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South African life insurers remain “100% committed” to paying out all genuine claims, but are cracking down on fraud and dishonesty as the number of irregular claims continues to climb.

Brad Toerien, the chief executive of life insurer FMI, says there has been a significant increase in fraudulent claims in South Africa in recent years, costing the industry and policyholders more than R1 billion in 2017.

According to industry body the Association for Saving and Investment South Africa (Asisa), the number of fraudulent death claims jumped from 444 in 2016 to 2111 in 2017.

Insurance fraud takes place when claimants attempt to gain benefits to which they are not entitled. This includes falsifying documents at application and claims stage, and exaggerating impairments to receive disability benefits.

“We want to pay claims; it’s why we exist. We give clients the benefit of the doubt even in tricky cases that aren’t black and white.

“But insurance fraud has a major impact on all stakeholders and it’s ultimately the premium-paying customers who suffer the most, as they carry the cost of ever-rising premiums. This is why insurers need to have a zero-tolerance stance on fraud,” Toerien says.

Life insurers often come under fire as they attempt to adapt their methods of detecting increasingly sophisticated fraud attempts. One such method is surveillance, an industry practice that is used only as a last resort when there is a suspicion of fraudulent activity.

Toerien says that, in the end, a successful relationship relies on a balance of empathy and integrity on behalf of the insurer and a commitment from policyholders to stay informed and up to date on the cover they select, as well as the terms of their policy.

Follow these six tips from FMI to ensure your claim is paid:

1. Don’t lie or falsify documents at application or claim stage. This will jeopardise your claim and could even result in criminal charges.

2. Provide complete information during the insurance application process. Rather provide too much information when applying for cover than too little.

3. Know what you’re buying. It’s vital that financial advisers and customers take the time to understand the product and cover they have selected.

4. Ask questions. If you’re not sure what a question means, or what information is being requested, ask.

5. Keep up to date. If your personal circumstances change, make sure your insurance policy is updated accordingly.

6. When you submit a claim, take the time to consider the condition you are claiming for and the impairment as a result of your condition. Being 100% open and honest with your insurer is critical. 

PERSONAL FINANCE