Staging hijackings, faking thefts and burglaries, and using car wrecks to back up false accident claims are just some of the methods fraudsters are using to rip off the insurance industry.
The SA Insurance Crime Bureau has revealed that some customers have even photo-shopped false vehicle registration details on to cars in dealership showrooms, or disposed of “stolen” vehicles over South Africa’s borders.
Hugo van Zyl, the chief operating officer at the bureau, said the annual short-term insurance claim spend was estimated at R35 billion, and if 20 percent of submitted claims were fraudulent, this equated to a loss of R7bn a year.
Syndicate involvement in claims contributed to 67 percent of all fraudulent cases, while medical aid fraud stood out as the most common type of fraud, he said.
“During a 12-month period in the latter part of 2011, 1 905 claims were submitted by an identified syndicate. The total value entailed payments to medical aid schemes and hospital cash cover claims amounting to R4 billion. The hospital cash policy cover amounted to R935 000 (25 percent) of the total.”
Van Zyl said some of the most common operandi used by syndicates involved:
l Wrecked vehicles bought from salvage yards.
l The staging of car accidents or hijackings.
l Multiple policies taken out at various insurers for the same items.
l The inflating of house contents claims.
l False hospitalisation claims.
Van Zyl said false hijacking claims involved high-end vehicles, while low-end vehicles were more common in false car theft claims.
“There appears to be a correlation between drug abuse and incidents of false car theft. It is found that vehicles are handed over to drug dealers for payment for drugs and then reported as stolen.”
Van Zyl said the most extravagant false claim intercepted by the bureau was from a doctor who could not afford the instalments on his luxury vehicle. He drove the vehicle to a neighbouring country, where it was sold and registered, and then reported it hijacked.
The syndicate was exposed during this investigation.
Danny Joffe, a senior legal adviser at Hollard, said while most claims were genuine, a small minority of people submitted fraudulent and exaggerated claims.
“It is estimated that the rate of short-term insurance fraud in South Africa today is 15 percent of premium costs.”
Herman Moloi, the general manager for customer value and proposition sales at Absa, said although the bank’s records did not show fraud had increased year-on-year, there were spikes towards the end of the year and after holidays, “typically when people come back from a trip and need money to pay off debt”.
In burglaries, the most common items falsely claimed for were electronic, such as iPads, PlayStations, and laptops. - The Mercury