DURBAN: THE insurance sector has revealed the drastic lengths people will go to in order to cash out insurance policies.
Last year saw a surge in insurance claims with over 2 000 cases of fake claims submitted to fleece insurance companies out of around R587 million.
According to the Association for Savings and Investment South Africa, S life insurers reported a 12% increase in fraudulent and dishonest claims across all lines of risk business in 2020 as compared to 2019.
Commenting on the statistics, Megan Govender, convenor of the ASISA Forensics Standing Committee, said the increase in fraudulent and dishonest claims is not surprising since tough economic conditions make it more tempting for dishonest policyholders and syndicates to try their luck in the hope of scoring sizeable insurance payouts.
Govender said while funeral insurance has always been seen as a soft target for fraudsters, the Covid-19 pandemic has made it worse. He says desperation due to job losses is driving more people to resort to crime, while the pandemic has also resulted in a significant increase in deaths, which makes it easier to source dead bodies from flooded mortuaries for fraudulent claims.
"Since funeral insurance policies do not require blood tests and medical examinations and are designed to pay out quickly and without hassle when an insured family member dies, criminals and dishonest individuals most commonly try their luck in this space," Govender said.
He said fraud in the funeral insurance space often involves mortuary employees who sell dead bodies to syndicates, who then use these bodies to claim against policies that were fraudulently taken out some months earlier.
"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 said.
Govender said he had come across cases where families were so desperate for pay-outs from funeral policies that they orchestrated unnatural deaths after their family members had died from natural causes within the waiting period. 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.
Govender said the life industry has picked up on a syndicate that targets drug addicts and alcoholics from impoverished communities and, under the pretext of a job offer, obtains their personal details, including banking details. These details are then used to submit fraudulent funeral policy applications.
"In one case the syndicate then tried to murder the victim. The victim managed to escape, and the syndicate then moved to plan B of buying a dead body and submitting a claim. The claim was marked suspicious by the life company’s claims department and submitted to the forensic department for further investigation. Investigators found that the person whose life was insured was in fact still alive,“ Govender said.
Govender said the same syndicate has also been responsible for other fraud cases and suspicious deaths.