Is it wrong to add a few items to your insurance claim; things which weren’t stolen during the break-in at your house?
Or not to let on that it was your younger, newly licensed brother who crashed your car into the gatepost, not you, the policyholder?
It would appear that quite a few people practise selective morality when it comes to claiming on their short-term insurance policies.
Most of the insurance fraud committed falls into the “soft fraud” category – a valid incident, but with a distortion of the facts – as opposed to hard fraud, where someone submits a claim for an incident that never happened, such as the theft of a car.
According to a 2011 survey of 30 000 insurance policyholders in nine European countries, as reported in Risk SA magazine earlier this year, 16 percent of the insured admitted to having exaggerated a claim and said they would do so again.
Eighteen percent believed it was acceptable to “pad” their claim by adding items, while 44 percent believed it was acceptable to overstate the value of loss or damage.
Many of those who tweak the truth when it comes to insurance claims point to what they regard as high premiums, or the fact that insurance companies will look for reasons not to settle the claim in full, as justification for their morality lapse.
Insurance fraud costs the local short-term insurance industry between R2 billion and R3bn a year, which results in higher premiums for all.
The SA Insurance Association estimates that local insurance fraud is in line with international trends and that fraudulent claims amount to about 30 percent of the claims submitted annually.
Which brings me to the story of a man I’ll call Gary, because he asked that I don’t use his name.
In September, shortly after a casual domestic worker had worked in their home, he and his wife noticed that a diamond engagement ring and two expensive watches were missing.
“I was very aggrieved about this,” he told me.
“I could not report the incident because there was no proof and the insurance company would say there was no forced entry.”
“It was then that I made up the story that my wife’s handbag was stolen, containing all those items.”
“After I reported the incident to the police and my insurer, my conscience got the better of me.”
“In the meantime, my insurer had begun to ask for proof of purchase for the items.
“I was co-operative with them but I couldn’t live with my deceit so early this month, I advised a manager that I wanted to withdraw the claim and he said he’d inform the assessor.”
The assessor then contacted Gary and set up a meeting to discuss the issue and sign a withdrawal form.
At their meeting, which the assessor recorded, Gary confessed to what he’d done.
“I admitted to doing wrong and expressed extreme remorse for my actions. I felt good after coming clean.”
But his good feeling was short-lived.
He got an e-mail from the insurer, stating that his claim was rejected and his policy had been cancelled as the result of his dishonesty.
“How does one reject a claim that was already withdrawn?” Gary asked.
So far he’s been unable to get short-term insurance from any other insurer.
“They all ask the question: ‘Have you or a family member have a policy cancelled by an insurer?’
“One has to answer truthfully. So I do.
“But even if I didn’t, I have been told that my former insurer has ‘red-flagged’ me on a credit bureau. So now none of them will touch me.
“And it’s the same story with my wife.
“Where do I go from here?”
I turned to Short-Term Insurance Ombudsman Dennis Jooste for advice.
Must Gary resign himself to the fact that his ill-advised moment of dishonesty, which he didn’t follow through with, will condemn him to never getting cover again?
Jooste began by saying that no insurer was obliged to accept a proposal for insurance, so that may well be Gary’s fate.
But he advised Gary to keep trying to get cover.
“In doing so he must tell the whole truth and hope that an insurer receiving his proposal will see that his behaviour, seen in totality, may in fact suggest an honest, rather than a dishonest person.”
Let’s hope so.
Otherwise the message sent by his story is: Avoid committing insurance fraud, or, if you do have a morals lapse and pad or fudge a claim, and shortly afterwards your conscience implores you not to go through with it, ignore that little voice because you’ll be punished anyway.
- To report insurance fraud, call the Insurance Fraud Line on 0860 00 2526, or e-mail [email protected]. - Pretoria News