claim only four months after the life policy was issued.
"The policy had been issued to a healthy, yet overweight, 47-year-old. According to the post-mortem report, however, the deceased individual was a chronically ill, elderly woman who was suffering from a long-standing severe lung condition.
"This led to further investigation and it was found that the fingerprints were not those of the insured person. The claim was declined."
- This article was originally published on page 5 of Pretoria News on November 07, 2009
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