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Funeral insurance claims top the list of fraudulent policy claims

Funeral insurance had an increase of fraudulent claims in 2020. Picture: Bhekikhaya Mabaso/African News Agency (ANA)

Funeral insurance had an increase of fraudulent claims in 2020. Picture: Bhekikhaya Mabaso/African News Agency (ANA)

Published Aug 25, 2021

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DURBAN - The Association for Savings and Investments South Africa (Asisa) said it had seen a 12% increase in fraudulent and dishonest claims across all lines of risk business last year compared with the previous year.

According to the association, the highest incidence of fraud and dishonesty last year took place in the funeral insurance space, where 2 282 claims were reported.

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Insurers detected fraud, dishonesty, or criminal intent in 2 282 funeral claims worth R80.8 million last year.

The South African Funeral Parlour Association (Safpa) condemned the rise in fraudulent claims, saying this could result in higher premiums for policyholders.

Safpa’s Vuyo Mabindisa said even though no incidents were reported by their members, such incidents affected the industry as insurers could increase their premiums.

Megan Govender, the convener of the Asisa Forensics Standing Committee, said the increase appeared to be due to the tough economic conditions, which had made it more tempting for dishonest policyholders and syndicates to try their luck in the hope of receiving sizeable insurance payouts.

He said that since funeral insurance policies did not require blood tests or medical examinations, and were designed to pay out quickly and without hassle, criminals and dishonest individuals most commonly capitalised on that aspect.

Govender said there were shocking incidents that showed how far people would go to access a funeral policy payout illegally.

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“Some families orchestrated unnatural deaths after their family members had died from natural causes within the waiting period,” he said.

“One family collected the body from the mortuary before the death was registered. The body was then purposefully placed in the road where it could be hit by a car. The family reported a hit-and-run accident and submitted a claim,” said Govender.

He said fraud in the funeral insurance space often involved mortuary employees who sold bodies to syndicates which then used these bodies to claim against policies that had been fraudulently taken out some months earlier.

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“If funeral cover is taken out on someone who does not exist by submitting fraudulent documentation, the criminal will have to commit a further crime by either buying a dead body or murdering someone to enable them to claim.

“Buying an unclaimed dead body is usually the easier option.”

Govender warned that insurers had put in place extremely sophisticated fraud detection mechanisms using artificial intelligence and data.

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“The chances of being caught are extremely high and the consequence is likely to be a lengthy prison sentence,” he said.

Funeral parlours in KwaZulu-Natal said they were on alert and followed strict protocols to ensure that fraud did not take place.

Nomfundo Mcoyi of Icebolethu Funerals said that verification processes were followed.

“The procedures we follow are to make sure that fraud does not take place,” she said.

Muzi Mkhize of Khayelihle Funerals said they remained vigilant and that there were regulations in place to prohibit people from claiming unknown bodies.

THE MERCURY

Related Topics:

Crime and courts

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